Sing for Chrysler

Wall Street Journal

Bad management has Detroit's Big Three auto makers approaching the brink of
bankruptcy, so maybe music can rescue them. That, at least, seems to be the
premise behind a marathon concert now under way in Ferndale, Michigan...

Continued:
http://online.wsj.com/article/SB123791423112627081.html

 

bad management for the big three wrong! go out and try to get a carloan!!!
now we have even bigger mismanagement from Obama you can't keep using your
credit card to pay the mortgage that's is one reason the wall street lenders
failed and now Obama is doing the exact same thing to this country by
borrowing money from china to pay for his 3trillion dollar stimulis package
you cannot blame the the big three for building the cars consumers want
look around and see how many small cars are not selling now but midsize and
suv's are

 

But GM and Chrysler raping the taxpayer is okay? Robbing us to make up
for very poor business decisions and rewarding incompetence of the
Detroit Duds is just fine?

 

Sorry, but you're wrong.
This financial crisis was initially caused by fraud and greed in the sub
prime mortgage business.
That happened because of too little regulation, so the white collar
crooks did what they wanted to do.
Now that money is tough to get, many financial crooks are being flushed
out.

As for the very severe problems with GM & Chrysler, they didn't listen
to what the customers wanted. So they've been losing many customers over
the years, while the "foreign" manufacturers have been growing.

 

If you include the crooks in and around Congress (Frank, Raines, et al)
who mandated and profited from (Raines: $90 million in 6 years when he
cooked the books at just the right times to trigger his personal
bonuses) the way the mortgage industries were forced to operate so as
not to get persecuted by the government (think CRA) then I will accept
that statement of yours.

BTW - heard anything about Fannie Mae's recent bonuses? Didn't think so.

No - Barney Frank is still in Congress.

Speaking of too little regulation, did you see the youtube of the
Congressional hearings some years ago in the attempts to reign in Fannie
Mae and Freddie Mac?

Here it is:

Listen carefully to who is saying what - then tell me where the blame
for non-regulation lies for Fannie Mae and Freddie Mac. Frank Raines Pelosi.

You mean like Toyota who is losing money too?

 

Sorry, but you're wrong.

The crisis was caused by the policies of the Bush administration, chief
among them:

1) invasion of Iraq (very expensive, how does gov't pay for it?)
2) insane and reckless drive to increase home ownership rates at
any cost (convert many new home owners into republican voters)
3) Fed Bank keeps interest rates articifically low to help
(1) and (2)

The cost of money (interest rates) was (and still is) being kept
artificially low, and hence the real estate bubble formed (bubbles were
forming with almost everything imaginable, because everything must rise
in value when currency itself is depreciating). Oil will again hit $150
/ barrel if interest rates don't start to rise.

If it was just a phenomena limited to mortgages, then explain why this
sub-prime mortage bubble formed during the years 2003 to 2007? Why did
this never happen in the past? Why not during 1995 - 1999? Why not
1985 - 1989? There really was no material change to rules and
regulations regarding mortgages and mortgage-backed securities lately
that would have prevented this explosion of bad lending in the past.

Lack of regulation at the mortage-origination level. Lack of rules
regarding minimum down-payment, regarding manditory requirements for
mortgage insurance. The ability to deduct mortgage interest from income
tax has significant implications for individual tax planing and
irrational purchasing behavior (paying inflated home prices).

Stupid buyers paid insane house prices and participated in mortgage
fraud along with the agents that falsified mortgage documents related to
"stated income" with little to no legal or financial repercussions for
them.

Car buyers are irrational. Last july they were paying over-list for
hybrids, and now that gas is under $2 you can't give a hybrid away.

All car companies are leveraged financially. In Japan, there is a bank
at the top of every industrial pyramid of family of companies. It's
normal for most companies to be in debt and to periodically re-finance
that debt. The US car companies are no exception. Newspapers, other
media companies, etc. Except that now, the banks don't want to
refinance debt (they want to hord cash because FED rates of 0% and prime
rates of 3% are simply not attractive enough to risk lending). The
banks are making enough money on service charges and will not lend money
normally again until interest rates go up. In Japan, they force car
turn-over with rules that require all cars to meet *current* emissions
standards (not the standards that were in place when the car was made).
In Europe, the gov't has been providing incentives to junk old cars when
you buy a new one. None of those mechanisms are in place in US/Canada.

