Crash after Cash for Clunkers

[CharlesEagan]

After these car companies fired all their American workers, and moved the plants to Mexico, these laid-off American workers can't afford to buy their cars now. Henry Ford paid his workers the equivalent of $100 dollars an hour, so all his workers could buy a Ford Car.
the Mexican workers building the GM, Ford, Chrysler cars can't afford to buy their cars either, all the money is ending up in the pockets of billionaires.

[Joe_J.]

>>It's not only negroes who misunderstand wealth and money. Keynesian economics is based on the notion that economies run on consumption, rather than on production.
If one guy digs a hole, and another fills it, that is counted as part of the GDP. Bernanke's hellicopter idea- dropping money from the sky- is the same as my printing press idea- except I am joking.

Don't forget that they count someone making a hamburger at McNigger's as a manufacturing job.

Looks like GMAC needs more money....

OCTOBER 28, 2009
WALL ST JOURNAL

Lender in Advanced Talks for Third Slug of Taxpayer Cash -- at Least $2.8 Billion More

By DAN FITZPATRICK and DAMIAN PALETTA

In a stark reminder of how some battered financial firms remain dependent on government lifelines, GMAC Financial Services Inc. and the Treasury Department are in advanced talks to prop up the lender with its third helping of taxpayer money, people familiar with the matter said.

The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government's 35.4% stake in the company could increase if existing shares eventually are converted into common equity.

The willingness by Treasury officials to deepen taxpayer exposure to GMAC reflects the troubled company's importance to the revival of the auto industry. Founded in 1919, GMAC has $181 billion in assets and is a major financier for 15 million borrowers and thousands of General Motors and Chrysler car dealerships.

The new capital would help firm up GMAC's balance sheet and solidify its auto-loan business. GMAC provides the vast majority of wholesale financing for GM dealerships across the country, meaning thousands would be unable to bring new vehicles onto their lots if GMAC were to collapse.

Federal officials also are moving to shore up GMAC's ability to fund its daily operations, with the Federal Deposit Insurance Corp. telling the company Tuesday the agency will guarantee an additional $2.9 billion in debt, according to people familiar with the discussions. The FDIC guarantee will make it easier for the company to sell debt to investors. The FDIC backed $4.5 billion in GMAC-issued debt earlier this year.

The FDIC approval came just four days before the expiration of the regulator's program that guarantees debt issued by certain banks. It ended months of tense negotiations between GMAC and regulators. Without a deal, the company would have been forced to further reduce its lending volume. New-car loans by the company tumbled 55% to $5.6 billion in the second quarter from a year earlier.

As part of the agreement, GMAC agreed to keep interest rates on deposit accounts offered through its banking unit at certain levels, according to people familiar with the situation.

While GMAC would be the only U.S. company to get three capital injections from the government since the financial crisis erupted two years ago, thousands of banks and other financial firms remain weakened by exposure to fallen real-estate values and clobbered financial markets.

Among U.S. banks that got a total of $204.64 billion in aid through the Troubled Asset Relief Program, just one-third of the capital has been repaid so far. Government officials are skeptical that some banks now wanting to escape the government's grip are strong enough to do so, with Bank of America Corp.'s attempt to repay bailout funds snagged by a disagreement over how much additional capital the bank must raise to satisfy regulators, people familiar with the situation said.

At GMAC, the likelihood of a third infusion increased when the government's stress-test results were released in May. The tests were conducted to determine whether banks would need more capital to continue lending if the economy deteriorated in 2009 and 2010. The test concluded GMAC needed $11.5 billion in common equity to continue lending in a stressed economy.

GMAC raised some of the money directly from the government, but a significant hole remains. The company hasn't been able to attract much capital from private investors because it isn't listed as a public company, forcing GMAC to begin negotiating with the government to find the remaining funds. GMAC and Treasury officials are now negotiating about exactly how much capital the company needs.

"GMAC is the only one of the banks that went through the stress test to need additional government capital," Treasury spokesman Andrew Williams said. "All other institutions were able to raise any necessary capital from investors and several paid back the taxpayer."

People close to GMAC said the company's outlook is better than it was in May, and that unlike other banks that went through the stress-test process, GMAC won't be forced to fill the entire capital hole even with a third infusion. Bank of America has raised about $40 billion in new equity, higher than the $34 billion required, and regulators are asking it to raise even more if it wants to return $45 billion in U.S. aid.

The U.S. government's current 35.4% stake in GMAC is the result of a 2009 restructuring of GM.

People close to GMAC said they don't expect the government to call for changes in management as a result of the likely infusion. The company posted a second-quarter loss of $3.9 billion amid rising loan delinquencies and the continued U.S. auto slump. It expects to release third-quarter earnings next week.

For decades, GMAC served as GM's finance arm. In 2006, GM sold a majority stake to private-equity firm Cerberus Capital Management, which eventually installed former Bank of America Chief Financial Officer Alvaro de Molina as CEO. The collapse of the U.S. housing market and declining U.S. auto sales nearly crushed GMAC, forcing Mr. de Molina to curtail lending and seek help to finance its operations.

