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IBDvalueinvestin (98.56)

This is when the Cash for Clunkers really makes Obama Smart.



April 08, 2011 – Comments (13) | RELATED TICKERS: TPX , SPY , OIL

People keep saying that consumers will be squeezed by Gasoline, but what most don't realize is that many consumers have switched to better MPG cars since 2008, thanks to the Clunkers rebate and they got rid of the gas guzzlers that were on the rode in 2008 whihch is the last time Oil went over $100.

Proof consumers are still spending is all around like today with Tempur-Pedic International Inc. (TPX) said that it expects to earn 67 or 68 cents per share on revenue of $325 million for the quarter that ended March 31. That's well above the 58 cents per share and $290.5 million in sales that analysts polled by FactSet have been expecting,

 and yesterday with similar bullish forecasts by BBBY and PIR

13 Comments – Post Your Own

#1) On April 08, 2011 at 1:23 PM, RonChapmanJr (30.32) wrote:

"makes Obama smart"

Nothing is this powerful.

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#2) On April 08, 2011 at 2:35 PM, L0RDZ (91.88) wrote:

I wouldnt call him smart.

He is like that dog in the movie the  Jerk  with Steve Martin

Mister don't call that dog life-saver !!!

"Don't call that dog Lifesaver - call him Sh!thead!"
"Okay..come on Sh!thead!"

"P.S. Is Grandma still farting?"

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#3) On April 08, 2011 at 2:39 PM, ChrisGraley (28.62) wrote:

I would love to see how you demonstrate that people taking on loans for cars that they can't afford in a bad economy translates in the ability for them to buy a high-priced mattress ?

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#4) On April 08, 2011 at 2:40 PM, Imperial1964 (94.01) wrote:

OK, I've gota say something on this one.

Since when is government subsidizing the destruction of productive assets make any of us wealthier?  It is "smart" to trade in your car for a more efficient one precisely when it is economical to do so.

If destroying productive assets were the way to prosperity, let's all take a hammer and smash our stuff.  I'll start with my car and then we'll rent a bulldozer and start on your house.

That's one sure way to reduce the inventory of homes and support home prices!  (another nonsensical goal--make things we all have to have, housing, MORE expensive!)  And our new stuff would be more efficient, right?  Never mind the energy/materials expended creating the new stuff.  Just pretend that the stuff is created out of thin air.

It is all just pandering to special interests.  Tell me this, does it take less fuel to make a new car or keep driving a less efficient one?  Does it pollute more to drive an existing car or mine the earth, refine the materials, and produce a new car?  I've done the math "back of the napkin"-style a while back.  I can drive my 25 MPG "clunker" for something like 100,000 miles on the energy required just to make a new car.  And the new car requires fuel too, you know.

People who were getting "squeezed" by gasoline are now getting "squeezed" by car payments.

At these prices I am spending $350 a month on gas for my car, which is paid off.  $350 a month will pay the payments for a new 40 MPG Fiesta.  But I will still have to spend $200 a month on gas and another $40 a month in extra insurance cost.  In other-words, it REDUCES my disposable income by over $200 a month.  Sure, there is a difference that $150 less in oil goes to other countries, but do you think many parts for that Ford Fiesta come from the US?  It is made in Mexico, you know.

If you say that the "cash for clunkers" subsidy would have reduce my payment, that is correct, but that is just cost-shifting.  Does it make it any "better" for the economy as a whole to socialize my car payment and make you pay part of it?

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#5) On April 08, 2011 at 2:52 PM, L0RDZ (91.88) wrote:

Good retort Imperial.... :)

I would still refer to him not as smart and not as some lifesaver dog

but as SH*THEAD.

come on boy...  funny how if we drilled drilled drilled back a few years back  how  Americans could have been finally able to bring more oil to the market...

But no...... also there is the refinery issue if you think gas is exp now just wait till a refiner has a fire or gets knocked out by mother nature

you will see people doing sex favs for gas...

it'll be that exp...


