Chrysler to stop all vehicle production Friday!

On 12/19/08 03:03 am Ted Mittelstaedt wrote:

> For the people with bad credit or small amount of savings,
> well guess what. There's TONS of used cars out there on
> the market that are in GREAT shape. Go buy yourself a nice
> big SUV that's a few years old, and you will get a fantastic
> used vehicle for a song. Gas prices right now are in the
> toilet, so no problem fueling it. And if gas prices rise again,
> well then just use some restraint on driving and get out of
> that goddam habit of just jumping in the car and driving to the
> store every time you find you need a little thing.

A newspaper report a few weeks ago quoted the example of a guy who had
just landed a new job after being unemployed for a while but couldn't
get financing for the *used* car he needed to get to the job.

Perce

On Dec 19, 3:03*am, "Ted Mittelstaedt" > wrote:


> Would you PLEASE quit perpetuating the MYTH that somehow
> the amount of money that a person pays for an item is LESS if
> they pay for it on credit than if they just pay cash?

It's not a myth. And now that the credit markets have tanked, the
result is self evident. People can't buy new cars, new car dealers
can't move inventory, car makers are making too much product. When
supply is up and demand is down, price falls. Macroeconomics 101.

>
> The US consumer is waking up in 2008 and discovering the
> REALITY that if you buy something on credit, that the INTEREST
> that is paid tacks a LARGE AMOUNT OF ADDITIONAL COST
> on to the price. *So they are pulling back, paying down their credit
> cards, and doing the old-fashioned method of buying things - which
> is to save up the money FIRST and THEN spend it.

That consumer exists in your head. Marketing folks work with the
finance people and the mantra is "buy buy buy - we finance anyone" -
stuff like that. No credit markets to lend, you can't move inventory.
Inventories have been built and maintained for decades with a credit
market supplementing purchases. Look at all the furniture companies
that went belly up.

>
> Why do you think that all of the investments are paying **** right
> now?

They are paying **** because banks lent money to people who could
never really pay back the money. BUT the banks, in conjunction with
the rating agencies (Fitch, Moody's Standard & Poors) rated the
securitized junk that supposedly mitigated risk as AAA "Investment
Grade". In the real world, the loans were so risky they should have
been rated junk. When the 24 year old borrowing 2 million dollars cn't
sell his "Investements" or pay his mortgages the banks were left with
AAA rated pieces of paper. Hence the **** returns you reference. Add
in some leverage (10 dollars controlls 100 or more for example) and
the crash is exponential.
>
> Home costs are an exception to the rule because in prior years,
> the appreciation of the home value outpaced the interest rate on the
> mortgage - so even though you may have ended up paying, say,
> a half-million dollars in interest for a $120K home at the end of
> 30 years - the home price had appreciated to that half-million
> dollars. *Thus, you didn't lose money - although you really didn't
> make any money either.
>

You lose. You don't rake up leaves in your investment, or fix a leaky
faucet, repair cracked concrete - there are huge minuses to owning a
home. They aren't investments. But if you can pay it off fast while
you're young, you can pocket more cash than renting. *IF* it's paid
off. cause you're still going to have maintenance and taxes. And now
that school taxes are getting less help from the states, guess where
public school funding will comre from? Higher property taxes on your
investment.


..
>
> Now as for this nonsense that credit markets are drying up, that
> is false. *The ONLY credit markets that are drying up are
> the "we'll finance anyone the law allows" sub-prime credit
> markets, and unsecured credit. *In short, they are no longer
> letting people with inadequate income amounts, and a history
> of defaults, get credit to buy a new car. *

You are categorically wrong.


>Nor are they just giving out
> $50,000 credit limits on unsecured personal lines of credit
> anymore. *And this is a bad thing? *How, exactly?
>
It's not. But it IS deflationary. And the economy WILL contract.

