What happened to that

[Black Bart]

"Cash for Clunkers" thread? Anybody seen it anywhere?

I bet it got the censor's axe for...umm...sump'n -- don't know what. Prob'ly morphed into one of those political squabbles that blossom occasionally.

Cain't figure out why such things keep happenin', but I herewith apologize for any possibly inflammatory remarks I may made have made (especially that one about machine-gunning liberals).

Maybe John H. is to blame for inciting a riot (you know how he is); urging us to kill old cars with baseball bats and crowbars (say John -- perhaps a disclaimer that you have no sporting goods/hardware business connections?). Also, it's "Cash for Clunkers" and not "Smash for Cash."

Well, anyway...I'd still like to know what the disposal protocol for clunkers is. Somebody said previously that they're pouring chemicals in the engines. Anybody heard anything else on: disposal methods, verification of demolition, assigned junk values?
P.S. Respondents mentioning politics will be (choose one): banished/ drawn and quartered/ frowned upon.

[dyne]

In today's newspaper it was reported that the engines in clunkers was to be made unusable
but the rest of the vehicle could be recycled.

[JSLATER]

According to our local TV news, there are only a few parts that can be salvaged. I did not pay that much attention, but I remember tires, cataylic (sp) converter and the radiator. There might have been more, but not much. No air bags, seats, doors etc.

[JohnH]

"Cash for Clunkers" thread? Anybody seen it anywhere?

I bet it got the censor's axe for...umm...sump'n -- don't know what. Prob'ly morphed into one of those political squabbles that blossom occasionally.

Cain't figure out why such things keep happenin', but I herewith apologize for any possibly inflammatory remarks I may made have made (especially that one about machine-gunning liberals).

Maybe John H. is to blame for inciting a riot (you know how he is); urging us to kill old cars with baseball bats and crowbars (say John -- perhaps a disclaimer that you have no sporting goods/hardware business connections?). Also, it's "Cash for Clunkers" and not "Smash for Cash."

Well, anyway...I'd still like to know what the disposal protocol for clunkers is. Somebody said previously that they're pouring chemicals in the engines. Anybody heard anything else on: disposal methods, verification of demolition, assigned junk values?
P.S. Respondents mentioning politics will be (choose one): banished/ drawn and quartered/ frowned upon.

I hereby plead guilty to all of Bart's charges but I do disclaim any connections to sporting goods/hardware business connections. I'd offer an apology for my musings, but it would just be too be obvious that the apology isn't sincere.

Hoping this won't get me back on the hot seat for mentioning politics, but it is a bipartisan bash. I can certainly understand JSLATER's comment on why they can't recycle old air bags - we already have an oversupply of them in Washington.

[thomtax]

In one interview with a gentleman whose job it is to disable clunkers he said that you drain the oil from the engine. There is then a mixture that is poured into the engine. You then start the engine. Within about ten minutes the engine will start to mess up and will freeze up. The mixture makes a solid glass inside the engine.

The way he talked, anything that could ordinarily be used by a salvage yard, can then be used.

LT

[BHoffman]

Mea Culpa

Bart is a gentleman for not naming me

Don't mean to inflame or incite. Politics and economics drive taxation, and they in turn are driven by differing ideologies. These days we are so miserably polarized as a nation, it seems impossible to discuss any of the anticipated effects of pending and enacted legislation on the economy and that relationship to taxation without causing great offense, intended or not.

Regardless of our political leanings, I think anyone who has the responsiblity of providing tax planning services to the general public may want to obtain at least a rudimentary grasp of basic economic theory. That knowledge is going to be extremely meaningful in the very near future.

For instance - Do you expect inflation to rise faster than the tax rate increases? Should I advise my clients to elect an accelerated depreciation method or not? Should I advise my clients to pay off debt or leverage as much as they can and hold onto their cash?

I'd like to discuss these types of things with you. Those conversations are not banned by the moderators. But, they are eventually made impossible by folks who feel personally threatened by any critical thinking that runs contrary to their beliefs. It is easier to attack the thinker than to seek understanding of the thought. Volume and repetition does not make a false thing into a true thing. Saying a false thing loudly and often does not make it true. It just indoctrinates.

If I truly hate anything, it's that indoctrination.

Thanks for listening. Special thanks to those who don't agree with me

[Black Bart]

Well said, Hoff -- you're a good sport!

Bart is a gentleman for not naming me...

Actually I wasn't bein' gentlemanly (usually am with the ladies, of course); just left in the middle of that thread and never went back, so don't know what mayhem I missed.

...Don't mean to inflame or incite...I'd like to discuss these types of things with you.

Q. Do you expect inflation to rise faster than the tax rate increases?

A. Yes (I think). International case study: Four lousy chicken strips at our homeboy's Dairy Freeze are up to six bucks. I shopped around and switched to a chain's (they're all offerin' cheapo deals) "Poreboy Package" (20 strips for $11.59). A coup (despite guilt complex over abandonin' the local guy)!

Q. Should I advise my clients to elect an accelerated depreciation method or not?

A. I run partial S-179 "what-if" amounts for best advantage and explain they'll usually need the leftovers in suceeding years.

Q. Should I advise my clients to pay off debt or leverage as much as they can and hold onto their cash?

A. Guess the others will have to answer this -- my average client makes $20-$40K and has nothing left to pay or lever with.

...I...hate...indoctrination

Most of us do -- everything's so partisan/ad hominem nowadays that the only safe place is our own political "choir" or "amen corner." Shoot, I guess we'll just have to stick to taxes.

