About a year ago a car salesman told me that a Jaguar is just a Taurus with a cat on the hood.
Close...the S-type was a Lincoln LS with a cat on the hood, and the X-type was a Ford Mondeo (what the Contour would have become if it had been redesigned instead of cancelled) with a cat on the hood.
I never considered either of these things "real" Jaguars, but I imagine they're probably what kept the brand afloat. The "real" ones, the sleek XK coupes and the big XJ sedans, probably don't have the sales volume to keep the brand alive.
there will be corrections now and then, but it has been my observation that uncontrolled credit, used by individuals, buying items they, the individuals didn't deserve or earn, or need... The uncontrolled greed by the average consumer who hasn't invested, nor saved while expecting some union controlled finance expert to be the watchman over the union retirement funds.
In other words the general population is starting to pay the price of their higher than earned or deserved life styles. The bad guys are the greedy common fools trying to blame anybody, but themselves and their favorite target is the Republican scape goat.
Cool heads stay in the market and patiently wait for the Fundamentals to take over, and they will. The crisis is the corrections the average Joe can't absorb because he has decided to live beyond his means, having no financial reserves. For too long, too many had the income of a Ford family, but made payments on Lincolns because they wanted to keep up with the Joneses. ----- Original Message -----
A dear old self-titled GOP candidate claimed he wouldn't hang Michigan out to dry, or something to that effect...so who knows how public funds will flow next.
I don't think the Joneses have bought a Lincoln since about 1978 :P ....for today, it might be more like those who had a Corolla income but via creative financing were allowed to make payments on a LX 470.
I think we can go further into debt without tipping the scales too far. We are 27th in the world. The only country with a higher debt ratio than Japan is Zimbabwe. Subsidizing Toyota and Honda and Nissan to try and beat the Big 3 has taken a toll on Japan. Germany, Canada and NORWAY are all in worse public debt condition than the USA....
I do agree they need to fire them all from the top down and get rid of the UAW if we are going to loan them money. :sick: Same goes for bailing out the financial institutions. Problem is WHO do you put in Charge? Congress does not have a good record of appointments.
Let me see if I understand the case that Wagoner is making for these loans, by using myself in an example of running a business.
So I own a restaurant on Main Street for the last 20 years, and I have a LLC. I pay myself and my employees a good wage and benefits from the business. At times I've had decent food, sometimes not. Mainly I serve high-fat main course American food and those are about the only recipes my cook and I have ever invested in. I've never really renovated the building.
Now a few new foreign restaurants have opened and my business has been going down over the years, and I've had to let a worker or 2 go. And now the city/state has announced that there are some new rules going into effect on fat-content and codes.
So what am I going to do? I've spent all the money I've ever earned, and now I can't see how I'm going to meet the new codes. My friends and the banks don't want to loan me anymore money. So of course the government needs to give me a loan! We've always been on Main Street!"
Is that the case the Big 3 took to Congress? If so I say let them fail, just like the restaurant would close.
When you make mistakes and bad decisions, there are negative consequences. And this just didn't happen to the Big 3 because of 1 recent law, but was the culmination of thousands of bad decisions over many years. Other manufacturers make bad decsions too, but probably not as many, or as severe.
If so I say let them fail, just like the restaurant would close.
Next we will be bailing out McDonald's and Popeye's Chicken. There are neighborhoods in Los Angeles that are not giving permits to build fast food restaurants because the people in the area are TOO FAT. So we need to bail out the fast food places that will be losing money. Don't forget the beef growers that are being forced out due to GHG emissions.
Close. Perhaps simplified a bit too much, but close.
At the time the government changed the rules on food, they also promised you $1 million loan if you need it to help rebuild your kitchen to be able to prepare food that meets the new regs. You go away thinking it will be tough, but you think you may be able to meet the new regs via other funding. The market for high fat foods tanks and your business begins burning through cash faster than anticipated and other avenues of funding dry up. So, you go back to the government and ask for the loan they already promised.
A little different. Doesn't change that previous decisions contributed to the position you find yourself in.
BTW - I don't think the "we've always been on Main Street" thing is a part of Detroit's argument. At least nothing I've read suggests that. It is part of the popular buzz surrounding all of this. Loss of jobs is a big part of their argument.
ext we will be bailing out McDonald's and Popeye's Chicken. There are neighborhoods in Los Angeles that are not giving permits to build fast food restaurants because the people in the area are TOO FAT.
I dunno about Popeyes, but McDonalds might actually be able to teach the domestics about marketing their products, and managing money. I've had some stock in McDonalds for about two years, and even after this recent economic meltdown, it's still gone up about 55% so far just on share price. More like 63% if you factor in dividend payments.
Of course, McDonald's has had their peaks and valleys I'm sure, just as the Detroit Three.
Yes you are correct; but how this promise of a loan ever passed by ... maybe it was an attachment and on P446, and the rpes. were given the revised bill 5 minutes before the vote on Christmas Eve. Maybe it was one of those bills - where in order to get the primary things through, you have to also vote for all the attached pork.
And yes I'm glad you agree that because they are responsible for getting themselves into the position they are now in, and that we are not obligated to help them.
If people feel obligated to save the Big 3 they can do so by voluntarily contributing capital to the companies - raise the stock-price and allow them to issue new stock. The government should not take our money and involuntarily spend it.
There is far more risk that $ will never be paid back, then that they the Big3 will be able to pay it back. It is far easier in the current environment for an auto-company to lose $5B than it is to make $1B.
Loss of jobs is a big part of their argument.
We went thru this in the Defense Industry in 1990, and it was supposed to be disaster, but it really wasn't as it turns out. Since people in this country will still buy X# of vehicles, and the Big 3 factories will still be standing and up for sale, I really don't see where the number of jobs will change much. The UAW may not like it much, if companies buy the factories cheap and hire non-union employees.
So is it the union and the lobbying groups for these automakers, who are just fabricating this gloom-and-doom if the Big 3 are replaced, and some other manufacturers take their place?
Maybe Microsoft would like to buy up the Big 3 plants for pennies on the $, take the Chevy Volt technology and begin making several million vehicles off that? Or GE or IBM could have the money and branch into autos. After all vehicles are getting more and more computerized.
