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Posts Tagged ‘con’

Cash For Clunkers seems like a pretty good program. Bring in a not-so-great vehicle and get up to $4500 in credit toward a new vehicle, a value virtually no one would get from a traditional trade-in program. There are a few stipulations but nothing outlandish. And it’s helping both the consumer and the economy, right? What could my beef possibly be?

The long-term result. But even the short-term isn’t exactly pretty. Right now, this program is “helping” people buy cars that get “better” mileage than what they had. But $4500 isn’t a great discount on a new car and I don’t know whether most dealerships will allow it to be paired with other incentives or not. If not, buyers are getting screwed. Secondly, the mile-per-gallon average is grossly overestimated and has decreased the last five years or so. Which means buyers get less bang for their buck even when they try to make the best choice. On top of that, until an amendment to the program passed today, August 1, 2009, the cars being turned in were to have their engine blocks “killed” at the time they were traded (officials recommended water glass, a sealant and bonding agent, be run through the engine in place of oil; the damage would be total and irreparable) … except that, at the time of purchase, many buyers do not know if their old vehicle will be accepted into the program. Some dealers required buyers to sign waivers and release forms to indemnify the dealership against damages. Because if the old car wasn’t accepted, or if the new car didn’t meet your standards, or you decided you couldn’t really afford it, or if you needed to back out of the deal in any other way, your old car was already toast. Sorry, Charlie, you said you didn’t want it anymore.

And the long-term outlook is worse.

If you hadn’t noticed, used vehicles are going pretty cheap at the moment. They have been for about, oh, the last eight months or so … since the stock market fell and the country began to worry about ridiculously bloated banking corporations. My biggest beef with this program is how it will take thousands and thousands of perfectly decent used vehicles out of the market. Just how many? Well, using a bit of fuzzy math, I’m going to take the total Cash For Clunkers budget (including the new increase) of $2.95 billion and divide it by 4000, since some people will get a $3500 credit and some get $4500 … and for the sake of brevity I’m going to assume it’s a pretty even split. Okay, now if even 1 in 3 of all those vehicles being turned in were potentially re-salable (I think the average would be much higher than that, but I’ll play devil’s advocate and remain conservative in that respect) that means roughly 245,000 re-salable vehicles will be crushed or shredded by time the program ends.

Want to see a few examples of the “clunkers” being traded in? Here’s a random group provided by the owners themselves.

(Click here to view full-size.)

Yup, those look like total and complete piles of shit. I don’t know how the owners managed to get them to the dealerships for trade-in.

Sarcasm aside, that’s almost a quarter of a million perfectly good cars and trucks, including those above, permanently and irrevocably destroyed. How is that bad? Well, for some sellers it won’t be, because the price of un-crushed used cars will go up. But, ultimately, all those cars and trucks permanently removed from the market will have an effect on prices. What happens when demand remains constant (or increases) but supply diminishes? The price goes up. And that means higher costs for people who can’t afford new cars. It puts one more burden on an already overburdened class and will result in real clunkers getting driven for longer periods because owners can’t afford to replace them. It means greater hardships and fewer choices for low-income owners. And not only will the price of used cars increase, the price of many parts will increase because those hundreds of thousands of vehicles were crushed or shredded with their drive trains intact. (By law, the scrapyards are not allowed to part them out.) So millions of perfectly usable parts will be wasted, salvage operations face a shrinking pool of resources, and low-income car owners foot the bill.

Granted, Cash For Clunkers will probably get some junkers off the road and likely help a section of lower-middle class consumers sign on for a car they couldn’t otherwise afford. But it seems to me that the “cons” here outweigh the “pros.” By far.

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Well, the season of brotherly love has ended. Call me a pessimist, a cynic, a curmudgeon (all true), but a few days ago I got a call that punctured the bright balloon of Christmas delusion and ushered the real world back in. Criminals posing as lawyers, bankers, judges, and friends victimized my neighbor’s step-mom. She wasn’t the first. I watched the same thing happen roughly ten years ago to another neighbor and the similarities are sickening.

Both were older widows well past retirement; both owned their homes, a small parcel of land, and had several thousand in savings; both were “be-friended” by wealthy couples who wanted to “take care” of the women; both women signed all manner of papers they did not understand; both women died suddenly and unexpectedly with all their worldly possessions and belongings deeded to the wealthy couples who “befriended” them.

It sounds fake. A crummy sub-plot in a soap opera or B-movie. But I’ve seen it myself and know it’s real and true and still happening. The latest victim, we’ll call her Ruth for the sake of anonymity, had no blood family and only a few ties by marriage, step-children who never cared much for her. Only one even bothered to remain in contact with her (my neighbor). When she told him about the wealthy couple offering to make sure she was cared for, he was suspicious, but she was convinced they were good people and began signing the papers they put in front of her. A power of attorney in case she suddenly fell ill; access to her bank accounts and savings to make sure her bills were paid; and among the god knows what else they slid under her pen, more powers of attorney and a deed for her house and property. She signed them all. By the time she began questioning their motives, she was falling ill and had nothing left in her name.

Even so, she had the first power of attorney revoked and asked her step-son (my neighbor) for help to get them out of her life. She told him what she knew (though nothing of the secondary powers of attorney or deed, which she apparently never knew she signed) and he helped her take the couple’s names off her bank accounts that very day. The very next day, a new power of attorney was filed in the courthouse and the couple claimed her bank accounts again; it so happened that they had friends in the bank and the courthouse keeping them abreast of any changes. Before she could reverse it again, Ruth had a small stroke and went into the hospital. While there she was declared incompetent due to dementia. My neighbor admitted she had been getting worse during the last few months but did not think she was anywhere near incompetent. At any rate, she was soon sent home under the care of the wealthy couple.

My neighbor was called away on business but had his wife call every few days to check on Ruth. Ruth herself rarely answered but one of the couple often did. They assured the wife that Ruth was fine and they were taking care of her. When my neighbor returned he went to check on her and found her alone in her house, dirty, ill, and unresponsive. He called 911 and she was taken to the hospital. There, they said she was dehydrated, suffering from massive organ failure, and had not eaten in days. She died within a few days, having never truly regained consciousness. She was in the ground within 36 hours.

My neighbor is speaking with attorneys to see what his options are. They aren’t encouraging. The wealthy couple are “upstanding pillars of the community” with the man (and mastermind) a deacon in the church, an ex-judge, and a practicing attorney himself. His brother works in a major bank in the area. His years in the courthouse and law office provided him plenty of contacts but he also had fingers in real estate agencies, which came in awfully handy in tracking down new blood. It so happened a partner in one of those real estate agencies was the man behind the crimes perpetrated against my other neighbor. He’s also high in the church, has close ties with the courthouse, and has two sons in the state police.

How very, very convenient for them both.

I wish my neighbor luck but hold little hope for him. Who knows how deep their influences run, but from past dealings I can tell you they pull some strings all the way to the state capitol. And they certainly have deeper pockets and more legal experience to defend themselves than my neighbor could possibly raise to attack them. It’s just another example of our wonderful justice system and those who use it.

All I can say is, watch your back.

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