Ford and GM own foreign car companies because it's hard to import
US-built cars into foreign countries (esp. Korea and Japan). Meanwhile
anyone can sell their foreign-built car into the US with relatively few
obstacles. Chrysler is hurting because it does not get much in direct
overseas sales (exports) because of these imbalanced trade rules, and it
doesn't own a foreign car maker like GM and Ford does. It's also
hurting because of the LX platform designed under the direction of
Daimler management. The LX platform doesn't lend itself to making small
cars. That's why were're hearing all this talk of Fiat providing
Chrysler with "small car technology". It's more like a small car
platform. How Chrysler gets geared up to stamp out Fiat cars here in
North America, I can't figure out (or, who will pay for the retooling).
Or perhaps the plan is to simply import Fiat cars and rebadge them as
Chrysler.

This deal where Chrysler gives 35% of itself to Fiat means that Chrysler
isin't going to be buying fiat cars and bring them over to the US to
sell. It means that the new trans-national "Chriat Incorporated" will
be shipping "parts and components" here for "final assembly" and then
sell them through "Chriat" dealerships (aka Chrysler dealerships).

 

Below..

DAS

To send an e-mail directly replace "spam" with "schmetterling"
---

DAS: In Britain mortgage interest tax relief, as well as tax relief on
insurance savings policies, was abolished years ago but that did not stop a
property bubble. Reasons included some of the others you listed, in
particular few lending controls and checks on ability of buyers to pay. The
change was early eighties, IIRC. before that there were strict controls
that, in effect resulted in unique-to-UK (apparently) mortgage rationing.
But it probably also prevented insane price rises.

Mind you, in central London in what I call the golden oval, prices are also
influenced by foreign buyers. In certain areas covenient for the financial
quarter, prices also rose rapidly because of the deregulation of The City,
resulting in huge wage/bonus increases to match (and even exceed) US levels.

:-(

DAS: A touch glib. The US has a number of non-tariff barriers, and it's no
trouble selling US-assembled cars in Europe, viz Chrysler. It's just that
not many people want them for various reasons. Quite a few 'American' cars
in the Gulf region (i.e. Saudi Arabia etc)

As regards Japan, my understanding is that, at least in the early years,
Detroit expected the Japanese to buy cars with the steering wheel on the
inappropriate side of the car. Furthermore, US-origin cars don't suffer
specific discrimination.


Chrysler is hurting because it does not get much in direct

 

No. Research "CRA" which was enacted under Jimmah Carter and put on
steroids by Clinton. Congress has been controlled by the Democrats for
the last few years (ever hear of Nanci Pelosi?). No - I don't think
getting people into housing they couldn't afford at any cost was a
Republican plot to gain votes.

 

The finger is usually pointed at the Community Reivestment Act, but it
far predates the criminal mortgages given out starting in 2003 - 2004
time frame and the artificially low interest rates that were necessary
to prevent the growing federal deficit from spiraling out of control.
The deficit spending was caused by both the cost of the Iraq invasion
and the Bush tax cuts during his first term.

Bush seeks to increase minority homeownership
http://www.usatoday.com/money/perfi/housing/2004-01-20-fha_x.htm

YouTube - Home Ownership and President Bush


If the CRA was the cause of reckless mortgages, then why didn't it
happen years ago? Why did it happen only in the past 5 years?

The democrats only got a majority in 2006. Long after they could do
anything about the Bush tax cuts and the costs of the invasion and
occupation of Iraq.

Bending over backwards for minorities (and being soft on illegal aliens
vis the guest worker initative) is nothing more than pandering to a
captive voting block at the expense of good governance and fiscal
responsibility.

 

You make some valid points.