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Author Topic: Auto bailout has already helped GMAC and GM sales  (Read 3498 times)
Beet
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« on: January 13, 2009, 01:14:34 pm »
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Written by Tony Wikrent (not me) at The Economic Populist"

"Emptywheel has looked closely at the numbers for December auto sales, and reaches a startling conclusion:

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While GM and Ford still lost more sales across the year than Toyota and Honda (because they also tanked during the gas price crash of the summer), their performance against Toyota and Honda more recently demonstrates the degree to which recent sales are a credit driven issue, and not what Richard Shelby likes to claim is a failed business model. . . .

    Both the Prius and the Tundra had worse than average declines last month, with the Tundra down 52% and the Prius down 45%. This isn't about gas prices anymore--it's about money.

Emptywheel also notes that Ford has managed to gain market share for three consecutive months now - for the first time since 2001 - again giving the lie to Shelby the Republicans.

But here's the really amazing thing, down in one of the updates:

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    Part of GM's less-bad-than-forecast sales were due to the GMAC deal put together at the end of the month.

    "GM said its December sales were helped by a zero-interest financing offer that its GMAC finance unit was able to make during the last few days of the month after GMAC was granted status as a bank holding company by the Federal Reserve.

    "This allowed GMAC to access money from the federal government aimed at helping banks and Wall Street firms. GMAC had essentially run out of cash to make auto loans earlier in the fall."

    Shockers!! BushCo actually managed to free up credit somewhere!! And the entity involved actually offered that credit!!!

Zounds! That means that if you give money to companies that actually, you know, produce something, rather than like, Goldman Sachs, there is a positive result! Amazing! I say take back all the $350 billion already given to Wall Street and the banks, and give it to the auto industry instead!

Emptyhwheel ends with an update on Hyundai, which has a U.S. plant in Alabama: the numbers are as bad as the other companies,

Quote
which explains why they're doing the offer where they'll take your car back if you lose your job
"

http://www.economicpopulist.org/?q=content/auto-bailout-has-already-helped-gmac-and-gm-sales
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« Reply #1 on: January 13, 2009, 01:43:59 pm »
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The Republicans just wanted to eliminate the auto industry to destroy the UAW, and harm the Democrats.
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« Reply #2 on: January 13, 2009, 01:48:17 pm »
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The Republicans just wanted to eliminate the auto industry to destroy the UAW, and harm the Democrats.

WalterMitty has basically even outrighted admitted to wishing that this would happen.
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« Reply #3 on: January 13, 2009, 01:49:26 pm »
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it would be kind of sad if it didn't
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« Reply #4 on: January 13, 2009, 01:52:27 pm »
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it would be kind of sad if it didn't

I guess the main point was there is nothing whatsoever wrong with GM's business or the UAW, the problem was just caused by bad government policy (regarding credit).
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« Reply #5 on: January 13, 2009, 03:54:28 pm »
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    Part of GM's less-bad-than-forecast sales were due to the GMAC deal put together at the end of the month.

    "GM said its December sales were helped by a zero-interest financing offer that its GMAC finance unit was able to make during the last few days of the month after GMAC was granted status as a bank holding company by the Federal Reserve.

    "This allowed GMAC to access money from the federal government aimed at helping banks and Wall Street firms. GMAC had essentially run out of cash to make auto loans earlier in the fall."

    Shockers!! BushCo actually managed to free up credit somewhere!! And the entity involved actually offered that credit!!!

And giving zero-interest loans to people who are the same crappy debtors (yes, even though GMAC has said these are "prime debtors", that means the minimum FICO score is 621, when the national median is over 700) AND who are now much more likely to default than they ever were, say three years ago, (which was already high) due to lowered wages/greater chances to be laid off is a good thing?

To me, it makes it even more clear that GM and GMAC are likely is going to go belly-up at some point in the near future, probably after a few more rounds "government assistance" from the taxpayer. 

Need I remind you that this money being loaned out at 0% must be paid back to the federal government through an 8% dividend on its equity shares of GMAC.  This makes financial sense how?

