As you’ve no doubt read, your duly elected representatives have rejected the proposed $700b Wall Street bailout plan. What happens next is anyone’s guess. Congress will undoubtably go back to the drawing board and try again. The stock market will either recover, tank some more or stay the same. The U.S. economy will either recess, depress or re-decompress. However this plays out, one thing is for sure: the days of “Zero Percent Financing for Anyone With a Pulse” are done. Dead. Finished. Over and out. Credit’s tighter than a superglued lug nut. At the same time, the market’s awash with used vehicles that no one wants. Millions of “average” people are backwards on their car loans– and scared. Even if residuals rebounded and zero percent abounded, the manufacturers can’t lure them into more debt. So they will do the right (only?) thing:nothing. They will simply pay down their existing car loans and run what they got. Meanwhile, the domestic automakers will deflate, dehydrate and die. The U.S. car market will eventually recover, but it won’t look anything like it does today. And TTAC will be there to chart the changes.
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Meanwhile, the domestic automakers will deflate, dehydrate and die.
All three of them?
An equally likely scenario could happen where the marginal players like the Mitsubishis could withdraw from the U.S. market while there are less scraps to fight over. Perhaps.
(special note: that girl in the picture is Canadian. Our beer will do that to you).
What’s next? Are you kidding?
Both sides blame the other, while the press tries in their self proclaimed objective way to present “both sides” fairly.
So if credit stays tight, does that mean there are going to be better deals/offers to people who want to write a check for a vehicle?
(special note: that girl in the picture is Canadian. Our beer will do that to you).
Yes, because Molson Canadian is awful stuff.
Yes, because Molson Canadian is awful stuff.
Yes it is.
“Once again, Sarah Palin learned her lesson about drinking beer from across the border”
I would guess after today’s fiasco in the House, the party is really and truly over now.
Affordable credit is history.
The party is over?? OH REALLY??!!
Party has been over for a huge number of folks for some time now. Its just finally making it to the top.
So the demands for a $700b blank check with no strings attached was rejected. Good. This feels like extortion to me.
The value of a couple nicely-equipped new 911s evaporated from my portfolio today. I won’t be buying an actual one any time soon now.
This place is getting less and less like Disneyland all the time now
Just a wiff of Grape. Mid 2009 Perfect Storm.
It should be noted that tucked into the current proposal is the ability of the government to purchase assets backed by auto loans.
Wanna bet which ones the banks are going to dump on Uncle Sam?
There’s more, again per AN: the proposal allows the Federal Reserve to make loans directly to lenders like GMAC and Chrysler Financial to make loans.
Nice photo.
Suddenly, only spending within your means is the American watchword. Rut row George, that means somewhere between 10% and 50% of the consumer buying binge is going to have to stop. Long term this may be a good thing, but the medicine is going down very, very hard.
Getting into community college and state universities is going to get even harder as families wonder why exactly they should borrow even more money to send Biff and Buffy to private schools.
Suddenly, only spending within your means is the American watchword.…
Which is how it should be anyway. Why it took a disaster like this to make people realize that spending what you don’t have is foolish…
So the demands for a $700b blank check with no strings attached was rejected. Good. This feels like extortion to me.
Have you actually read the bill? Or even a summary of it in the news? Sorry, the statement above makes those questions moot.
Hey, I like Molson Canadian. Someone has to stand up for it.
Ron Paul was right.
I feel it is my duty to direct you to THIS VIDEO about the bailout!
@RJF
It’s as if she’s channeling Jello Biafra.
Good for her for standing up for her constituents.
Damn, I actually felt like I lived in a democracy today.
$700 billion could re-build a lot of crumbling infrastructure, which would create a lot of jobs, which would eventually sell a lot of cars.
On the other hand $700 billion could perpetuate the indebtedness of the country keeping the finance industry rich giving low wage service industry employees sub-prime car loans until the the government can no longer support the increasingly high interest and the US is forclosed on by a nuclear nation of more than one billion people.
The above picture clinches the deal, when shit gets heavy I’m running to Canada.
Now if someone did a line of coke off of her ass, would that be sexual assault?
Just askin’ is all….
@ no_slushbox:
Canada’s major index was down 841 points today. No place to hide.
@ no_slushbox:
My apologies, make that 840.93 I don’t want to go blowing things out of proportion.
until the the government can no longer support the increasingly high interest and the US is forclosed on by a nuclear nation of more than one billion people.