The news media often refers to this as a “Mortgage Crisis”. It is not about mortgages! Only 2% of all existing mortgages are in trouble. Most of those are a result of people thinking about real estate today the same way they thought about technology stocks in the late 1990’s – they can only go up. Folks bought houses they couldn’t afford with easy mortgage terms assuming the houses would continue to appreciate at 10-30% per year.
Investors who got burned in the stock market saw easy pickings in the housing market and bought rentals they couldn’t afford, again with easy mortgage terms assuming they’d sell and profit handsomely later. Both got caught in the housing price correction that started a couple of years ago. Housing prices couldn’t continue to increase forever at 10-30% per year.
That 2% mortgage problem is not what is driving the situation we see today. Today’s problem is a balance sheet crisis. That is the connection to mortgages. Mortgage lenders, investment bankers and brokerage firms figured out how to combine hundreds of mortgages into a single package and sell that package to investors. Rating agencies called that package of mortgages SAFE because the investment was collateralized by the homes and real estate behind the mortgages. Banks held this investment on their books as an ASSET. So far so good.
The banks then used these ASSETS to make loans to other financial institutions and investors, who also called the borrowed money an ASSET and themselves created additional investments, which in turn were used to make even more loan based investments. Each investment was made up not of money but rather of an IOU or loan from a previous security, which itself was based on an IOU from someone else – all the way back to that real estate speculator who just financed an overpriced rental with a new zero down mortgage.
That mortgage may have been leveraged up to 35 times its value in this ponzie-like scheme of “mortgage backed securities” owned by mutual funds, banks, insurance companies, hedge funds, brokerage firms and individual investors all over the world. This extreme leverage was propelled by simple greed. Firms were paid huge fees to create and sell these securities. They were creating money out of thin air and who is not in favor of that? Investors were rewarded by high returns with seemingly low risk that could also be purchased without full payment.
Banks and other financial institutions held these ASSETS on their balance sheets to offset other liabilities, or money they owed. The strength of the balance sheet and hence the company was how much more ASSETS they had compared to liabilities. Once it became obvious that the ASSETS were really someone’s liabilities with neither holding real money just IOUs guaranteed by someone else’s IOUs – the Asset became worthless, the entire balance sheet collapsed and companies were considered insolvent. Bankrupt. It was mortgaged backed dominoes with each security knocking down the one behind it.
That is what happened to Bear Sterns recently, Lehman Brothers this weekend and probably a few more companies in the near future. This is a credit crisis, a contraction of liquidity, a recognition that IOUs can only be stretched so far and financial institution refusing to loan anymore without any real assets or earning power to repay the loan.
This seems to me to be a return to sensibility. But the cost of correcting this over-indulgence in leveraged credit will be costly. Big named financial institutions will disappear. They recklessly leveraged risk. Taking too big a risk made fortunes for a short time then destroyed the risk takers. I don’t feel a bit sorry for them. I am angry for the hurt they are causing the investing public.
So how does this affect us? The news media is addicted to sensationalism and we are in the heat of a Presidential election, with each party willing to spin news to their advantage, so getting an objective story will be difficult.
We have to first realize that this difficulty is about financial services not the economy as a whole. Banks, investment and insurance companies are in trouble – not the rest of the economy. The US economy is strong and still the economic engine that powers the rest of the world. Inflation is low, GDP is growing, unemployment is mild, and productivity is surging ahead. The cost of oil has dropped from $140 a barrel to less than $100, which bodes well for the general economy. Eventually, a restriction of credit to both businesses and individuals will slow the US economy, but not now. Don’t think the US economy is going under because some investment bankers lost their jobs. Personally I think, they should go to jail but that is another matter.
The Federal Government has said it won’t bail out Wall Street this time. They let Lehman Brothers fail and Merrill Lynch be sold. We are witnessing true Financial Darwinism – survival of the fittest. In the long run we’ll probably be better off. I believe in the long-term viability of the American economic system. The financial sector will continue to provide investment banking, insurance and mortgage services, albeit with different, stronger companies who will be more closely regulated.
Where is this from? Not that it's incorrect....it's a simple burst of the housing bubble, and it couldn't come soon enough. Some of us are patiently waiting to come in and pick something up when the bottom hits.
This debt-purchasing entity the Feds have suggested is a pretty significant bailout, like 20 years ago. As before, the financial sector will receive help like nobody else. But when the rescuers can simply print more money as needed...
I had my wife buy 1000 shares of MCD at $14. It was a good buy. She also gave 100 shares each to a couple of her nieces and nephews as graduation gifts. It is a well run company and pays good dividends. I quit messing with the stock market a couple years ago. I could not tell you what it is worth today. Takes too much time. I am retired and waste all my spare time blogging on Edmund's.
If you're retired, I imagine it's in your best interest to keep your money in more conservative investments anyway, and out of the more volatile stuff. I'm only 38 though, and retirement's still a few years off. And with the way this year's been going, probably a few more on top of that!
I wonder if Uncle Sam will kick in a few bucks to bring my 401K back up to what it was. I'm down about $40k in the last few months. Funny how the Feds like to bail out everyone except the people that pay the taxes.
I should have switched most of it to a MM at Fidelity when I saw this coming. As long as the Teamsters and SS checks keep coming in the 401K is not too important.
Indeed! Good idea. Improve the mood of investors, maybe positive feelings will create a better economy. "Animal spirits" and all of that.
Yeah, nice idea, but I doubt it'll ever happen. We're still ripe enough to bleed, through taxes, yet little enough that nobody gives a spittle if we go under. Although I guess one thing the middle/working class has going for it is that if we get knocked down too far, we can go on welfare. :shades:
Some of us are patiently waiting to come in and pick something up when the bottom hits.
I don't know where you live, but I read today that nearly 50% of California real estate transactions in August were foreclosed properties, and reduced the avg. sales price to $301k. As long as you have your finances in order, you should be able to put yourself in a house at a very good price. Seems to me, markets tend to overshoot, meaning they will go up beyond a reasonable amount, reverse, and go down to the point they are undervalued. That's when it's time.
As for GM/Ford loans, I don' know. Hell, we've been bailing everyone else out, what's a few more billion. But with GM/Fords track record, would you lend them your money? I wouldn't, not until they can prove to me they have created a business model that can be profitable.
