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Selasa, 23 Desember 2008

Bailouts proposed for new-vehicle buyers

What would you think of a bailout proposal that rewards people who buy new cars?

That idea is the basis of several bills introduced in Congress. Car buyers would get a $10,000 incentive in one form or another to buy a new car and, in the process, heal the ailing U.S. auto industry.

It's certainly not the strangest car-related stuff we've read recently. (That would be an article about a Beverly Hills physician who powered his car with biodiesel made from liposuctioned human fat.)

Would any of these car-buying incentives work? Plenty of dealers are already offering $10,000-plus discounts on new cars and trucks, according to many media outlets, including Consumer Reports. So far those aren't undoing a lack of consumer confidence in both automakers and the economy that's slowed showroom traffic to a crawl.

One of the bills, introduced by Sens. Tom Harkin, D-Iowa, and Dick Durbin, D-Ill., would provide a $10,000 rebate to people within certain income limits who trade in an old gas guzzler and buy a new fuel-efficient car. That's defined as a vehicle getting more than 25 miles per gallon, which, sadly, includes only about 15% of new American cars.

Another bill, introduced by Rep. Doug Lamborn, R-Colo., would give all new-car buyers a $10,000 tax deduction. Lamborn doesn't mention fuel efficiency or income limits in his post at The Hill's Congress Blog.

A number of similar ideas are swirling around the Internet.

Tim Straus discussed a $25 billion proposal in a post in the Springfield, Mo., News-Leader that would appear to address consumer confidence, the credit crisis and the automakers' need for cash: You purchase a new fuel-efficient car, put $1,000 down and finance the rest, minus a $10,000 federal rebate that goes to the bank. The bank pays the dealer the full purchase price.

He wrote, "Each dollar of this program is multiplied into important economic activity that drives jobs, supports our manufacturing base, drives us closer to our energy-efficiency goals and helps banking."

Jeffrey Leonard at the Washington Monthly proposed that the federal government offer a 50% rebate on any new car purchased from an automaker that agrees to restructuring. In exchange, the government would get preferred stock and also an industry that finally understands the importance of fuel efficiency. He added, "If we free Detroit of its current inventory and then send clear long-term signals based on higher fuel taxes, the industry will quickly adjust."

Related articles:

White House bails out auto bailout

U.S car companies worth over $100 billion

Even Toyota can't escape the recession

This board game is a little TOO real

The Economist is offering a board game called "Credit Crunch" in its holiday double edition. The winner is the "last solvent player" -- in other words, the one who eliminated the competition.

This is way nastier than Monopoly. As a press release explains it, Credit Crunch players are encouraged to "pick on the weakest, kick opponents when they are down and generally manifest all the characteristics that bring success in the financial world. Winner takes all!"

You start by entering the subprime mortgage market and if you play the game well -- that is, ruthlessly -- you finish as "Deemed Too Big To Fail." Here are a few of the rules (stop us if they sound familiar):

•    Players may conceal their assets from each other.
•    Players who cannot pay fines may borrow from other players at any rate -- "for instance, 100% interest within three turns."
•    Players who cannot borrow must either go into Chapter 11 or be taken over.
•    The takeover purchaser and subsidiary are technically a team, but the purchaser gets to call the shots (including using the subsidiary's assets to pay his fines).

"As though our readers have not suffered enough already in 2008, we are proud to offer them the chance to be crushed, humiliated, and impoverished all over again," game designer Kevin Kallaugher said in a press release.

We fondly recall Monopoly's famous game pieces: the dog, the top hat, the car, the iron and all the rest. Credit Crunch goes you one better: You can download game icons such as "bull market" and "stock market ticker," but it's suggested that a player instead use "diamond cufflinks, or any other mementos of your former wealth, to represent you on the board."

In these rough economic times, you can't argue with the cost: game board, risk cards and currency are all free for the downloading. You can also find the game board in the holiday issue.

Related articles:

Recession is real -- and it hurts

"…7 bankers begging, 6 hedge fund falling…"

Is economic crisis affecting behavior in strange ways?