Change is good...and sometimes clunky...

Alright now, I realize that at first blush my prior blog may seem like a piece against the current administration's spending and therefore could be lumped in with all of the Republican blah blah blah. Not so fast. I do think we need change. I do believe that we have a good man in office right now. I do believe the wind is right to sail into new seas...maybe just not in a brand spankin' new boat if the old one still floats. Maybe just get yourself a new sail. (and a pirate flag)

What grinds me is the constant pressure we put ourselves under to buy, buy, buy and do it NOW. A young couple in love used to get hitched, live in squalor for a few wonderfully miserable years while they saved every penny and then, when the piggy bank was ready to burst, went into the local bank and triumphantly hoisted it up onto the counter as a down payment for their first home. It was normally at least 20% of the purchase and the home price would put them into a payment that was around 30% of their monthly income at the time. You drove a car until it either became too small for your growing family or decided to give up its ghost in the driveway some morning. Now most of us are purchasing our first home with 105% financing and never saving a penny...ever...for anything. We never had to so we never learned. We buy a new car because our current one needs a tune up or it no longer matches our wardrobe. We have completely lost the sense to save up for purchases we can't pay cash for and we count on the myth that our children's college tuition money will magically appear in an account we currently have $212.37 in a week before they pack up and leave home. "Sorry Billy, there's always that job selling sweepers and air purifiers until you save up enough to get to school, Mom and Dad were busy supplying you with Wii games, 372 channels of digital cable, $80 jeans and electric scooters the past 18 years."

So in my rambling way I guess what I am saying is that what I am against is not the attempt at getting things moving in the economy by spending money, what I am against is getting the economy of such a specific industry revved up by pulling money, and lots of it, straight out of the wallets of the already strapped and struggling middle class. We are the ones the Clunky plan is targeted at and we are the ones kicking in the cash to make it work. $4500 hasn't bought a new car since before I was born so where do you think the other $15,000 is coming from? We are already expecting too much from the tuition fairy.

I understand that not all the plans the new administration puts in play are going to be perfect right out of the gates and I am wholeheartedly okay with that. I embrace the fact that they are at least trying to do something real and looking at things in a different way. God Bless 'em for it. We need it. I just think that we need to look at the new initiatives from an R&D perspective and be honest with ourselves when they looked better on paper than they do on the road, or in the garage. I find it frustrating that the middle class consumer is tapped to save an industry that has raised the price of a new car over the past 20 years to the point that none of us in the middle class can afford them...honestly with the current economic environment even at $4500 off, we still can't. Or at least shouldn't.


So let's look at this as prototype 1.1, give the administration a good pat on the back for the attempt and let's move on to the next big idea. 1.2 anyone? Anyone?

Cash for Clunkers...

Okay...okay...I know, why in the world should I care about the fact that the "Cash For Clunkers" program just got another $2 Billion. I run a credit union and we are in the auto lending biz. Anyway, it isn't real money right, just the play money that the government throws around at our problems. Still though it bugs me. We are making a LOT of these loans. Some to members that can afford a new car or were planning to buy anyway, and I am fine about that. More power to you. The people I am worried about are the ones who can barely afford the cars they drive now who feel that this "free money" is too good an offer to pass up. They are, for the most part, trading in cars and trucks that are in fairly decent condition, are relatively reliable and most importantly...PAID FOR! Even after Uncle Sam kicks his $4500 into the deal most people end up with a minimum of $15,000 financed, or in cash flow terms, around $300 a month. Add in the fact that they will also need to carry full coverage insurance and you can probably kiss close to $400 goodbye each month to pay for this amazing deal. Now, I know that this is a fantastic program for the auto dealers, who are trying to remember the last time they didn't have to put a buyer in a choke hold to test drive a NEW car. I know that the manufacturers are elated because buyers are looking at the glut of inventory they filled the dealer's lots with the past 2 years as their golden ticket to the $4500 party. Insurance agents and the big auto insurance companies are even winners as most of us celebrate the day when the last payment is made on our "clunker" and can drop the coverage a little lower than the bank would allow and the new car certainly gets the phones at Geico ringing. Poor little lizard. Not even sure how he holds that big heavy receiver. So who loses with this program and why would I even waste 10 minutes venting about it...the people who go out and put themselves into a new car who had a perfectly reliable one already leaking oil in the garage, that's who. People who lay in bed and wonder is there is a pink slip tucked in behind their punch card. People who so far have survived the cuts at work or have only had to deal with a few less hours per pay. People who so far have made it and think that this is a sign from above that the worst is over and the smoke is clearing. I am an optimist, really I am, but even I can't look someone in the face and tell them that its all casual dining and imported beer from here on out. We are not out of the woods yet people. In fact, we might not have even gotten into the thick, machete and Deep Woods Off section yet. I know it isn't Washington's job to keep all the little buyers safe and out of harms way, I am vehemently against their meddling in most cases. But I also don't think that dangling a shiny 4 cylinder carrot in front of starving rabbits is the best way to solve the problem either. Eventually that 2002 Explorer that you just had to have in 2006 will need replaced, I agree with that Billy, but remember, you used to love her too...and the 2009 Caliber will get hit by the ugly stick too someday....and how sure are you that widgets will keep selling and the plant will stay open. Sorry to be a realist Billy, but I really don't want to repo your new car next year. You can't get your clunker back once it has been "rendered inoperable"...