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#6) On April 08, 2011 at 3:02 PM, IBDvalueinvestin (98.56) wrote:

Imperial1964 Your forgetting that the clunker rebate gave you $4,000 plus many dealers matched that to give you $8,000 towards a more friendly gasoline car.

Lets say you were smart and bought a $16,000 car , giving you a $9000 loan on a brand new car. That comes out to only $176/mo and now you have a car that is doing 35+ MPG instead of 15-17 MPG

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#7) On April 08, 2011 at 3:23 PM, smartmuffin (< 20) wrote:

I think people really over-estimate the affect of small MPG changes on the bottom line.  The "middle class" aren't buying Priuses, they used cash for clunkers to exchange a slightly inefficient car for a slightly more efficient car.

Let's take someone who had a car that got 16mpg (pretty low) and traded it in for a car that got 28mpg (pretty decent).  At $3 gas, 10,000 miles driven comes to a total cost of $1071 versus $1875 for a savings of $804 dollars.  When gas increases from $3 to $4, the numbers become $1428 and $2500 for a savings of $1072.  At $4 gas, the "amount saved" is $1072, but the increase in gas prices still cost you an extra $357 no matter how you slice it.

Also, there was no "cash for clunkers" program for truck drivers or airlines.  As their costs go up, they'll pass it along to us, and the cost of everything will rise.  What exactly is Obama's plan for that?

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#8) On April 08, 2011 at 3:27 PM, mtf00l (43.13) wrote:

Appoint a czar?...

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#9) On April 08, 2011 at 3:30 PM, catoismymotor (< 20) wrote:

IBD, I mean no disrespect when I say I think your idea is flawed.

My car is a twelve year old four-banger. I bought it used in 2001, it is a '99. I paid $13,000 for it. I financed it. My monthly payments were $270 a month for five years. I buckled down, paid it off in three years. Now I have a paid off car, that costs me $100 - $125 on average to maintain/repair. To replace that car with a like model that is two years old would cost me $21,000 or $425 a month @ 6% with nothing down/no trade in. For me that is a monthly savings of $300. And that is without the extra ad velorum tax for a more expensive vehicle I would  get to pay every birthday.

In truth most of those people that took advantage of the cash for clunkers were taken advantage of. They were seduced into taking on tens of thousands of dollars worth of extra debt in order to have a shiny paint job and that new car smell. If they had their heads on straight they would have kept what they had, paid less monthly to repair/maintain it and saved enough to absorb a jump in gasoline prices. Gasoline would have to reach $7+ a gallon before the $300 I pocket each month would be erased. 

And on a side note I would like to see some numbers on how many of those people have since had to give up their cars because they lost their jobs, now have no car at all.

Respectfully, Sincerely, Deliriously,


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#10) On April 08, 2011 at 5:21 PM, VExplorer (29.11) wrote:

I’m running 12 year old ISUZU Trooper with just 19 MPG in best case. And “yes”, I spend 50% more on gas than year ago. But all calculations I did till now drive me to decision NOT change the car.

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#11) On April 09, 2011 at 10:47 AM, L0RDZ (91.88) wrote:

Cash for clunkers stupid social engineering, just like all the other wasteful  redistribution ideas.

Just taking money from people who really didnt need to buy a new car.

A new car is like the worst thing, the moment you drive it, you have already lost.


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#12) On April 09, 2011 at 11:05 AM, buffalonate (51.02) wrote:

I think Cash for Clunkers was a great idea.  It saved the car companies from destruction and got more efficient cars on the road.  Gasoline use has gone down 2% in the last year because of more efficient cars.  The increased mileage standards have made cars almost twice as efficient as they were a few years ago.  This keeps money in people's pockets instead of sending it overseas.  I think in the next few years oil demand in the U.S. will continue to go down because of better technology and lightweighting. 

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#13) On April 09, 2011 at 11:33 AM, catoismymotor (< 20) wrote:

Re: #12

You're silly.


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