CASH FOR CLUNKERS: THE LONG GOODBYE

MOTHER NATURE NETWORK
Aug 24, 2009

The federal Cash for Clunkers program ends tonight, and experts cautiously declare the experiment a success. The program could have blowback. We may see months of auto industry famine after the feast of Cash for Clunkers. According to JOSEPH D. BLACKBURN, James A. Speyer Professor of Production Management at the Vanderbilt Owen Graduate School of Management, we might see what he calls “the bullwhip effect.” He describes it as “false euphoria” — the automakers are pushing up production volumes (GM by 20 percent in the third and fourth quarters) in anticipation of demand that might not materialize.