This further reinforces the rather interesting point that, although the credit markets have loosened up a little, any loosening is entirely due to the federal government backstop.  Unless this changes in any material sense (and it most likely won't because the Feds seem increasing interested in getting so involved in the credit market that they are shutting out private entities), the end game (TSHTF) is still the most likely *final solution*.

Getting to the writer's last point, I have said for a while that Ford was the most likely of the Big 3 to survive, long-term, in its present condition.  I still think so.  Gaining market share is positive news, even though functionally it means Ford is being killed less than everyone else.

I have an interesting Houston anecdote from the real estate market to share that's related to this, but I'm not sharing it right now.  Another thread perhaps...  Smiley

http://www.bloomberg.com/apps/news?pid=20601087&sid=aKyOm6fygQ2U&refer=home
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« Reply #6 on: January 13, 2009, 05:40:37 pm »
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Quote
    Part of GM's less-bad-than-forecast sales were due to the GMAC deal put together at the end of the month.

    "GM said its December sales were helped by a zero-interest financing offer that its GMAC finance unit was able to make during the last few days of the month after GMAC was granted status as a bank holding company by the Federal Reserve.

    "This allowed GMAC to access money from the federal government aimed at helping banks and Wall Street firms. GMAC had essentially run out of cash to make auto loans earlier in the fall."

    Shockers!! BushCo actually managed to free up credit somewhere!! And the entity involved actually offered that credit!!!

And giving zero-interest loans to people who are the same crappy debtors (yes, even though GMAC has said these are "prime debtors", that means the minimum FICO score is 621, when the national median is over 700) AND who are now much more likely to default than they ever were, say three years ago, (which was already high) due to lowered wages/greater chances to be laid off is a good thing?

To me, it makes it even more clear that GM and GMAC are likely is going to go belly-up at some point in the near future, probably after a few more rounds "government assistance" from the taxpayer. 

Need I remind you that this money being loaned out at 0% must be paid back to the federal government through an 8% dividend on its equity shares of GMAC.  This makes financial sense how?

This further reinforces the rather interesting point that, although the credit markets have loosened up a little, any loosening is entirely due to the federal government backstop.  Unless this changes in any material sense (and it most likely won't because the Feds seem increasing interested in getting so involved in the credit market that they are shutting out private entities), the end game (TSHTF) is still the most likely *final solution*.

Getting to the writer's last point, I have said for a while that Ford was the most likely of the Big 3 to survive, long-term, in its present condition.  I still think so.  Gaining market share is positive news, even though functionally it means Ford is being killed less than everyone else.

I have an interesting Houston anecdote from the real estate market to share that's related to this, but I'm not sharing it right now.  Another thread perhaps...  Smiley

http://www.bloomberg.com/apps/news?pid=20601087&sid=aKyOm6fygQ2U&refer=home

Any short-term recovery will be funded in part by loans, Sam. Keeping a minimum FICO score of 700 is not a realistic number regardless of whether the entity behind it is being driven by government spending or private spending. Not enough people have those kinds of FICO scores to support the sufficient auto demand to keep the auto industry going in the short run. If the FICO requirements had not been lowered, then auto sales could not possibly have recovered, and both GMAC and GM would have been doomed; and doomed at a time when the Federal stimulus is far from ready, and at a time when other sectors of the economy are also laying off. With expanded volume, both GMAC and GM have a chance, although Ill admit that they will both be dismantled as they are in the short run.

As for the Feds "getting so involved in the credit market that they are shutting out private entities", if the Fed hadnt gotten involved in the credit markets, there would be no private entities. All of the major banks and lending institutions would have failed. Instead of the expected 6% drop in GDP next quarter, it would be more like 20-30%.
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« Reply #7 on: January 13, 2009, 06:45:07 pm »
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Giving O% interest loans to failed companies is a bad policy. What happens if the companies fail anyway and the gov;t is out billions of dollars. Why not give 2 or 3% interest loans to small businesses who make 2/3 of the jobs anyway. Its a much better investment then failed companies. You may wonder why I call them that but its the truth and this article is in denile if it things it be prevented. The Automakers need a wide sweeping restructuring that can only be achieved through the dictatorial powers of a Bankruptcy judge(or equivalent like a car czar)  or Liquidation.
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« Reply #8 on: January 14, 2009, 11:02:32 am »
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The Republicans just wanted to eliminate the auto industry to destroy the UAW, and harm the Democrats.
^^^^