As long as you have your finances in order, you should be able to put yourself in a house at a very good price.
Only problem is, they're tightening up lending standards in a MAJOR way. So while housing is getting more affordable, they're almost going overkill when it comes to qualifying you. Heck, mo-fo's declined me when I applied for a Shell card, of all things! And the last time I checked, my credit score was something like 759.
Only problem is, they're tightening up lending standards in a MAJOR way. So while housing is getting more affordable, they're almost going overkill when it comes to qualifying you. Heck, mo-fo's declined me when I applied for a Shell card, of all things! And the last time I checked, my credit score was something like 759.
Yeah, credit card companies can be funny that way. Certainly mortgage standards are going to increase, but if you have a good credit score, stable income, and a down payment, it shouldn't be to much of a problem.
I got turned down for a credit card a few years ago. My wife and I both have FICOs over 780. Found out we were declined over a $50 charge off from a hospital from 8 years prior, it showed up on only 1 of the 3 bureaus. We had moved and I never got the bill. A few years later a bill collector called for payment. I told them to provide the original invoice and I'd pay. They never did, so I never paid.
Ha, they don't make any money off people with good scores who pay off their debts on time and in full. You would have been approved if your score was 559. :P
I think they have been scared sufficiently with the rise of Toyota and with that giant nipping at GM's heels and knocking Ford out of the number 2 spot to understand that they must focus on building better products. I also feel it is owed to them since those crazy new CAFE standards are going to hurt all 3 companies.
Shoot, I remember when lending standards were REALLY tight. I had stellar credit but was shot down twice for a lousy Sears credit card in the early '90s.
Back in the day, you couldn't even GET a mortgage unless you had at least 20% or more down and the payment couldn't exceed 28% of your net pay. With the crazy prices of housing, it would be pretty tough to do either these days unless you were either quite wealthy or the ultimate miser. I was lucky I bought my place before all this bubble nonsense occurred. My mortgage/taxes/insurance payment is less than most people's rent!
While this analysis is not incorrect, it does not drive home the point that the 2% mortgage problem is amplified disproportionately. Only 2% of mortgages being bad would be a problem in and of itself, but this small percentage now has effects that reach throughout the financial sector. One bad asset now affects multiple institutions on multiple levels. One bad asset shows up shows up as a bad asset for many (also a liability for many, which the analysis also underplays a bit). There is no liquid here, so there is no real flow. Ultimately the whole thing grinds to a halt.
Again, the analysis is pretty good, but it could have made that point a bit more clear.
The analysis also underplays the risk of this financial problem affecting other sectors of the economy.
The Federal Government has said it won’t bail out Wall Street this time.
Whoops. Now the questions are will the recent injection of liquidity by the worlds' central banks and the plan to remove these bad assets from balance sheets right the ship? And I am sure those who hold those 2% bad original mortgages are scratching their heads wondering what all this means to them.
BTW - the $25 billion sought by the car makers is still looking more and more like a bargain.
Priorities, Why a bail out of the big 3 when naughty little boys on Wall St, are determined to create as much mischief for their competitors and to paint the picture so black that the government will have no choice but to bail them out . Congratulations Wall St, you won. Though none would have failed on their own, you managed to spook Henry the lesser and Ben no D(epression) after my name dammit. Gone is Bear, Fannie, Freddie, Lehman and AIG. The Salem witch trials have met Wall St's inner child and the inner child has proven to be Chucky. The tax payer shall eat your bad paper, Go forth and sin no more. While it had to be done or their continued bad behavior would cause thermo nuclear meltdown, it rather bites.Unfortunately the goal of previous administrations has been to purchase more home than you can afford, not auto ownership. Neither homes nor autos are a growth industry. More's the pity.
...that the hundreds of billions ( :surprise: ) of taxpayer bailout money shelled out to stabilize the market this week have rendered this question moot. Whether or not these expenditures were wise will be debated for years but further lending is out of the question IMO.
It is brief, expeditious. The treasury secretary becomes very powerful, given lots of discretion and leeway. The treasury secretary may act essentially without limitation. Requests $700 billion, and that is just the amount to buy the troubled securities. No limit on administrative or other costs, and such costs are deemed already appropriated. No details or even much mention of taxpayer protections. No direct assistance to homeowners.
The politicos will bicker over some of this, but it is a good beginning. It will move through and be approved quickly I think.
Automakers are flying under the radar right now. Not sure if that helps or hurts their case for funding of the loans they want. On the other hand, if the governments actions in the financial sector have the desired effect, it may become easier for the automakers to secure private funding.
The CAFE standards are applied to all car manufacturers and not just the big 3.
the problem I have with any bailout (and there is really no other way of calling it) is the big e is saying it is to implement more fuel efficient vehicles but when pushed, they don't give any details. This leads me to believe that this money is so they can survive.
With the events of the past couple of days, I think this discussion is pointless anymore. The US taxpayers will soon be investors in GM, Ford and Chrysler. Of course, it is only a loan. :sick:
GM, Ford and Chrysler now...does that mean we all get 25% discounts and $4,000 manufacturer rebates back when buying our Chevy Volt's? I agree, dissolve the dorky UAW with this bailout, too. Enough deduced greed is enough. Start building cool cars like we had in the 60's again. Learn from this and don't just happily borrow with no intent to repay, Big 2 1/2. :sick:
Shades of Mr.Lee Iacocca and Chrylser again. They did repay, too!
Iacocca did have a plan for Chrysler and it worked.
The stipulation of the current Federal loans is to one: upgrade 20 year old or older factories. Two: build 35 MPG combined cars. I don't think the Volt will qualify as it is going to be a big experiment and out of the average buyers price range. I don't think any of the Big 3 have any idea of what they will do.
upgrade old factories and build cars that get at least 35mpg are the two stipulations for spending this cash? Does anyone out there think they'll use this money only for those very important reasons? Excuse me while I laugh out loud while coughing and restraining a hic-burp.
They'll use that money to fly to exotic locations, drink fine coffee's and eat good raspberry donuts. Think of the UAW jobs bank for a minute.
