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Mercury fallout from the Cash-for-Clunkers program.

Events have consequences.

Let’s walk through the mercury problem (H/T: Instapundit).

  • Automakers used mercury as a component for various auto systems until 2004.
  • They stopped because mercury is toxic, and it gets into stuff that we eat (the actual level of risk is in fact not relevant for this discussion).
  • People get very touchy about toxic elements being thrown out with the rest of the garbage, so there’s an industry designed around collecting the mercury at the end of a car’s life.  The big (only?) one of these is ELV Solutions.
  • Here’s a list of the car companies that work with ELV Solutions.  Notice which car company isn’t on the list?
  • That’s right: GM isn’t on the list.  They exited the program at the beginning of August.
  • Autoblog Green calls the reason why “convoluted,” but it’s not.  There are now two GMs.  Good GM is the one with good assets and a chance of actually making money; Bad GM is the one with all the garbage assets, bad debts, and onerous obligations.
  • Good GM does not make cars using mercury, and technically never has (its predecessor Old GM did, not it), so it sees no particular reason why it should fund mercury recovery.
  • Bad GM… doesn’t make anything, or indeed do much of anything except sit there and slowly decompose; but Bad GM is the one that ELV Solutions needs to talk to about funding mercury recovery.
  • No, Bad GM doesn’t have any money.  Money is a good asset, which is why Bad GM doesn’t have any of it.
  • No, ELV Solutions is not able to break even on mercury reclamation.  If you could do that, ELV Solutions wouldn’t exist: the car companies would have done the job themselves and directly.
  • So now we come to the Cash-for-Clunkers program, which has suddenly put a large number of pre-2004 cars up for immediate destruction (and mercury reclamation).  A lot of those cars were built by the Old GM.
  • ELV Solutions is thus stuck for reclaiming the mercury of a major car company’s old vehicles, without getting funded by that car company.
  • And, given that there’s no GM ‘flavor’ of mercury, or GM-only junkyards, ELV Solutions is really stuck for reclaiming the mercury a major car company’s old vehicles, without getting funded by that car company.

One last thing, and please note this carefully: none of this is a bug.  The intent all along was to shunt money-hemorrhaging expenses like mercury reclamation to a zombie company that could go belly-up without also killing General Motors.  So don’t expect the administration to do anything about this.  Although I suspect that the hand of the government that was establishing the GM reorganization [did not know] what the hand that was putting together Cash-for-Clunkers was doing… which may mean that (depending on how this all turns out) a seafood diet may be contraindicated again for a couple of years.

Moe Lane

Crossposted to Moe Lane.

[Updated for clarity.]

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