I’m curious to know, maybe I could find it elsewhere, but just what is the US debt compared to the US GDP?
How much debt can the US take on really? And more importantly, can Europe get away from financing cheap cars and products for US citizens or are they in so deep right now they have to stick with it to the very end?
Seeing as though the Netherlands is the 4th largest direct investor in the US, that could be bad.
Just this morning, the talking heads on CNBC were trying to get us to “understand” why we need to help them and their buddies in New York, and why it was a mistake to kill the bailout.
Maybe they are the ones who don’t understand why the public is 100-to-1 against giving their money to help these bastards out when they ran their companies into the ground.
I rent my house, paid cash for my car and have less than a $300 balance on my credit card.
Yet, I get to watch the value of my 401(k) go right into the dumper, and the bank that holds my checking account had their stock value drop by over 60% in two days.
House of cards, indeed.
undoubtably?
Shaker>
I carry no credit card balance, have saved my entire life and was looking to put down 20-30% down on a small, far suburban house (waaaaaaay outside of Chicago) because that is what _I_ can legitimately afford. I have 2 of 3 vehicles paid off…an econobox (25mpg city) a bike (35mpg city) and a sports car which I have less than 2.99%/1.5 years left on. If I wasn’t saving for a house down payment, I’d have paid off the car already.
I don’t understand why I should carry the burden of other peoples irresponsibility/greed gone bad.
By the way, shaker, now is the time to diversify your checking & savings account (as ridiculous as it sounds). If a bank should fail, you may get your money from the government eventually, but how do you pay your bills in the meantime?
I had several people tell me a few years ago (05’ish) that I should get a house in Chicago before prices went up even more. I told them there was no way I could afford it no matter WHAT the bank said. I knew my income & expenses & it simply wasn’t doable.
If things ever turn into utter chaos here, I will probably move with my wife to Brazil (she is a citizen there).
I don’t understand why I should carry the burden of other peoples irresponsibility/greed gone bad.
You wouldn’t be. You’d instead be preventing a depression that would reduce your likelihood of buying a house, or for that matter, having a job that you could use to pay your rent.
If things ever turn into utter chaos here, I will probably move with my wife to Brazil
That wouldn’t help. The emerging markets would be even worse off than here.
shaker:
I couldn’t have said it better myself. The situation is complex but in the end we’re all tied into the health of our economy. While I appreciate the argument that we need the moral fortitude to accept the negative results of the financial sector’s (actually, part just part of it) losses in recent gambles I cannot fully sign off on it. That is because I honestly don’t have the fortitude to see my retirement funds lose value and my employment status start to teeter. If my tax dollars are going to be used for something I’m sure as heck happy to see them used to stabilize my welfare as Pch101 said.
And even more on point for this site I want to buy a new car next year.
You’d instead be preventing a depression
Can’t stop the inevitable. The bailout will just make it worse and more prolonged. It’s like they are using the depression play book for their “fixes”.
The depression analogies I think are getting strained. I was going to use the one comparing the Hoover administration letting the free market take it course and the failure of such. But really, it’s apples and oranges.
beetlebug: I was going to use the one comparing the Hoover administration letting the free market take it course and the failure of such. But really, it’s apples and oranges.
Actually, the Hoover administration did not allow the market to take its course, and that was one reason why would should have been a short, sharp recession (the economy was softening even before the Stock Market Crash) became the Great Depression. As a matter of fact, many of things he did are eerily reminiscent of what the failed bailout was trying to do…
The biggest mistake his administration and the Republican Congress made was to pass the Smoot-Hawley tariff in 1930 to “protect” American industries, which backfired, as it encouraged retaliatory tariffs by other countries. The disastrous effects of Smoot-Hawley were one reason that the Roosevelt Administration became committed to expanding free trade.
For example, the export market for American cars declined dramatically after Smoot-Hawley at the same time that the home market was entering a downturn. It was a double blow that sent the domestic industry into a downward spiral.
The bailout will just make it worse and more prolonged.
Sorry, but that’s absolutely 100% wrong.
The average American has no clue of how fragile the financial system is right now. We are at a real precipice. The increase in overnight lending rates is a big fat clue of how bad things are going to get if there isn’t a fix very quickly.