> For the people with bad credit or small amount of savings,
> well guess what. *There's TONS of used cars out there on
> the market that are in GREAT shape. *Go buy yourself a nice
> big SUV that's a few years old, and you will get a fantastic
> used vehicle for a song. *Gas prices right now are in the
> toilet, so no problem fueling it. *And if gas prices rise again,
> well then just use some restraint on driving and get out of
> that goddam habit of just jumping in the car and driving to the
> store every time you find you need a little thing.
>
> Use a little logic for God's sake. *There's only ONE REASON
> that new car sales have fallen, and it has NOTHING to do with
> the banks. *It is simply because PEOPLE ARE DRIVING LESS.
> There's plenty of government statistics to back this up. *

Plenty of Government statistics, eh? Like the economy was fine, credit
markets were fine, Greenspan patting himself on the back talking about
the resilliensy of the economy. SEC doing due dilligence. Yes, the
government statistics, much like the rating agencies are doing a bang
up job, Ted! It must be that people are driving less and not needing a
new car. Thanks for clearing that up!

>
> But, FINE don't believe me. *Go ahead with your fantasy that
> somehow in a few years when India and China start selling the
> sub-$5000 cars and the rest of the automakers drop their
> prices to compete, that it will magically wake up car sales.

Well, I see you clearly grasp the big picture! And here I was thinking
things were bad. Think I'll go whistle past the graveyard now!

Jimmy

The point is that somebody buying a USD 20K can't necessarily plunk that sum
down on the counter but can afford, say, USD 500 per month.

That is the point and it doesn't matter that the total sum paid is greater.
Same with home loans, of course.

In Britain all car loan adverts show the cash price and the total sum paid
if in instalments. It's obvious it's dearer to borrow (some interest-free
deals notwithstanding).

DAS

To send an e-mail directly replace "spam" with "schmetterling"
---
"Jimmy" > wrote in message
...
On Dec 19, 3:03 am, "Ted Mittelstaedt" > wrote:


> Would you PLEASE quit perpetuating the MYTH that somehow
> the amount of money that a person pays for an item is LESS if
> they pay for it on credit than if they just pay cash?

It's not a myth. And now that the credit markets have tanked, the
result is self evident. People can't buy new cars, new car dealers
can't move inventory, car makers are making too much product. When
supply is up and demand is down, price falls. Macroeconomics 101.

[...]

In article > ,
News > wrote:

> That said, Toyota shelved plans to complete its Mississippi Prius plant.

Toyota just opened a new plant in Ontario, the RAV4 is being built
there, one shift for now.

On Wed, 17 Dec 2008 21:05:56 -0800, "Ted Mittelstaedt"
> wrote:

>
>"Jimmy" > wrote in message
...
>> http://news.yahoo.com/s/nm/20081218/ts_nm/us_autos_7
>>
>>
>http://money.cnn.com/2008/12/17/auto...n=money_latest
>>
>> I just refuse to believe that this is all due to quality.
>>
>
>[big rant deleted]
>
>I don't see what your all het up about.
>
>Chrysler made too many cars. What do you want them to do?
>Make more so that they have to sell them at below cost? Make
>more so that they have to stack them up in the warehouse like
>cordwood?
>
>Sure it sucks for the workers to lose a month's pay and
>unemployment won't make all of that up - but at least they
>will have jobs to come back to a month from now.

They won't lose a months pay. When Chrysler announced they were
stopping manufacturing a month early, there was some Chrysler auto
worker being interviewed on TV complaining about,
"How am I going to live on 80% of my regular wage"?
THAT'S EIGHTY PERCENT FOR SITTING AT HOME.
He went on to say how he has a family, bills, a mortgage and car
payments!
Responsible financial counselors have said for years, you should have
six months income in the bank to cover emergencies. Where is his
"rainy day fund"? Common sense should have told him to start saving
money months ago when the handwriting appeared on the walls.

BTW, there have been continuous Dodge Caravans in my garage since 1984
so I have no ill feelings towards the company. I truly hope they make
it out of this.