The big 3 have nothing to fear. Bush is the bailout czar. He will make a way to bail them out with or without the consent of the people, the Constitution, or congress.
This 1 month shut-down is a strategy to get the bailout money. Nothing more. Besides, if Chrysler can’t survive without taxpayer welfare, then it should shut down permanently.
Chrysler is whining that they can sell, but they can’t get the loans approved. Then maybe Chrysler has relied too heavily on sub-prime lending schemes to push it’s product, and not enough time on the quality of their product.
It’s a fact. People with good credit can still get a car loan...no problem. It’s the sub-prime folks, those with a history of not re-paying loans, who are having trouble getting car loans. So the sub-prime bubble bursts. And Chrysler didn’t know it was destined for failure? Please.
Here’s the deal. Sub-prime lending has the potential for huge profits. How so? Interest rates on the loan are the highest allowed by law, and the price of the vehicle is maximized with all the trimmings at the highest possible price. Then the typical sub-prime buyer will be sold the entire bill of goods included with the loan. ie extended warranties sold at the highest possible price, and credit life and A&H. WHAMMO! Everybody makes big money (on paper).
WHOA! Hold the presses. An enormous amount of defaults are liquidating all the profits. Well no duh. Just how long did Chrysler believe it could get away with this scam? Of course Chrysler is not the only car manufacturer involved in this sub-prime lending scheme.
In the next step in the scheme, the product (sub-prime portfolios) were sold at a discount to Wall Street investors expecting huge profits. And here we are.
I’m telling ya, you just can’t make this stuff up.
Point well taken. I wonder how many cars were bought over the last few years with money from home equity or refinance deals (or combinations thereof). It’s gonna take a long time — if it happens — for us to learn to live within our means.