The public might feel that they are exacting some sort of revenge against the fatcats, but a failure to act would only blowback against the average person and his soon-to-be former employer. Unfortunately, it’s very difficult to explain the problem in a succinct fashion in such a way that it wouldn’t cause a mass panic, so the tones have to be guarded and those who do understand it such as Paulson and Bernanke have no choice but to talk around it.
Frankly, it’s better for the average person to get upset about it and have it approved, than it would be for them to fully comprehend the depths of it. If Joe Sixpack really knew what we were up against, it would probably make things worse.
“Too Big to Fail”
This will have to change, no matter what the “economies of scale” dictate – Absolute power corrupts absolutely.
Break up these financial trusts when things stabilize – Fool me twice, you won’t get fooled again.
And GM deserves a kick in the ass, too.
Well, Psh101, I wish the folks who do believe in this bailout would open up, have someone trusted by all sides sit down on TV on a “fireside chat” and explain it to all of us ignorant folks out here.
In the meanwhile, some 95% of the population disagrees, along with “a few other people”
http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview
http://www.lewrockwell.com/rockwell/near-death-of-state.html
http://www.wnd.com/index.php?fa=PAGE.view&pageId=76231
I wish the folks who do believe in this bailout would open up, have someone trusted by all sides sit down on TV on a “fireside chat” and explain it to all of us ignorant folks out here.
To be blunt, here’s the problem with that: Those who can comprehend most of it would be on the phone with their congressman, demanding that some version of this thing be passed pronto.
But those who understood only a portion of it would run to their banks and take out all of their money. Unfortunately, most people are in this category, so the resulting disaster would be self-fulfilling prophecy at its worst.
I read Minon’s piece yesterday. That article is so off the mark that I would crash this server cutting it apart. The very short version of a critique of it — just imagine what sort of mass public panic would occur if we had some major bank failures all happen at about the same time. Minon obviously never took a psychology class at his alma mater.
People like Minon got what they wanted in the past. That caused the Great Depression. Give those sorts of people the attention that they deserve: None.
geeber:
You’ve made some good points. I didn’t mean to be so general but I was just taking exception with the analogists. Depending on your point of view you can cite these events in many different lights. Here’s a quick passage I found on the web at a historical documents site:
Hoover broke precedent because the national government assumed some responsibility for what happens during an economic depression but he was not willing to go far enough. He believed that the depression was part of the normal business cycle and had been caused by international factors and not US ones. to him, “prosperity was just around the corner.” The best thing for the country to do would be to wait the crisis out. -historicaltextarchive.com
I’m not saying that’s accurate summary. It’s funny how even the verdict of history can be interpreted wildly differently. In these times does it really give us a great deal of insight?
beetlebug,
President Hoover didn’t have much problem with aiding business, or trying to prop up failing business. His main beef was with direct relief to individuals (what we today call welfare and unemployment insurance).
That was the primary difference between President Hoover and candidate Roosevelt. As governor of New York, Roosevelt presided over the only state in the union that had these programs.
A big factor that contributed to the Great Depression was monetary policy. The federal government, fearing inflation, tightened the money supply. Only problem was this was the last thing that the economy needed. DEFLATION was the big problem. It was like trying to treat a man for a fever after he has already frozen to death. The government’s actions throttled the economy.
I don’t know what action to take, to be honest. On the one hand, I can understand Pch101’s concern for our financial infrastructure. But, on the other hand, I still believe the old saying that “depressions uncover what the accountants (or the media, or the pundits, or the ‘experts’) missed.”
The bottom line is that we need major corrections in two key sectors. Housing prices are out of line with incomes (especially in places like southern California and the Boston-Washington, D.C., corridor), and therefore the solution is to let prices fall. Propping up prices, or letting people “buy” homes with exotic loans that they have little hope of paying off are not answers. Prices need to fall, it will hurt some people, but it still needs to happen.
In the automobile sector, it is apparent that quite a few companies (and not just GM, Ford and Chrysler – I’m looking at you, imported luxury marques) have survived by selling vehicles to people who really can’t afford them. This is not a viable business plan. Again, something needs to give, and I think that several stalwart American nameplates – Mercury, Buick, Pontiac and Saturn – need to die. And BMW, Mercedes, Audi and Jaguar may not make it, either.
How this should be handled to minimize pain, I’ll leave to better minds than mine. But it has to eventually happen. Government aid should not be used to prevent what needs to happen from happening.