Yep, that was pretty obvious. On a broader level, the Republican South wanted to destroy the economy of the Democratic North.
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« Reply #9 on: January 14, 2009, 03:38:06 pm »
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And giving zero-interest loans to people who are the same crappy debtors (yes, even though GMAC has said these are "prime debtors", that means the minimum FICO score is 621, when the national median is over 700) AND who are now much more likely to default than they ever were, say three years ago, (which was already high) due to lowered wages/greater chances to be laid off is a good thing?

Obviously it is SS.  Any 'default' can be taken care of by simply writing off the debt (i.e. printing the money and ignoring the obsession with being 'paid back').  The point in a deflation/depression is to get things moving, to create vast amounts of fiat currency to change behavior (create consumption).  There is no reason at all to worry about 'getting paid back' - this is all just psychological, and there is no 'real money' behind it.  In fact being 'paid back' is not a particularly helpful occurrence, in this macroeconomic context.

To me, it makes it even more clear that GM and GMAC are likely is going to go belly-up at some point in the near future, probably after a few more rounds "government assistance" from the taxpayer.

Why would they go belly up?  They will receive whatever is necessary. 

This further reinforces the rather interesting point that, although the credit markets have loosened up a little, any loosening is entirely due to the federal government backstop.  Unless this changes in any material sense (and it most likely won't because the Feds seem increasing interested in getting so involved in the credit market that they are shutting out private entities), the end game (TSHTF) is still the most likely *final solution*.

Credit can only be 'loosened' by the State, SS, in good times or bad.  You need to get over the idea that there is a 'private' aspect to economics.  This dichotomy is a false one.

Giving O% interest loans to failed companies is a bad policy. What happens if the companies fail anyway and the gov;t is out billions of dollars. Why not give 2 or 3% interest loans to small businesses who make 2/3 of the jobs anyway.

The companies didn't fail, State policy failed us all (including these companies), NC Yank.  As for 'small business' the jobs it creates are mostly not worth having.  UAW jobs are some of the last few 'real jobs' - as in they pay a living wage - left in the US.
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« Reply #10 on: January 14, 2009, 03:43:50 pm »
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The Republicans just wanted to eliminate the auto industry to destroy the UAW, and harm the Democrats.

WalterMitty has basically even outrighted admitted to wishing that this would happen.

no, ive said that the us should get out of auto manufacturing.

that is easier said than done, of course, since so many workers would be affected.

i do certainly blame the unions for the downfall of the auto industry.
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« Reply #11 on: January 14, 2009, 06:20:15 pm »
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The Republicans just wanted to eliminate the auto industry to destroy the UAW, and harm the Democrats.

WalterMitty has basically even outrighted admitted to wishing that this would happen.

no, ive said that the us should get out of auto manufacturing.

that is easier said than done, of course, since so many workers would be affected.

i do certainly blame the unions for the downfall of the auto industry.

I agree, but wouldn't you agree that the product offered by US manufacturers also contibutes to the terrible state of the industry?
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« Reply #12 on: January 14, 2009, 07:13:45 pm »
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The Republicans just wanted to eliminate the auto industry to destroy the UAW, and harm the Democrats.

WalterMitty has basically even outrighted admitted to wishing that this would happen.

no, ive said that the us should get out of auto manufacturing.

that is easier said than done, of course, since so many workers would be affected.

i do certainly blame the unions for the downfall of the auto industry.

I agree, but wouldn't you agree that the product offered by US manufacturers also contibutes to the terrible state of the industry?

yes.
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« Reply #13 on: January 14, 2009, 11:09:52 pm »
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And giving zero-interest loans to people who are the same crappy debtors (yes, even though GMAC has said these are "prime debtors", that means the minimum FICO score is 621, when the national median is over 700) AND who are now much more likely to default than they ever were, say three years ago, (which was already high) due to lowered wages/greater chances to be laid off is a good thing?