All I have to do is think of the dorks at The Boeing Company eating donuts and drinking coffee and making the big boy decisions. The Big 2 and a half will squander this money as they see fit and then raise their prices and look for another handout from us.
In theory, gagrice has it right. this is what the big 3 is saying what the money is for. When you push them for more details, you get the "we are still working out the details". a few analysts feel this loan is to provide cash flow so they can survive until the savings from the UAW contracts kick in somewhere around 2010 or 2011.
I agree with you iluv. i have no faith in the big 3. They have not shown they can run a business properly. The fact that their best cars are being sold overseas instead of here inteh US tells me how much they care about this market. They took us for granted. Unfortunately, I think the decision has already been made. I think Congress is getting an earful from the taxpayers abot all these bailouts. Folks have had enough of this.
The coverage of this issue leaves a lot to be desired. I have to wonder who is doing any actual research at most media outlets. My guess is they are simply listening to all the politicing and lobbying, and they are not looking at what is behind it all. After a quick Google search and about 10 minutes of digging I found the source of all this mess. Should have gone right to that at first.
It is part of the huge omnibus energy bill signed into law in Dec. 2007. If you are so inclined, here is the part of the legislation at play.
The Energy Independence and Security Act of 2007 The link goes to the pertinent subtitle - Improved Vehicle Technology. Look at Sec. 136. Advanced Technology Vehicles Manufacturing Incentive Program.
Essentially this sets up a loan program to assist auto manufacturers in meeting the new emissions and efficiency requirements set out elsewhere in the law, that's the "advanced technology." The loan program is managed by the Department of Energy. The term "Secretary" means the secretary of the DOE. The law outlines eligibility requirements and governs how the funds are to be used and limits the loan to cover 30% of the cost of an eligible project. The Secretary is given authority to establish many details of the program, such as the application process, additional eligibility requirements, and final decision on who actually gets the loans. The loans are subject to the availability of funds.
So the loan program has been set up. Now the manufacturers are applying for the loans. The DOE is left to decide which applications will be approved. Congress still must appropriate funds.
Interesting note - as I read it, there is no requirement, per se, that the loans may only be given to upgrade or retool manufacturing facilities that are at least 20 years old. When manufacturers with existing facilities seek these loans to retool those existing facilities, the law does direct the Secretary to give preference to the manufacturers with the oldest facilities or with facilities that are at least 20 years old. A clear, strong preference to Detroit, but by no means does this shut out a manufacturer seeking these loans to retool a newer facility or even to build a new facility.
The money may be used for engineering integration activities performed in the United States.
The loans are available to component suppliers.
There is nothing in the law specifically addressing the business practices of any applicant other than some labor issues covered by other law.
There is one killer requirement though. Applicants must show that they are "financially viable without the receipt of additional Federal funding associated with the proposed project." It just seems from what I have read in the press that the Big 2.5 are arguing they need these loans to remain "financially viable," and that if they don't get them all hell will break loose. The only reason that the Big 2.5 would lobby Congress is to seek some changes to this law. My guess is the changes they want is a relaxation of eligibility requirements and changes in how the money can be used. If all they want is approval of the loans, their efforts should be directed at the Department of Energy. Let the DOE request the appropriations which would most likely be rubber stamped.
Regardless of how I may feel about how the Detroit manufacturers have run their businesses, if they meet the requirements for approval, their application should be approved. Not that I favor the loans, but the program already exists.
Last note - I am puzzled by one thing. This law also establishes some other loans programs and some grant programs. The grant programs also address retooling and such and developing electric and hybrid technology and diesel technology. We have heard nothing about any manufacturers seeking these grants. Grants don't have to be repaid. Just made me scratch my head.
Grants don't have to be repaid. Just made me scratch my head.
That is true. I think the Feds are going to give a lot of grants to alternative energy programs. The key is having a sponsor in Congress. It would help to have your lobbyist spend some time with one of the powerful and mighty.
It just seemed odd that we hear about all the effort the auto makers are putting into getting loans, and nothing about efforts to get these grants. It just seems they would be very interested in money they wouldn't have to repay. It wasn't that grants don't have to be repaid that made me scratch my head, just where the manufacturers were focusing their efforts. The grants are probably for smaller amounts of money.
Seems a grant approval would be a sure thing if the request mentioned energy independence, homeland security, and reducing global warming.
Seems a grant approval would be a sure thing if the request mentioned energy independence, homeland security, and reducing global warming.
I am not sure how the whole grant thing works. I would imagine they are kind of limited in the $$millions. That would not do GM or Ford much good. And they are usually very specific. The Big 3 got a couple billion back in 92 for the electric vehicle research. I think they are in so deep without any idea of how to get out of their mess. They could spend billions and not be any further toward beating the competition on small high mileage, 35 MPG + than they are today.
Geez, they are bailing out car loans, home loans, they are talking about bailing out bad credit card loans, what AREN'T they going to bail out? I will take a bailout, since they seem to be going around!
This is going to cost generations and generations of future Americans hundreds of billions in interest payments ALONE, if they go ahead with it. :sick:
PS looks like the loans being discussed here are due to be approved by the end of the week:
But it will be well into next year before the automakers see any money, and before then the Energy Department must certify that the automakers receiving loans would remain solvent without the money. There is some doubt they can pass that standard, apparently.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
nippononly: Geez, they are bailing out car loans, home loans, they are talking about bailing out bad credit card loans, what AREN'T they going to bail out? I will take a bailout, since they seem to be going around!
I agree; this is getting ridiculous. These loans should never have been made in the first place, and what we are witnessing is a necessary correction.
The auto makers liked the lax standards because they could keep the assembly lines running by allowing customers who should have bought used to buy new.
Denial isn't limited to the auto sector. New Jersey Governor Corzine said that "falling housing prices are the problem."
Uh, no, falling housing prices are the SOLUTION. Housing prices artificially inflated by a credit bubble and "real estate mania" are the PROBLEM. We don't need more exotic loans to allow people to "buy" overpriced houses (never mind that these people had very little chance of actually owning their homes by paying off the loan). We need prices to fall to reflect the actual purchasing power of potential buyers.
nippononly: But it will be well into next year before the automakers see any money, and before then the Energy Department must certify that the automakers receiving loans would remain solvent without the money. There is some doubt they can pass that standard, apparently.
