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	Name:	water_watcher -
	Subject:	Heard on CNBC
	Date:	8/5/2009 8:15:01 AM

Just heard a very logical analysis of why Cash for Clunkers program is bad for the economy. While it had a short term impact to help the car companies move inventory, it did nothing to put people back to work in the factories. It was only a shot in the arm to reduce the pain.

But the main reason it will have a "negative" impact on the economy is the government is borrowing to give out the $4,500 (or $3,500) AND people that had a fully paid off car and would spend money on other things, are now taking on car loans which will reduce their spending power in months ahead. Additionally, it is contributing to driving up consumer debt again which is not good, and should the economy not pick up, which is a high probability, you could see a run on the default rate of all these cars that the government baited people to buy when they may not have been able to afford in the first place. Just like they did with home loans with the Community Reinvestment Act that caused the crisis.

But fear not, Obama will then have the cash for clunker bail out program and take over all auto loans under the program so people don't lose their cars.

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Heard on CNBC - water_watcher - 8/5/2009 8:15:01 AM

Heard on CNBC - lakngulf - 8/5/2009 8:44:28 AM

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