Obviously it is SS.  Any 'default' can be taken care of by simply writing off the debt (i.e. printing the money and ignoring the obsession with being 'paid back').  The point in a deflation/depression is to get things moving, to create vast amounts of fiat currency to change behavior (create consumption).  There is no reason at all to worry about 'getting paid back' - this is all just psychological, and there is no 'real money' behind it.  In fact being 'paid back' is not a particularly helpful occurrence, in this macroeconomic context.

To me, it makes it even more clear that GM and GMAC are likely is going to go belly-up at some point in the near future, probably after a few more rounds "government assistance" from the taxpayer.

Why would they go belly up?  They will receive whatever is necessary. 

This further reinforces the rather interesting point that, although the credit markets have loosened up a little, any loosening is entirely due to the federal government backstop.  Unless this changes in any material sense (and it most likely won't because the Feds seem increasing interested in getting so involved in the credit market that they are shutting out private entities), the end game (TSHTF) is still the most likely *final solution*.

Credit can only be 'loosened' by the State, SS, in good times or bad.  You need to get over the idea that there is a 'private' aspect to economics.  This dichotomy is a false one.

Giving O% interest loans to failed companies is a bad policy. What happens if the companies fail anyway and the gov;t is out billions of dollars. Why not give 2 or 3% interest loans to small businesses who make 2/3 of the jobs anyway.

The companies didn't fail, State policy failed us all (including these companies), NC Yank.  As for 'small business' the jobs it creates are mostly not worth having.  UAW jobs are some of the last few 'real jobs' - as in they pay a living wage - left in the US.

So you mean that the CEO's of GM, Ford, and Chrysler did everything they should of. They planned ahead, they modernised production, they offered cars people wanted, and they got the production cost per product down to levels where they could compete. Only the ecil George Bush got in there and spent 8 years wrecking the economy and if it weren't for him we would be fine. Bullsh**t. These Mother F**kers have been selling out there own companies for at least 25 years. They didn't plan ahead, They didn't offer us fuel efficient cars(they couldn't afford too if they wanted b/c of my next point) They didn't bring production costs down. So when a crisis came along they couldn;t with stand so where did they go running to congress cap in hand. Now you want to print more money to dillute whats left of my savings accounts, finish off my 401k and then raise my taxes on top of that so you can go on funding there disaster.

Everybody invest in the Aussie Dollar/US combo, oil, gold and other dollar denominated securities if this continues to be Gov't policy. The Chinese and the US currency's will probably collaspe before this year is out.

I hope you enjoy having to haul wheelbarrows full of money to buy one loaf of bread. We have never experienced hyper-inflation before. Germany(1919-1924, 1929-1934) and Russia(1916-1918 and 1993-1999) have, I suggest you look it up.
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« Reply #14 on: January 14, 2009, 11:17:59 pm »
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The companies didn't fail, State policy failed us all (including these companies), NC Yank.  As for 'small business' the jobs it creates are mostly not worth having.  UAW jobs are some of the last few 'real jobs' - as in they pay a living wage - left in the US.

The government needs to stop favoring large corporations over small businesses.
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« Reply #15 on: January 15, 2009, 12:00:07 am »
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The Republicans just wanted to eliminate the auto industry to destroy the UAW, and harm the Democrats.

I would be all for the demise of the UAW, the sooner the better.
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« Reply #16 on: January 15, 2009, 12:13:53 am »
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The Republicans just wanted to eliminate the auto industry to destroy the UAW, and harm the Democrats.

WalterMitty has basically even outrighted admitted to wishing that this would happen.

no, ive said that the us should get out of auto manufacturing.

that is easier said than done, of course, since so many workers would be affected.

i do certainly blame the unions for the downfall of the auto industry.

The "US getting out of auto manufacturing means the Big Three all closing and everyone involved losing their job. There's no other way. So basically you want the government forcibly close three major coporations because...well there's no reason there other than wanting to rant at unions. But as we are talking three companies, there's no way "The US" can collectively get out of auto manufacturing without destroying them for basically no reason.

For the record I will always love GM for what they did in trying to destroy the disgusting human filth that is Ralph Nader.
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