the true problem with the cash for clunkers program is the same on that caused the housing market problem..If you couldn't afford a new car before guess what you still can't. People fore get that while the 4500.00 credit seems great, you'll be paying higher insurance, higher tag cost, higher upkeep.
Same with the housing problem. After Katrina the government in an attempt to "Strengthen the economy" made it so that anyone with a minimum wage job could afford to buy a 250K house with no problem..Problem is 99.9955% of those people that bought couldn't qualify for a fixed rate loan and didn't understand that adjustable rate mortgages is a fast track to being bankrupt. So every body and their dog was buying at the max of what the qualified for loan wise and two years later interest rates go up and that 850.00 a month note goes to 1200.00 then because the value of the home is less that 80% of the loan value the bank requires mortgage insurance that's another 100.00+ a month. So a house that you could barely afford to start with just became way to expensive "AGAIN" and poof foreclosures out the ears banks start loosing money cause they were forced by the banking community reinvestment act to loan to these high risk people. Credit gets tight so company's that were running a credit line against accounts receivable now can't pay their employees so layoffs happen and people can't pay their bills so they start loosing their cars and house..
Its a cycle. The only way to stop it is to quit giving money and credit away and make people work for what they own. It might mean that there are people that can't drive a new car every 3 year *GASP* or live in big 250K house *outrage* but them's the breaks.
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