Cash for Clunkers Have had a Long Term Effect

The folks at the Wall Street Journal miss the point, by stressing capacity cuts, but it takes 2-3 years for new cars to become used cars.

I'm not sure whey they do this, except for the fact that the jobs being lost are UAW jobs.

More significant is the fact that anyone who got cash for a clunker under the government program did not have their car work its way down the used car ecology.

Cars traded in under that program had to be rendered undrivable, generally by putting abrasive in the crankcase.

What that means is that there has been a significant reduction in used cars in the pipeline, which is likely going to be boosting used car prices, and possibly new car prices, for the next few years.