Clunker update

Looks like the Senate will go along with providing another $2 billion for the trade-in program. CA Sen. Dianne Feinstein says that she and Sen. Susan Collins have been promised by the Senate leadership that if the program were extended, tighter mileage rules would be considered. One of the gripes has been that participants in the program aren't required to purchase cars with all that much better mileage than the ones they're turning in. (NYT) By the way, there are doubts about whether July's pickup in auto sales, largely the result of the clunkers program, can be sustained. From the WSJ:

Good news shouldn't be ignored, but it carries the risk of false expectations. As John Murphy of Banc of America Securities-Merrill Lynch says, "The real risk in this trough is that the industry looks too far through it", ignoring near-term challenges. Weak employment and consumption trends remain, as does continuing structural overcapacity in autos. The more Washington, D.C., pays Americans to buy cars they otherwise might not need, the bigger the risk of Detroit putting off further restructuring.