No help or wrong help for Detroit?

Open with an insult, always grand.

What was it about:
The media mis-reports things all the time and I do care about it.
That you did not understand?

There were no " shinanigans on the Chrysler loan discusion ". I'll
explain it to you again.

Someone says that if the government helps GM and/or Ford, Chrysler should
get the same out of fairness. I respond that chrysler already had theirs.
Chrsyler fans get all upset because I used the term 'taxpayer funded'.
They loose all track of the point and the thread because they didn't like
that term in classic usenet fashion. What do you call an arguement that
erupts out of nothing more than that? I call it semantic.

Daniel can write post after post after post where he purposely uses just
as or more inaccurate commonly believed items about Ford for the sole
purpose of bashing Ford, but I make a mistake with Chrysler and that
can't stand. Even when it didn't have a damn thing to do with the point
I was making. The difference between 'taxpayer funded' and 'government
loan guarantee' (which is really securing the loans with taxpayer funds)
was irrelvant for the point I was making.

If you had half a clue, you would realize there is no parallel here
between usenet and the media. But hey, whatever floats your boat.
Obviously you're just upset about something in the past and see this
trivial error in terms as your chance to strike back. Go back to my first
post and replace 'taxpayer funded bailout' with bailout secured with a
taxpayer backed loan guarantee' and notice how my point doesn't change
one bit. Obviously not equal to the reporting on port situation one bit.

But I am glad to know that even the tinest mistake on my part is such a
big deal.

 

In general, this hasn't been true for a long time. If people
consistently pay for their cars, lenders are willing to loan them far
more than they (the lenders) could recover if repo were necessary.
More than loan value, more than wholesale, more than retail, more than
retail plus sales tax. They'll even do it for people who only pay
more or less on time.

Sure, the owner can't sell the car outright, but because of the system
above, if he's paid regularly, can trade it, even if he's buried. The
lenders will help him get buried more.

The problem comes in when there's an involuntary outright sale, which
is essentially the situation if the car is totalled. The insurance
company is buying the car for its actual market value, which may be a
lot less than what's owed. In that case, the lender might accept an
exchange for a lien on a similar car which can be purchased for the
insurance proceeds, the buyer retaining an amount owed higher than the
car's value. OTOH, some insurance companies offer (for an additional
premium) coverage that will pay the loan amount if greater than the
value of the car. Where there's a demand, someone will step in and
make money off it.

 

I know several people who have rolled several negative equities along
into the next car. Before long, they have a $25,000 loans on $18,000
cars, or $40,000 loans on $27,000 cars! <G>

I know some of these idiots personally. I also hear this stuff over
and over on radio consumer and finance shows, so it's fairly safe to
say that this stuff happens all the time.

 

I think what you're saying may be true for the situation you have stated
(i.e. borrowing money to purchase a used car), but from my experience,
it isn't that way if you get a (non-car) loan and use your car for
collateral. Don't ask me why, but the banks apparently valuate a car
much differently if the loan is to *purchase* a used car (using that
loan) than if that same car is already owned and is simply put up as
collateral on an otherwise equivalent consumer loan.

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

Not normally my style, but I made a very rare exception for you.

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

I've seen a situation where a bank branch manager could loan only NADA
wholesale on a used car and the same bank, through its dealer lending
department would loan selling price plus sales tax plus a couple of
thousand negative equity. The dealer writes up the paperwork, raising
the price of the purchase vehicle and the allowance for the trade so
it "looks" like there's equity but everyone knows what's going on.

 

The average new vehicle buyer in the US replaces their vehicle in three to
four years, with 45K to 60K on the clock. For them a finance contract of
four or five years is foolish. If the amount of the monthly payment is a
limited by their income, they would be way ahead with at two or three year
lease since the lease payment would be lower than a four or five year
purchase contact. When I would recommend a short term lease rather than a
longer term finance contract, many would say I'd rather own my vehicle. My
answer to that was, 'You don't own the one your are driving now and you will
not own it for another two or three years.


mike hunt

 

There is a concept of "Too Bog To Fail" that will ultimately be brought
into play here as it was with Chryslar in 1979.

That's pure bullshit. The government (you and me) are already on the
hook through the PBGC for underfunded pension plans. The already
insolvent PBGC will go further in the red when they have to pick up
those huge plans. The retirees will get screwed because they will get
cents on the dollar.

Have no idea how his relates to GM and Ford.

And we are even farther afield here.

Naw, the big three built up a reputation of building largely dull cars
that had quality problems while the competition put out cars that had
fewer problems. The quality problems are now not as severe, but the
image continues.