I'll bet you that the Energy Department will find a way to make sure that they can pass that standard.
In 1980, Congress at least set strict standards that Chrysler had to meet before it agreed to the loan guarantees. Iacocca had to prove that he had cleaned out the management of the "old Chrysler," and present a plausible turnaround plan, which was based on platform consolidation (basing as much product as possible on the K-Car platform). Iacocca cut his salary to a symbolic $1 per year, and the UAW was required to make wage and benefit concessions.
I see very little evidence of this today. For example, I'm not thrilled with my tax dollars being used to shore up a GM brand structure that has been obsolete for at least 25 years. (Pontiac puts a new grille and side vents on the Chevrolet Aveo, calls it a G3, and says that these changes make it "sporty." How stupid do they think that we are?! Pontiac is an irrelevant brand in today's market. It exists to keep the dealers in business, which points to a "root cause" problem - state franchise laws. But since dealers will lobby their state and federal legislators, this law will never be changed. Pontiac needs to be put out of its misery.)
Nor do I see much evidence that GM is changing its corporate culture. At least Ford brought in Alan Mullaly to shake up the corporate culture (another one of the roots of these companies' problems).
This is going to cost generations and generations of future Americans hundreds of billions in interest payments ALONE,
I read CBS Marketwatch a lot and last week one of the analysts had a column that the U.S. government obligations counting SS, Medicare, pension guarantees, deficits, treasury bills, loan guarantees is about 60 TRILLION dollars in the next 30 years. The problems are far worse than anything you're imagining if we keep the same policies.
We are leading an unsustainable lifestyle as a society!
The Dems want more entitlements. Universal Health Care may be the nail that closes our coffin for good. We cannot afford to give everyone that needs special cancer treatment or a kidney transplant. Every society that has tried to do that is going broke. UK, Canada, Germany, Japan, Sweden, Norway the list goes on. They are going deeper in debt than the USA. Someone someday will have to pay the bill. It will get where most of what we take in from the few that are working will just cover the interest.
This whole thing with bailing the automakers out is getting out of hand. They want a lot more and have no clue as to what they will accomplish. At least Chrysler has some EVs they plan to sell. I would say they are closest to pulling out of the Big 3.
That's a good comparison. Letting these politicos and the corporate entities who control them try to "solve" this mess will indeed be akin to entrusting an arsonist to put out his own fires. Inmates running the asylum.
I think both parties will have to re-think their economic plan with this massive bailout. No way we can give tax cuts nor can we lessen regulations since we now know these businesses cannot be trusted. Isn't greed one of the seven deadly sins? If it were me, i would drop out of the presidential race. Who in their right mind would want to deal with this mess?
Who in their right mind would want to deal with this mess?
That is why I always considered myself smarter than the smartest politician. I would not get in the rat race for any amount of money. I like my privacy and freedom too much for that glass house existence.
I do think we can afford to reward automakers that come up with GOOD ways to build economical cars. Handing the Big 3 an blank check is just as bad as giving one to the financial institutions.
The problem with the big three is they closed alot of factories in the USA and sent the work to mexico and canada if they want a loan they should of kept the factories here open to show that they are trying to keep jobs here instead they laid off workers here then cried help but the workers in the other countries kept working the big three are liars and to put it in right way they scamed the people in this country into beleaveing a lie to get money they put them selfs in the this position to get money for thier eror in having cars to get better fuel milage Chrysler had hybreds ready to make but decided to make big cars Ford and GM did to just like in the 70s when they got in that mess sure they will pay it back but they should kept the USA plants going but instead they closed them and then went to the goverment and used these jobs like ramsome for the loan are they will not have jobs for USA workers but I find it odd that the canada plants and mexican plants are up and runing at 3 shifts in some plants and 2 shifts at other plants that is the work that they sent out of the country they say that they are USA companies but they do not care about this country so I SAY TO THEM GO GET YOUR LOAN FROM CANADA AND MEXICO
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Close...the S-type was a Lincoln LS with a cat on the hood, and the X-type was a Ford Mondeo (what the Contour would have become if it had been redesigned instead of cancelled) with a cat on the hood.
I never considered either of these things "real" Jaguars, but I imagine they're probably what kept the brand afloat. The "real" ones, the sleek XK coupes and the big XJ sedans, probably don't have the sales volume to keep the brand alive.
Sure there will. Dollar bills are like Doritos -- they just make more of them.
and burden ANOTHER generation of Americans with more debt than they can repay in their lifetimes...
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Let them eat gold. It'll slide down easily with a little ATF.
And, while you're at it, make sure it's synthetic, since it's slipperier than dino. Too expensive, you say? Naw, just charge it!
In other words the general population is starting to pay the price of their higher than earned or deserved life styles. The bad guys are the greedy common fools trying to blame anybody, but themselves and their favorite target is the Republican scape goat.
Cool heads stay in the market and patiently wait for the Fundamentals to take over, and they will. The crisis is the corrections the average Joe can't absorb because he has decided to live beyond his means, having no financial reserves. For too long, too many had the income of a Ford family, but made payments on Lincolns because they wanted to keep up with the Joneses.
----- Original Message -----
A dear old self-titled GOP candidate claimed he wouldn't hang Michigan out to dry, or something to that effect...so who knows how public funds will flow next.
I don't think the Joneses have bought a Lincoln since about 1978 :P ....for today, it might be more like those who had a Corolla income but via creative financing were allowed to make payments on a LX 470.
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
I do agree they need to fire them all from the top down and get rid of the UAW if we are going to loan them money. :sick: Same goes for bailing out the financial institutions. Problem is WHO do you put in Charge? Congress does not have a good record of appointments.
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.h- tml
So I own a restaurant on Main Street for the last 20 years, and I have a LLC. I pay myself and my employees a good wage and benefits from the business. At times I've had decent food, sometimes not. Mainly I serve high-fat main course American food and those are about the only recipes my cook and I have ever invested in. I've never really renovated the building.
Now a few new foreign restaurants have opened and my business has been going down over the years, and I've had to let a worker or 2 go. And now the city/state has announced that there are some new rules going into effect on fat-content and codes.
