Every personal finance expert worth his salt has been saying the same thing forever: It is never, ever, ever a financially-sound decision to buy a new car.

It took a recession and a lot of pain for it to happen, but it turns out a lot of people are finally figuring this out. With new car sales down nearly 50% from their peak, some industry observers are predicting that while the market will certainly rebound somewhat, there may also be a long-term shift toward used cars.

The industry is worried, and so are politicians: The whole point of the bailouts and TARP efforts to make car loans available to people with shaky credit is that the U.S. economy is so consumption-driven that we need people going out buying new cars that they absolutely can't afford.
The New York Times reports on one woman who traded in her 2006 car to save on car payments, and now volunteers at a non-profit in exchange for use of a shared car.

And yet if more people make the smart financial decision she did, more jobs will be lost in what economist John Maynard Keynes referred to as the paradox of thrift. Because of how consumer-driven our economy is, lawmakers are left with two choices: Either implement policies that encourage Americans to make prudent financial decisions, or implement policies that compel us to "shop til we drop."

For now Washington is choosing the latter option, and "drop" we certainly will if we continue down this path. But we'll have to wait a few years to see how the current crop of workers is paying for retirement to see the consequences.

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