Earlier today, Doug McIntyre wrote about the Congressional passage and presidential approval of $25 billion in loans to help the American auto industry modernize its plants.And the pigs still won't leave the trough. The Wall Street Journal reports (subscription required) that the $700 billion bailout plan rejected by Congress on Monday also included a provision to help the auto industry recover from the bad car loans it made, similar to what the housing industry faces. According to the Journal, "A Washington bailout of bad car loans could loosen the flow of financing for potential car buyers and spark demand for new cars and trucks. It likely would free up funds that could be invested in securities backed by auto loans, bringing down borrowing costs for auto lenders."
If the housing bailout is nuts, a bailout to make it easier for people to get car loans is insane. Nearly every finance expert would agree that car loans are something to be avoided, and most people should be buying used cars unless they can afford to pay cash for a new one. The government should not commit taxpayer funding to make it easier for people to overextend themselves buying depreciating assets to impress their friends.
Of course, with the rust belt set to be a major battleground for the upcoming elections, few politicians will have the gall to stand up to special interest groups seeking cash for things that don't benefit the vast majority of Americans -- yet another reason to delay a massive bailout until mid-November, after the election.











Reader Comments (Page 1 of 1)
10-01-2008 @ 3:10PM
bkeller388 said...
the author needs to get into the real world of overbearing government. who mandated the safety regs? who mandated the mileage req'mt regs? who mandated the emissions regs? why did they not also fund the changes? the author must love the foreign car companies. the auto industry in this country provides about 1 in 6 jobs. it's high time we invested something in our american companies!
10-02-2008 @ 7:33AM
Lex said...
those overbearing govt safety reqs and mile mileage requirements apply to all manufacturers - the management at the 'big 3' manufacturers are to blame for their problems. ford still thinks a 50-60 mpg fiesta wont sell in the US. forward thinking indeed.
10-01-2008 @ 4:17PM
PHIL said...
lol lol doug is the true lover of toyota! he could care a less about anything else . but he never talks about wall street dying and banks having no money to give loans ! so why would any of his comments make a diff?? lol they don't.. but the true pigs at the trough is wall street ! 700 billion doug? lol lol like people believe what you blog? lol lol if they do i have a bridge to sell them ? lol
10-02-2008 @ 4:09PM
JOHNR said...
Four years ago, a salesman at our local FORD garage was saying to me "only if the banks and dealers offer car loans to the buyer at 0%, soon will the auto dealers continue to keep open. He was saying, things are going to get very ugly as he sees it coming, for auto buying as time goes on,because even then he could see the ecnomy getting into trouble with home loans that can't be paid,and people buying cars at ridiculous high interest rates and prices and not being to hold onto them.. He was an old guy,that was a young teenage kid duing the 1930's. He knew what he was talking about. The old saying "some who knew were talking, but no one was listening." Until it was too late.
10-06-2008 @ 2:56PM
messagerelay said...
This auto manufacturer bailout loan crap makes me not want to vote. YES, it's a bailout and a risk. The risk is, they will probably use the money unwisely just like before and not make a profit. Please tell me, how do pay back a loan without profit? And who made the calculated risk to do this? The big three auto mfrs should be allowed to fold. I highly believe the UNION is the main cause of their failure. Think about it. Why should a person with no college education, some don’t even have High Scool ed, make $29/hr for mounting hardware on hardware? Tires, seats etc… I have seen people “Stage” parts like screws and washers and gaskets and push buttons that get paid over $24/hr. Give me a break. No wonder they are losing money. They have to support the morons in their work force. A high scool student can do this for federal min wage!
Most everything is automated and the unhealthy stuff is done by robots. That’s ridiculous. If one were to vistt one of their plants and audit this you will see it’s true. I have been in manufacturing for 10 years. Positions get a pay increas because of tenure? WTF is that. After 5 years your still an idiot manual robot doing the same thing you got paid for when it was minimum wage! The big three should fold and the American people should not have to suffer through their reign of OPEC Support terror.
DROP THE UNION! Or beteer yet, shut down the plant and reopen WITHOUT THE UNION! Sure, promote "Buy American". I'll spend my money on some good ol Amercian fun like go see a Baseball game and scarff down 8 hotdogs and a pitcher of beer before I spend a boatload of money on an american car just to help support the afformentioned idiots employed there. Don't get me wrong, not all are itiots, just the floor rats. If it weren't for the UAW, US auto prices would be more competitive and affordable to Americans.