On that point, I just heard Clunker rebates are not taxable (per IRS). Noble of 'em, eh?

[BHoffman]

Thanks for your comments.

I think inflation is going to be felt painfully in Nov 2009, and will continue to increase more slowly for the next three years before leveling off.

I think the tax rates will surely increase in 2010, and probably dramatically increase in 2011.

So, I'm advising clients to take deductions sooner rather than later. I'm advising them to hang on to as much of their cash as possible. I'm advising them to accept nothing except a fixed rate of interest for any capital purchases.

I expect to be filing quite a few NOL carryback returns.

[Bees Knees]

So, I'm advising clients to take deductions sooner rather than later. I'm advising them to hang on to as much of their cash as possible. I'm advising them to accept nothing except a fixed rate of interest for any capital purchases.

I'm not advising them to do anything. I'm going to try to get out of the advising business and stick to filling out forms. I think the government has ruined tax planning, and I want no part of the blame when things change and our clients get stuck in the middle.

Take for example the first time homebuyer credit. I'm sure glad I never told anyone to buy a home in 2008, because if I had, I would hate to have to tell them they should have waited until 2009.

[BHoffman]

Take for example the first time homebuyer credit. I'm sure glad I never told anyone to buy a home in 2008, because if I had, I would hate to have to tell them they should have waited until 2009.

Yep. That would have been awful. I hardly ever advise on specifics like when or whether to buy a house or a car. When asked, I've usually told them it's best to buy when and if you need or want it, ignore the government cheese effect, and let the tax fall as it will. No government gimme is worth picking up debt you either don't need. don't really want, or cannot afford.

But, I'm rarely asked. My sister had fancy new windows installed in 2008, and then told me. Ouch.

[JG EA]

Something I don't like about the program is that my car is too old to be a clunker.

[JohnH]

I'm in total agreement with the inflation expectation, although I'd be interested in how you arrived at your time frame. I assume you expect a recovery to begin in late 3rd quarter or early 4th quarter and that everyone will try to stay ahead of the curve by building inflation expectations into their pricing, thereby making it more or less a self-fulfilling prophecy. Could happen that fast, but there will have to be clear signs of a recovery preceding that turn of events. So far, I don't see many signs that a recovery is taking hold.

Now what happens if our government tries to dampen inflation by running interest rates up and simultaneously raising taxes? It might work if they guess just right, but it's a bit like trying to turn a battleship. The more likely scenario would be the worst of both worlds - dampening the recovery without doing much to rein in prices, resulting in a prolonged period of stagflation. If the government then tried something really stupid such as wages & price controls, we could find ourselves stuck in that rut for months or even years. And we haven't even considered the economic effects of a series of major terrorist events, or an oil price shock - especially in the highly likely event that hostilities break out with Iran over their nuclear program.

In any event, right now I'm as interested in what I'm going to do in my business, regardless of what I might advise my clients. I am definitely getting rid of my remaining fixed-fee arrangements and going to hourly billing on everyone. I may not be able to control inflation, but I'm going to do my best not to be a victim of it.

And if the above isn't enough to throw a damper on your weekend, read this:

http://news.yahoo.com/s/nm/20090805/bs_nm/us_usa_housing_deutschebank

[BHoffman]

Normally, I wouldn't be looking for inflation until the unemployment numbers start coming down. I'm expecting to see a large flood of stimulus money hit those shovel ready streets, and I think it's going to happen soon. It's worth noting that the Fed is selling Treasuries. It's my understanding that the Fed sells treasuries (and "buys" dollars) when it expects inflation. Our major electricity supplier, Salt River Project, has raised rates by over 8% saying it's because they need upgrades but we are wondering if they are anticipating the passage of cap and trade legislation. So, I'm thinking November. Hope I'm wrong.

I think the interest rates will stay low, but credit will still be tight. I think taxes are surely going up, and that it will be done covertly by taxing businesses and will cause prices to increase.

Trying to find some kind of definition for "Inflationary Depression". And, is there a pill for that?

I'm not making many changes in my business practice. We've always been pretty debt-averse and live below our means and are happy doing that. I'm hanging on to my 6 year old clunker. It's paid off and low miles since I don't commute.

[JohnH]

Recently, **** Morris wrote an article in which he tried to introduce the term "depressflation", but he was mainly hawking a newsletter for someone. I think "stagflation" is an adequate description, or maybe "stagflation on steriods". I remember being assured by my economics professors back in the early 70"s that we knew so much about macroeconomics that the government could smooth out the business cycle by fine-tuning monmetary & fiscal policy and a depression could never happen again. But given how the "fine tuning" process has worked so far, I'd love to have the opportunity to run through this whole process with them again and see if they're still so sure. Whatever the case, we're not out of the woods and I'm not sure even our best & brightest even know if we're halfway through the forest.

[outwest]

An inflation thought..

I've not been quite as concerned about inflation due the federal deficits. Why?

I think that we already had a massive expansion of the money supply due to the free wheeling credit policies. Those have at least temporarily shrunk back and I think the federal deficit is just filling in the hole. To say another way, I think there shrinking financial credit leverage is just being replaced by government money. Swapping dollars if you will.

Evidence? It's interesting to note that "M2", a measure of the total money supply by economists is up only about 1.7% over the last three months on a annual basis. That used to be considered a little low rate of growth to maintain full employment. It was up much more through the election cycle and early this year.


I think the inflation pressure might come when optimism returns and the financial leverage and velocity of money reverse course and expand on top of the federal deficit. A odd thought is that maybe heavier regulation that is being floated would also have a inflation reducing effect to the extent it lowers private leverage and velocity.