Mr. de Molina's search for capital brought him to the government's door. The Fed awarded GMAC status as a bank-holding company and Treasury injected $5 billion in December 2008. It came back with an additional $7.5 billion on May 21. The Fed also waived rules to allow the bank to pass assets down into its bank division, and the FDIC reluctantly agreed to issue "up to" $7.4 billion in government-backed debt. The FDIC approval issued Tuesday brings GMAC to the full amount authorized in May.

In another defining moment, GMAC entered into an agreement with Chrysler in April 2009 to provide auto financing and services to Chrysler dealers and customers. This allowed GMAC to leverage its core strength of auto financing and become part of a solution with the U.S. government to restructure the auto industry.

In May, GMAC also launched a new brand for its online bank, called Ally Bank. Its pursuit of deposits at high rates became a key leg of its strategy, since deposits provide a cheap form of funding, but the taxpayer-assisted approach rankled competitors and the FDIC.

The dispute nearly cost GMAC its chance at the final $2.9 billion in FDIC debt guarantees. The two sides were able to hammer out an agreement that asks GMAC to keep its rates at certain amounts in exchange for the support.

http://online.wsj.com/article/SB1256..._LEFTWhatsNews

[Oy Ze Hate]

Originally Posted by CharlesEagan

After these car companies fired all their American workers, and moved the plants to Mexico, these laid-off American workers can't afford to buy their cars now. Henry Ford paid his workers the equivalent of $100 dollars an hour, so all his workers could buy a Ford Car.
the Mexican workers building the GM, Ford, Chrysler cars can't afford to buy their cars either, all the money is ending up in the pockets of billionaires.

Precisely, generally speaking.

I introduce you to the worst aspect of the human male in general, and the jew in particular: greed.

http://www.faculty.fairfield.edu/fac...ome&wealth.htm

I guess you could call me a socialist. Or even a National Socialist.

Sieg Heil?

It wasn't the banks that needed bailing out with ZOG funny money. The banksters and financiers stole the peoples' money, squirreled it away overseas (Israel, Switzerland, the Caymans, etc), and then claimed losses using uber shady accounting practices.

Money is never "lost", it simply changes hands. I take that back. Because I know I've lost a few pennies and nickels over the years.

Just as true 200 years ago as it is now:

"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.

---Thomas Jefferson

Homeless yet?

[Alex Linder]

FOR IMMEDIATE RELEASE

Contact:
Jeannine Fallon/Chintan Talati
Edmunds.com Corporate Communications
www.Edmunds.com
Media Hotline: 310-309-4900
pr@edmunds.com

Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold, Reports Edmunds.com

SANTA MONICA, Calif. — October 28, 2009 — Edmunds.com, the premier resource for online automotive information, has determined that Cash for Clunkers cost taxpayers $24,000 per vehicle sold.

Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program.

Ironically, the average transaction price for a new vehicle in August 2009 was only $26,915 minus an average cash rebate of $1,667.

"This analysis is valuable for two reasons," explained Edmunds.com CEO Jeremy Anwyl. "First, it can form the basis for a complete assessment of the program's impact and costs. Second—and more important—it can help us to understand the true state of auto sales and the economy. For example, October sales are up, but without Cash for Clunkers, sales would have been even better. This suggests that the industry's recovery is gaining momentum."

The chart below sets forth actual SAAR (Seasonally Adjusted Annual Rate) compared to Edmunds.com's forecasted rate if the program had never been implemented.

[see link below for chart]

"Our research indicates that without the Cash for Clunkers program, many customers would not have traded in an old vehicle when making a new purchase," Edmunds.com Senior Analyst David Tompkins, PhD told AutoObserver.com. "That may give some credence to the environmental claims, but unfortunately the economic claims have been rendered quite weak."

To conduct the analysis, the Edmunds.com team of PhDs and statisticians examined the sales trend for luxury vehicles and others not included in Cash for Clunkers, and applied the historic relationship of those vehicles to total SAAR to make informed estimates. These estimates were independently verified through careful examination of sales patterns reflected by transaction data. Once the numbers were determined, Edmunds.com's analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle.

Coincidentally, a parallel analysis of the first-time homebuyer credit was reported yesterday by MIT Sloan Professor Simon Johnson and Yale law student James Kwak, who both blog about economics at The BaseLine Scenario.

http://www.edmunds.com/help/about/pr...6/article.html

[Axel Faaborg]

Originally Posted by Mr Murray

So the libertarian currency will be physical gold, no paper money?

It's the only kind of money allowed for in the Constitution.

[John in Woodbridge]

Paper money backed by gold. Get rid of the federal reserve. The federal government should require a balanced budget, as with the case with many states. This would force the federal government to cut its size in half, much of which is useless anyways.

[MikeTodd]

This would force the federal government to cut its size in half, most of which is worse than useless anyways.

Fixed it for you.