Let’s take a look at this PHEV incentive that was passed also. To take advantage of this incentive, the vehicle you purchase must have soo much battery in it, can’t remember the specs but it was 3x more than any current foreign hybrid uses. Ironically if you look at any vehicles that can qualify, only the Chevy Volt and other US hybrid wannabe vehicles can qualify. Why? Because they are soo inefficient they require that much battery to run. So basically these US autos can not sell themselves and the big 3 need the govt to try and make the deal sweeter. For this reason I will never purchase a US big 3 vehicle again. The American people CAN survive even if the big 3 auto are gone. Need a car? There’s others to choose from? Lose your job because the plant failed to foresee the coming inevitable world change and they blindly charged on building Bradley Tank SUV’s? No problem, other auto manufacturers exist here in the US and when competition is gone from the big 3, guess what, manufacturing increases elsewhere in the US. Incentives for this PHEV bill should go to the vehicles that ARE PHEV. That should be the criterea. Then the consumers can decide WHAT PHEV they want to buy. So, guess what, they will most likely not buy a Chevy Volt and I highly recommend against the volt. This vehicle as well as any other attempts for the big 3 to sell as a hybrid / PHEV is just like their predecessors. They were hogs on gas back then, and in this generation they are hogs on batteries! Nothing has changed and they learned nothing. Tell me again why we are giving these huge loans to the same people that enticed people and sold Americans these poor excuses for a vehicle? I hope they all go under. This will open the doors to the small entrepreneurs like the “AC Propulsion”, “Phoenix Motors and “Hybrid Technologies” or “Black Bay Technologies”. Don't get me wrong, the Volt is an outstanding concept. I just don't agree with their business practices therefore they will never get my bussiness again or support. Here's proof Ford can produce a high mileage car: http://www.carpages.co.uk/guide/ford/ford-fiesta-studio-1.25-3dr.asp AND HERE:http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=autos_autos+--+lifestyle+subindex+page_top+stories, funny they don't offer it here in the US, we don't deserve it?
Basically IF the big 3 took what “Hybrid Technologies” is doing and refined the process, expand their facility, buy them out and ensure product reliability to “Their” standard then I believe the big 3 can make a come back. Think about it. This little comapny, Hybrid Technologies, takes already built ICE vehicles and convert them to 100% Electric in about 4 days. You get a range of 100+ miles. Good for commute and for soccer practices and runs to the grocery store, run to fast food for the 3 kids and get a beer. That is a perfect idea. So there, I just retooled the big three in less than an hour, my bill is $50Billion please.
Of course this will not happen because Detroit has this “It wasn’t my idea so I wont bother with it” persona. Sure they’ll probably get the loan. How’s it feel to be left out in the cold for those Americans who lost their homes to bad loans? Govt will bail big auto but leave Americans to fend for themselves and at the same time pay for this friggin mess. Yes, it is true that “We weren’t pushing these larger vehicles, we were just building what our customers wanted,” Mulally said….” (Quote from: http://afp.google.com/article/ALeqM5h4EahO3VBl2HqNDP58DrifgZ_RlQ) but you continued and did nothing to “Adapt” to the market, Just like the dinosaurs, and guess what, the Asteroid of OPEC hit and you cant “Adapt”! Hey Detroit, “Retool THIS!”, bastards.
10-24-2008 @ 10:51PM
Calvin Whitehead said...
I agree with the unions causing the majority of the problems with the auto industry,but we as americans go out and by foreign autos and trucks. Even thought they are made or assembled here their profits all go back overseas.Talk about a trade deficit. And furthermore where are the Japanese when our markets are failing.Sitting back and laughing there asses off.I have tried to purchase American made products all my life but it gets harder and harder every day.I have worked in a GM dealer most of my life and will put their product up against anything that the foreigners can produce.
11-06-2008 @ 11:30PM
dave f said...
Please don't give the auto industries any more money until the ceo's (etc) take a $100.000 cut in there pay and bring all auto jobs back to the united states and re-open the shops in michigan(flint) THEY HAVE BEEN GOUGING THE PUBLIC FOR MANY YEARS NOW, THEY SAY 0% BUT THE INTEREST IS IN THE COST OF THE VEHICLE, PLUS THE DEALER COST PLUS THE RETIREMENT PROGRAM. THEY CLAIM THERE GIVING YOU 0%-WHILE THERE RIPPING YOUR HEAD OFF THROUGH GMAC ESPECIALLY THE MORTGAGE DEPARTMENT.WHAT EVER HAPPEN TO "DRIVE THE USA IN YOU CHEVROLET"I WILL NOT BUY ANOTHER NEW CAR UNTIL THE AUTO INDUSTRIES STOPS THE GOUGING AND MISLEADING ETHICS. WAKE UP GM=FORD-CHRYSLER-THE PUBLIC IS TIRED OF IT. IF YOUR NOT GOING TO BRING THE JOBS BACK WHY SHOULD WE BUY YOUR PRODUCT.
11-08-2008 @ 12:17PM
corners said...
Bkeller, i think you are a lil lost on this issue. We shouldn't bail them out. They spent millions and millions fighting better fuel regulations and greener technology because they were making a killing of their truck and suv lines.Now that the oil prices and the back lash of consumers against bad fuel mileage Detroit's sinking because of their own choices they made.
Back when regulations were trying to be put on the auto industr they said it would cost billions and it would also cost millions of jobs. Well, look where we are now?We have lost millions of jobs and factories, and now are cars don't have even the good mileage the auto industry was afraid of.Now they want us to bail them out again? This time will be 75 billion total, if they are burning 4 billion a month i don t see how another bailout in 10 months wont be coming
11-14-2008 @ 2:42AM
Rocket said...
No bailouts for any industry.
Bad businesses need to die. That is capitalism. Do not reward bad businesses. Better companies will rise up.
Why should the American taxpayer foot the bill for their incompetence? These are privately owned companies.