The other issue killing detroit makers is their cost of unionized
labor.

But they will go in droves to the Toyota and Nissan dealer down the
street if they offer a reliable car that looks and drives good. And
that's what happened.

Naw, that has nothinbg to do with it. It is the image and reality of a
quality car at a decent price pure and simple that attracts people to
asian cars.

What does it mean to "be in denial"? I've heard that psycho-babble
phrase so often but it means nothing. And what makes you think he is
attending AA meetings.

Naw, "Too Big To Fail" will be resurrected once again to justify a
bailout.

That's nonsense. Quality (the lack of) is what gto detroit makers into
trouble. Decades ago they had the market but became so arrogant and
complacent that they failed to take account of who their competition
was and the kind of products they were capable of making. And they
have been falling further behind ever since.

Possibly could help the detroit makers to reduce their lines if coupled
with a real move toward quality products. And if they cut labor costs.
GM's attempt at building a car using japanese techniques failed
miserably. The Saturn turned out to be a piece of junk.

Why should we tell Toyota to stop making a definitively better product
that consumers want. That makes no sense whatsoever.

This is so far out in left field....

Whaaaaattt???? You are nuts!

 

That's when I buy them.

I agree, but there are lots of foolish people out there.

They would be better off if they practice some combination of buying a
less expensive car, buying a used car and keeping their car for a
longer time.

But it would probably last for another ten years or more. If you put
the equivalent of a car payment in a savings account, you could easily
have $30,000 by then.

 

Mike, if these idiots understood that they wouldn't be selling vehicles with
45-60K
on the clock. They would sell them with 150-200K on the clock and have at
least
3 years or more of ownership with -no- car payment, and during that time
they would
be taking the money they were normally sticking into a car payment, and
sticking
it into a savings account. Then when they sold that 150-200K vehicle they
would
have a large enough down payment that what loan they would be getting for
the
car would be easily payable 1 - 2 years.

It's quite possible for a young person with no money, by carefully
purchasing good
used cars for the first 2-3 cars he owns in his life, and by saving the
extra money
he would be spending on interest and insurance, to get into a position by
the time
he hits his 30s where he has enough savings that he can approach vehicle
purchase
from a positive, rather than a negative. What he then can save in interest
payments is
huge and he can finance much lower monthly payments, or much shorter loan
terms. In short he has a lot more flexibility in what he can do.

But of course this requires 2 things, delayed gratification, and
self-discipline, which
are not trained into most people when they are young, at least not in this
culture.

My favorite line from people like this is when I tell them they would pay
less overall if
they saved up for a car and then bought it, rather than buying it on credit,
and
having them tell me they would never be able to save up the money because
they
would end up spending it.

Ted

 

That the way to start. When I first started to buy cars after the war I
bought cheap used cars for cash. When I started to buy better used cars I
needed to finance them. When I finished paying the contract I placed the
payment amount in a savings account.. With the accumulated cash I got into a
position where I had enough down money to finance new vehicles rather than a
used car that soboy else no longer wanted. After I finished paying the
contract I placed the payment amount in a savings account along with the
money I was now saving or repairing my used cars. Finally I got to the
point I no longer needed to finance my cars, if I sold them off and bought
another new one often enough for cash. Now the only thing I need to do is
change oil three of four times, have the car inspect one time and the dealer
I buy from even covers those cost for me on both of my cars. Now I simply
write a check for six or eight thousand every two years and drive home in
another new vehicle. Three or four grand a year, with no maintenance or
repair costs not even a set of tires, is hard to beat IMO.

mike hunt

 

(snip some flames)

(snip some more flames)

(snip unglued flames)

(etc)

Hey John.... new around here?

 

And thank you for crossposting!

 

Like, how was I to know where he was? <G>

 

Yes, that happened in the 80's most certainly. On one hand you had
General Motors with the computer-controlled Varajet that the garden
variety mechanic could not make head nor tail of, in a big old boat
of a car that sucked gas like no tomorrow. On the other hand you had
the imports with fuel injection and small gas saving cars easy to fix.

But today it's not true anymore. Take a look at the warranties offered
by the domestics and foreign manufacturers, they are all the same 3/36
If the imports were so much more reliable their warranties would be longer.

Operative word there is image. The domestics hurt themselves by
having bad quality in the late 70's early 80s as compared to the imports.
Unfortunately that gave Generation X an image and that image
hasn't changed with that generation. They will be buying imports until they
die,
and they are influencing their parents purchases today, which 30 years
ago was unheard of.