So what am I going to do? I've spent all the money I've ever earned, and now I can't see how I'm going to meet the new codes. My friends and the banks don't want to loan me anymore money. So of course the government needs to give me a loan! We've always been on Main Street!"
Is that the case the Big 3 took to Congress? If so I say let them fail, just like the restaurant would close.
When you make mistakes and bad decisions, there are negative consequences. And this just didn't happen to the Big 3 because of 1 recent law, but was the culmination of thousands of bad decisions over many years. Other manufacturers make bad decsions too, but probably not as many, or as severe.
Next we will be bailing out McDonald's and Popeye's Chicken. There are neighborhoods in Los Angeles that are not giving permits to build fast food restaurants because the people in the area are TOO FAT. So we need to bail out the fast food places that will be losing money. Don't forget the beef growers that are being forced out due to GHG emissions.
At the time the government changed the rules on food, they also promised you $1 million loan if you need it to help rebuild your kitchen to be able to prepare food that meets the new regs. You go away thinking it will be tough, but you think you may be able to meet the new regs via other funding. The market for high fat foods tanks and your business begins burning through cash faster than anticipated and other avenues of funding dry up. So, you go back to the government and ask for the loan they already promised.
A little different. Doesn't change that previous decisions contributed to the position you find yourself in.
BTW - I don't think the "we've always been on Main Street" thing is a part of Detroit's argument. At least nothing I've read suggests that. It is part of the popular buzz surrounding all of this. Loss of jobs is a big part of their argument.
I dunno about Popeyes, but McDonalds might actually be able to teach the domestics about marketing their products, and managing money. I've had some stock in McDonalds for about two years, and even after this recent economic meltdown, it's still gone up about 55% so far just on share price. More like 63% if you factor in dividend payments.
Of course, McDonald's has had their peaks and valleys I'm sure, just as the Detroit Three.
And yes I'm glad you agree that because they are responsible for getting themselves into the position they are now in, and that we are not obligated to help them.
If people feel obligated to save the Big 3 they can do so by voluntarily contributing capital to the companies - raise the stock-price and allow them to issue new stock. The government should not take our money and involuntarily spend it.
There is far more risk that $ will never be paid back, then that they the Big3 will be able to pay it back. It is far easier in the current environment for an auto-company to lose $5B than it is to make $1B.
Loss of jobs is a big part of their argument.
We went thru this in the Defense Industry in 1990, and it was supposed to be disaster, but it really wasn't as it turns out. Since people in this country will still buy X# of vehicles, and the Big 3 factories will still be standing and up for sale, I really don't see where the number of jobs will change much. The UAW may not like it much, if companies buy the factories cheap and hire non-union employees.
So is it the union and the lobbying groups for these automakers, who are just fabricating this gloom-and-doom if the Big 3 are replaced, and some other manufacturers take their place?
Maybe Microsoft would like to buy up the Big 3 plants for pennies on the $, take the Chevy Volt technology and begin making several million vehicles off that? Or GE or IBM could have the money and branch into autos. After all vehicles are getting more and more computerized.
Investors who got burned in the stock market saw easy pickings in the housing market and bought rentals they couldn’t afford, again with easy mortgage terms assuming they’d sell and profit handsomely later. Both got caught in the housing price correction that started a couple of years ago. Housing prices couldn’t continue to increase forever at 10-30% per year.
That 2% mortgage problem is not what is driving the situation we see today. Today’s problem is a balance sheet crisis. That is the connection to mortgages. Mortgage lenders, investment bankers and brokerage firms figured out how to combine hundreds of mortgages into a single package and sell that package to investors. Rating agencies called that package of mortgages SAFE because the investment was collateralized by the homes and real estate behind the mortgages. Banks held this investment on their books as an ASSET. So far so good.
The banks then used these ASSETS to make loans to other financial institutions and investors, who also called the borrowed money an ASSET and themselves created additional investments, which in turn were used to make even more loan based investments. Each investment was made up not of money but rather of an IOU or loan from a previous security, which itself was based on an IOU from someone else – all the way back to that real estate speculator who just financed an overpriced rental with a new zero down mortgage.
That mortgage may have been leveraged up to 35 times its value in this ponzie-like scheme of “mortgage backed securities” owned by mutual funds, banks, insurance companies, hedge funds, brokerage firms and individual investors all over the world. This extreme leverage was propelled by simple greed. Firms were paid huge fees to create and sell these securities. They were creating money out of thin air and who is not in favor of that? Investors were rewarded by high returns with seemingly low risk that could also be purchased without full payment.
Banks and other financial institutions held these ASSETS on their balance sheets to offset other liabilities, or money they owed. The strength of the balance sheet and hence the company was how much more ASSETS they had compared to liabilities. Once it became obvious that the ASSETS were really someone’s liabilities with neither holding real money just IOUs guaranteed by someone else’s IOUs – the Asset became worthless, the entire balance sheet collapsed and companies were considered insolvent. Bankrupt. It was mortgaged backed dominoes with each security knocking down the one behind it.
That is what happened to Bear Sterns recently, Lehman Brothers this weekend and probably a few more companies in the near future. This is a credit crisis, a contraction of liquidity, a recognition that IOUs can only be stretched so far and financial institution refusing to loan anymore without any real assets or earning power to repay the loan.
This seems to me to be a return to sensibility. But the cost of correcting this over-indulgence in leveraged credit will be costly. Big named financial institutions will disappear. They recklessly leveraged risk. Taking too big a risk made fortunes for a short time then destroyed the risk takers. I don’t feel a bit sorry for them. I am angry for the hurt they are causing the investing public.
So how does this affect us? The news media is addicted to sensationalism and we are in the heat of a Presidential election, with each party willing to spin news to their advantage, so getting an objective story will be difficult.
We have to first realize that this difficulty is about financial services not the economy as a whole. Banks, investment and insurance companies are in trouble – not the rest of the economy. The US economy is strong and still the economic engine that powers the rest of the world. Inflation is low, GDP is growing, unemployment is mild, and productivity is surging ahead. The cost of oil has dropped from $140 a barrel to less than $100, which bodes well for the general economy. Eventually, a restriction of credit to both businesses and individuals will slow the US economy, but not now. Don’t think the US economy is going under because some investment bankers lost their jobs. Personally I think, they should go to jail but that is another matter.
The Federal Government has said it won’t bail out Wall Street this time. They let Lehman Brothers fail and Merrill Lynch be sold. We are witnessing true Financial Darwinism – survival of the fittest. In the long run we’ll probably be better off. I believe in the long-term viability of the American economic system. The financial sector will continue to provide investment banking, insurance and mortgage services, albeit with different, stronger companies who will be more closely regulated.
This debt-purchasing entity the Feds have suggested is a pretty significant bailout, like 20 years ago. As before, the financial sector will receive help like nobody else. But when the rescuers can simply print more money as needed...
If you're retired, I imagine it's in your best interest to keep your money in more conservative investments anyway, and out of the more volatile stuff. I'm only 38 though, and retirement's still a few years off. And with the way this year's been going, probably a few more on top of that!
I should have switched most of it to a MM at Fidelity when I saw this coming. As long as the Teamsters and SS checks keep coming in the 401K is not too important.
Indeed! Good idea. Improve the mood of investors, maybe positive feelings will create a better economy. "Animal spirits" and all of that.
And don't make it another foolish "stimulus" package - that served no use, although it did get me $600 closer to paying off my car.
Yeah, nice idea, but I doubt it'll ever happen. We're still ripe enough to bleed, through taxes, yet little enough that nobody gives a spittle if we go under. Although I guess one thing the middle/working class has going for it is that if we get knocked down too far, we can go on welfare. :shades:
I don't know where you live, but I read today that nearly 50% of California real estate transactions in August were foreclosed properties, and reduced the avg. sales price to $301k. As long as you have your finances in order, you should be able to put yourself in a house at a very good price. Seems to me, markets tend to overshoot, meaning they will go up beyond a reasonable amount, reverse, and go down to the point they are undervalued. That's when it's time.
As for GM/Ford loans, I don' know. Hell, we've been bailing everyone else out, what's a few more billion. But with GM/Fords track record, would you lend them your money? I wouldn't, not until they can prove to me they have created a business model that can be profitable.
Only problem is, they're tightening up lending standards in a MAJOR way. So while housing is getting more affordable, they're almost going overkill when it comes to qualifying you. Heck, mo-fo's declined me when I applied for a Shell card, of all things! And the last time I checked, my credit score was something like 759.
Yeah, credit card companies can be funny that way. Certainly mortgage standards are going to increase, but if you have a good credit score, stable income, and a down payment, it shouldn't be to much of a problem.
I got turned down for a credit card a few years ago. My wife and I both have FICOs over 780. Found out we were declined over a $50 charge off from a hospital from 8 years prior, it showed up on only 1 of the 3 bureaus. We had moved and I never got the bill. A few years later a bill collector called for payment. I told them to provide the original invoice and I'd pay. They never did, so I never paid.
Again, the analysis is pretty good, but it could have made that point a bit more clear.
The analysis also underplays the risk of this financial problem affecting other sectors of the economy.
The Federal Government has said it won’t bail out Wall Street this time.
Whoops. Now the questions are will the recent injection of liquidity by the worlds' central banks and the plan to remove these bad assets from balance sheets right the ship? And I am sure those who hold those 2% bad original mortgages are scratching their heads wondering what all this means to them.
BTW - the $25 billion sought by the car makers is still looking more and more like a bargain.
Neither homes nor autos are a growth industry.
More's the pity.
2001 BMW 330ci/E46, 2008 BMW 335i conv/E93
It is brief, expeditious.
The treasury secretary becomes very powerful, given lots of discretion and leeway. The treasury secretary may act essentially without limitation.
Requests $700 billion, and that is just the amount to buy the troubled securities. No limit on administrative or other costs, and such costs are deemed already appropriated.
No details or even much mention of taxpayer protections.
No direct assistance to homeowners.
The politicos will bicker over some of this, but it is a good beginning. It will move through and be approved quickly I think.
More closely related to topic.
GM draws $3.5 billion on a line of credit
Automakers are flying under the radar right now. Not sure if that helps or hurts their case for funding of the loans they want. On the other hand, if the governments actions in the financial sector have the desired effect, it may become easier for the automakers to secure private funding.
the problem I have with any bailout (and there is really no other way of calling it) is the big e is saying it is to implement more fuel efficient vehicles but when pushed, they don't give any details. This leads me to believe that this money is so they can survive.
With the events of the past couple of days, I think this discussion is pointless anymore. The US taxpayers will soon be investors in GM, Ford and Chrysler. Of course, it is only a loan. :sick:
Shades of Mr.Lee Iacocca and Chrylser again. They did repay, too!
2021 Kia Soul LX 6-speed stick
The stipulation of the current Federal loans is to one: upgrade 20 year old or older factories. Two: build 35 MPG combined cars. I don't think the Volt will qualify as it is going to be a big experiment and out of the average buyers price range. I don't think any of the Big 3 have any idea of what they will do.
They'll use that money to fly to exotic locations, drink fine coffee's and eat good raspberry donuts. Think of the UAW jobs bank for a minute.
All I have to do is think of the dorks at The Boeing Company eating donuts and drinking coffee and making the big boy decisions. The Big 2 and a half will squander this money as they see fit and then raise their prices and look for another handout from us.
2021 Kia Soul LX 6-speed stick
I agree with you iluv. i have no faith in the big 3. They have not shown they can run a business properly. The fact that their best cars are being sold overseas instead of here inteh US tells me how much they care about this market. They took us for granted. Unfortunately, I think the decision has already been made. I think Congress is getting an earful from the taxpayers abot all these bailouts. Folks have had enough of this.
It is part of the huge omnibus energy bill signed into law in Dec. 2007. If you are so inclined, here is the part of the legislation at play.
The Energy Independence and Security Act of 2007 The link goes to the pertinent subtitle - Improved Vehicle Technology. Look at Sec. 136. Advanced Technology Vehicles Manufacturing Incentive Program.