When your parents (if they are still alive that is) were in their 20's, they
would have never been asked for advice on purchasing anything by
your grandparents. That has changed 180 degrees today, and it
started with the Gen Xers because they were the first generation to
be young enough to climb into the computer and information culture.
The generation that is following Gen X was raised in the computer
culture, you see, and they will not have the same influence over their
parents - the Gen X'ers - as the Gen X'ers have today over their own
parents, the baby boomers, because both the Gen Xers and their children
are of the same information culture.

When historians look back 100 years today they will point to the 1990's
as the decade that American culture started the Information Age and
ended the Industrial Age. The Gen Xers were on the cusp of that
change and as a result they are rapidly gaining far more power in shaping
the culture than most generations had. The Baby Boomers had that
same power as well and they use it to change people's attitudes towards
each other. In the 60's they used it to promote tolerance, and today they
are using it to promote intolerance. The GenXers power isn't in
that area, instead the Gen Xers power is in changing people's attitudes
towards how they make an effect in the material world. That's why
the Gen Xers are so interested in people's effect on the environment,
and that's why they are so interested in how corporations use
employees, etc. The big 3 automakers in Detroit still haven't
figured this out in their marketing, the foreign automakers have, though.

A person who is in denial is a person who continues to believe his own
view of the world, after being presented with irrefutable evidence that
his world view does not agree with the actual world itself. That is a
pretty basic definition that anyone knows it is not psycho-babble.

The poster apparently thinks that Bush firmly believes Ford and GM will
be able to pull themselves up out of their own holes without government
help, and the poster thinks the reality is that they can't do it, and that
proof of that has been shown to Bush who is refusing to believe it. Of
course this is a rather preposterous set of suppositions, but this is what
it means.

Or more likely a merger. The Justice Department has been approving
quite a lot of corporate mergers that in prior years would have been
considered violations of the Sherman Anti-Trust act. Most likely what
the President has been told by his economic advisors is that if
General Motors bought Ford, that it would not create a trust because
on a global scale there's many many many automakers out there, and
that the US citizens would still have many many choices. And those
advisors have probably been sold the line that if those two companies
merged that it would so greatly increase the manufacturing economies of
scale that it would allow GM to spend even less money manufacturing
a car, thus the combined entity would become very profitable.

Of course these same advisors seem to think that Goliaths in government
organizations are wasteful and a Bad Thing, which goes to show that
people have the capability of believing that two completely opposite
statements are both true at the same time.

The exact same thing would happen to the foreign car makers if they
"had the market" If we don't have domestic car makers left then
what will we do?

That isn't why Saturn isn't doing well. Saturn isn't doing well because
GM totally underestimated how hypocritical American consumers
really are. For years and years since time out of mind the American
consumer has ranked the honesty of the typical car dealer somewhat
on the level of the average lawyer, and complained endlessly about
how they couldn't stand to haggle when purchasing cars. GM fell for
that line and created the no-haggle sale. Then they discovered years
later that only a small percentage of American consumers actually
were serious about not wanting to no-haggle a car sale, the rest of
them may have bitched a blue streak about having to dicker, but
when cash started talking and bullshit started walking, most consumers
figured they would get a better deal down the street from the dealer
willing to haggle.

Ted

 

If GM buys Ford, both Henry Ford and William C. Durant will turn over in
their graves. . . . There will be a big earthquake in Detroit.

Charles of Schaumburg.

 

LOL! Ted - you need to coyright that sentence. That's funny I don't
care who you are!!

Actually there's a dealer in the small town where I live that some would
claim invented the no-haggle deal (probably 45 years ago). He's
outsurvived all the other dealers in town, which flat out disappeared,
went out of business, or changed hands several times over the same
period of time. But, I think you're right in general - he's the
exception that proved the rule - to use another cliché.

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

Gawd. GM and Ford merge? I sure hope fscking not. Japan can support a
half-dozen car companies but the Americans can only compete if they get
down to one?

 

....and it'll be impossible to tell by looking that there's been a big
earthquake in Detroit, which is already a deserted, crime-ridden,
broken-down, rotting, ugly hellhole.

 

That is one of the poorest arguments I ever saw. In the 80's and 90's
domestic quality was far behind import quality, yet the domestics
offered warranties like 5 years, 6 years, even longer, while the
imports from Japan have always had 3 year warranties.

By you argument the domestics were of better quality, and nobody with
an IQ over 30 would ever make that claim.

*************************
Dave