Essentially this sets up a loan program to assist auto manufacturers in meeting the new emissions and efficiency requirements set out elsewhere in the law, that's the "advanced technology." The loan program is managed by the Department of Energy. The term "Secretary" means the secretary of the DOE. The law outlines eligibility requirements and governs how the funds are to be used and limits the loan to cover 30% of the cost of an eligible project. The Secretary is given authority to establish many details of the program, such as the application process, additional eligibility requirements, and final decision on who actually gets the loans. The loans are subject to the availability of funds.
So the loan program has been set up. Now the manufacturers are applying for the loans. The DOE is left to decide which applications will be approved. Congress still must appropriate funds.
Interesting note - as I read it, there is no requirement, per se, that the loans may only be given to upgrade or retool manufacturing facilities that are at least 20 years old. When manufacturers with existing facilities seek these loans to retool those existing facilities, the law does direct the Secretary to give preference to the manufacturers with the oldest facilities or with facilities that are at least 20 years old. A clear, strong preference to Detroit, but by no means does this shut out a manufacturer seeking these loans to retool a newer facility or even to build a new facility.
The money may be used for engineering integration activities performed in the United States.
The loans are available to component suppliers.
There is nothing in the law specifically addressing the business practices of any applicant other than some labor issues covered by other law.
There is one killer requirement though. Applicants must show that they are "financially viable without the receipt of additional Federal funding associated with the proposed project." It just seems from what I have read in the press that the Big 2.5 are arguing they need these loans to remain "financially viable," and that if they don't get them all hell will break loose. The only reason that the Big 2.5 would lobby Congress is to seek some changes to this law. My guess is the changes they want is a relaxation of eligibility requirements and changes in how the money can be used. If all they want is approval of the loans, their efforts should be directed at the Department of Energy. Let the DOE request the appropriations which would most likely be rubber stamped.
Regardless of how I may feel about how the Detroit manufacturers have run their businesses, if they meet the requirements for approval, their application should be approved. Not that I favor the loans, but the program already exists.
Last note - I am puzzled by one thing. This law also establishes some other loans programs and some grant programs. The grant programs also address retooling and such and developing electric and hybrid technology and diesel technology. We have heard nothing about any manufacturers seeking these grants. Grants don't have to be repaid. Just made me scratch my head.
That is true. I think the Feds are going to give a lot of grants to alternative energy programs. The key is having a sponsor in Congress. It would help to have your lobbyist spend some time with one of the powerful and mighty.
Seems a grant approval would be a sure thing if the request mentioned energy independence, homeland security, and reducing global warming.
I am not sure how the whole grant thing works. I would imagine they are kind of limited in the $$millions. That would not do GM or Ford much good. And they are usually very specific. The Big 3 got a couple billion back in 92 for the electric vehicle research. I think they are in so deep without any idea of how to get out of their mess. They could spend billions and not be any further toward beating the competition on small high mileage, 35 MPG + than they are today.
Will Uncle Sam take on bad car loans?
http://www.autonews.com/article/20080923/ANA02/809239984/1142&Profile=1142
Geez, they are bailing out car loans, home loans, they are talking about bailing out bad credit card loans, what AREN'T they going to bail out? I will take a bailout, since they seem to be going around!
This is going to cost generations and generations of future Americans hundreds of billions in interest payments ALONE, if they go ahead with it. :sick:
PS looks like the loans being discussed here are due to be approved by the end of the week:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080923/AUTO01/809230363/1148-
But it will be well into next year before the automakers see any money, and before then the Energy Department must certify that the automakers receiving loans would remain solvent without the money. There is some doubt they can pass that standard, apparently.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
I agree; this is getting ridiculous. These loans should never have been made in the first place, and what we are witnessing is a necessary correction.
The auto makers liked the lax standards because they could keep the assembly lines running by allowing customers who should have bought used to buy new.
Denial isn't limited to the auto sector. New Jersey Governor Corzine said that "falling housing prices are the problem."
Uh, no, falling housing prices are the SOLUTION. Housing prices artificially inflated by a credit bubble and "real estate mania" are the PROBLEM. We don't need more exotic loans to allow people to "buy" overpriced houses (never mind that these people had very little chance of actually owning their homes by paying off the loan). We need prices to fall to reflect the actual purchasing power of potential buyers.
nippononly: But it will be well into next year before the automakers see any money, and before then the Energy Department must certify that the automakers receiving loans would remain solvent without the money. There is some doubt they can pass that standard, apparently.
I'll bet you that the Energy Department will find a way to make sure that they can pass that standard.
In 1980, Congress at least set strict standards that Chrysler had to meet before it agreed to the loan guarantees. Iacocca had to prove that he had cleaned out the management of the "old Chrysler," and present a plausible turnaround plan, which was based on platform consolidation (basing as much product as possible on the K-Car platform). Iacocca cut his salary to a symbolic $1 per year, and the UAW was required to make wage and benefit concessions.
I see very little evidence of this today. For example, I'm not thrilled with my tax dollars being used to shore up a GM brand structure that has been obsolete for at least 25 years. (Pontiac puts a new grille and side vents on the Chevrolet Aveo, calls it a G3, and says that these changes make it "sporty." How stupid do they think that we are?! Pontiac is an irrelevant brand in today's market. It exists to keep the dealers in business, which points to a "root cause" problem - state franchise laws. But since dealers will lobby their state and federal legislators, this law will never be changed. Pontiac needs to be put out of its misery.)
Nor do I see much evidence that GM is changing its corporate culture. At least Ford brought in Alan Mullaly to shake up the corporate culture (another one of the roots of these companies' problems).
I read CBS Marketwatch a lot and last week one of the analysts had a column that the U.S. government obligations counting SS, Medicare, pension guarantees, deficits, treasury bills, loan guarantees is about 60 TRILLION dollars in the next 30 years. The problems are far worse than anything you're imagining if we keep the same policies.
We are leading an unsustainable lifestyle as a society!
This whole thing with bailing the automakers out is getting out of hand. They want a lot more and have no clue as to what they will accomplish. At least Chrysler has some EVs they plan to sell. I would say they are closest to pulling out of the Big 3.
That is why I always considered myself smarter than the smartest politician. I would not get in the rat race for any amount of money. I like my privacy and freedom too much for that glass house existence.
I do think we can afford to reward automakers that come up with GOOD ways to build economical cars. Handing the Big 3 an blank check is just as bad as giving one to the financial institutions.