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GM is betting big on small cars like the Chevy Cruze.

Ford's European-bred Fiesta is also coming our way.
"If we suddenly went to $1 or $1.50 a gallon, that would be really bad" -- GM vice chairman Bob Lutz

It seems as though automakers just can't catch a break these days. The rocky economy and credit crunch resulted in a horrible month for auto sales in September. Every single automaker posted sales losses for the month. Even perennial overachiever Toyota witnessed a sales decline of 31.8% while Chevrolet and Ford witnessed drops of 11.2% and 33.8% respectively.

Compounding the dreadful state of the auto market were the record high fuel prices witnessed over the past six months. In May, we saw the Honda Civic, Honda Accord, Toyota Corolla, and Toyota Camry surpass the Ford F-150 in sales as Americans scrambled for more fuel efficient vehicles.

In late June, General Motors suspended the development of its next generation full-size pickups and SUVs. The company also announced plans to close four of its truck plants by the end of 2010 in order to focus on small vehicles like the upcoming Chevrolet Cruze.

Ford also felt pressure from lagging truck sales and idled its Dearborn truck plant and announced plans to convert its Cuautitlan Assembly Plant in Mexico -- which currently builds full-size trucks -- to build the sub-compact Fiesta.

So one would think that all is well now -- the automakers saw the changing trend in consumer demand, so they pivoted. Well, it's not quite that easy according to the Los Angeles Times.

With fuel prices now dropping at record levels -- 35 cents in two weeks -- auto manufacturers are wondering if they made the right move to make drastic changes to the lineups/production levels. "Do you hope for gas prices to go down so you can sell a lot of trucks again, or do you hope for them to remain high so you can justify your investment in fuel economy," questioned auto industry analyst Aaaron Bragman.

Outspoken GM vice chairman Bob Lutz seemed quite worried about the sudden change of events. "We may hate high fuel prices, but they've been driving us in the right direction when it comes to fuel economy. If we suddenly went to $1 or $1.50 a gallon, that would be really bad."

GM and Ford announced their production changes when gasoline was forecasted to top $5 a gallon in the near future.

Toyota too has cut production of its full-size Tundra pickup in response to sharply lower demand and dropped plans to introduce a diesel variant of the truck. However, Toyota spokesman John Hanson said that the company would be able to adjust to customer demand should the need arise, "If consumers start demanding trucks, we think we can still make as many Tundra pickups as they need."

This is most definitely a turbulent time in the auto industry. Plunging profits and falling sales sometimes call for desperate measures. Just over the weekend, it was announced that GM and Chrysler are in talks to merge, while Ford is considering selling its 33.4% stake in Mazda. One thing is certain, however, this is just the beginning of a huge shakeup in the automotive landscape.

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I think
By Spivonious on 10/13/2008 11:04:25 AM , Rating: 5
I think that people won't go back to trucks, since they know fuel prices won't stay low forever.




RE: I think
By krotchy on 10/13/2008 11:08:29 AM , Rating: 5
I think "Intelligent" people wont go back to trucks because they know fuel prices won't stay low forever...

However the general population has very little memory for the long term and is easily swayed by a "what can I get now" philosophy. Its half the reason for the sub-prime mortgage crisis and the massive amount of consumer credit debt.

I wish you were right, but I know that the general population will likely never be smart enough to think long term.


RE: I think
By othercents on 10/13/2008 11:47:12 AM , Rating: 5
I don't think this article is just about trucks, but really the big picture. People are just not buying new vehicles. Many people are getting smart and buying a decent used low mileage vehicle or keeping their current vehicle and saving themselves from having a large car payment.

The overall financial market (because of those over spenders) is making it hard for individuals to get loans for anything. I would expect the auto industry to have had their worse sales month in September.

Other


RE: I think
By Cypherdude1 on 10/13/2008 12:24:45 PM , Rating: 5
You're right. Judging from the posts on this thread, I can tell few people are realizing just how bad the economy is. It is true the credit markets are freezing up . I hear that there are few customers even showing up at the car lots, new or used, because they can't get any credit. If a car buyer, new or used, can't get credit, there won't be any deal at all. That's the real reason why ALL the carmakers are posting lower sales. BTW, the price of gas will NOT drop to $1 a gallon. I don't know where that GM exec. got that figure but it's ridiculous. In order for gas to drop that low, you'd need oil to drop to $10-28/barrel and that's not going to happen. Doesn't anyone remember the Clinton years when this happened? Gas dropped to $1/gallon because oil dropped to $10/barrel.
quote:
The overall financial market (because of those over spenders) is making it hard for individuals to get loans for anything. I would expect the auto industry to have had their worse sales month in September.


RE: I think
By Mitch101 on 10/13/2008 12:30:44 PM , Rating: 5
I cant speak for other areas but the used car lots by me (North Charlotte) are loaded with BMW, Hummers, SUV's, and Corvettes. All late models too and it appears they aren't selling either. The used car lots are looking more upscale than the regular dealerships in the area.


RE: I think
By lotharamious on 10/13/2008 3:26:50 PM , Rating: 5
quote:
BTW, the price of gas will NOT drop to $1 a gallon. I don't know where that GM exec. got that figure but it's ridiculous. In order for gas to drop that low, you'd need oil to drop to $10-28/barrel and that's not going to happen.

Everyone knows (Lutz, too... I know it's amazing he knows anything intelligent) that gas will not drop down to $1/gal unless there is a SERIOUS recession worldwide. What is possible is oil at $40-$45/brl until early 2010, before it spikes to $200 because of the exiting of the global recession. This would correlate to about $1.90 at the pump average for the entire US. It's very possible. And that scares the autos because they bet the wrong way, essentially wasting their money.

I do think the autos made the correct decision however. They're looking long-term, and oil, long-term, will skyrocket, even though it should drop another $30/brl in the next 6 months.


RE: I think
By Solandri on 10/13/2008 3:55:16 PM , Rating: 2
The pre-OPEC oil embargo price of gas of about $0.35/gal corresponds to about $1.65/gal now after you adjust for inflation. So it's highly unlikely we'll see gas get down to those prices.

Even though gas prices are going down, I think the experience has permanently changed how Americans think about the variability of gas prices. Previously, a big increase in gas prices was going from $2.20 to $2.65. Now everyone knows it can go from $2.65 to $4.50. When thinking of buying an SUV, people ask themselves, "well how much could gas go up?" The answer back then used to make them more comfortable with buying a gas guzzler. The answer now will leave them uncomfortable even if gas drops all the way back to ~$2/gal.


RE: I think
By Nik00117 on 10/13/2008 4:24:51 PM , Rating: 2
I agree, the market is indeed different then it once was. The car makers need to keep on the path they are now cause truth of the matter is fuel effiecent cars are the way to go.
\
GM is run by a bunch of morons anyways I work in a career field that directly interacts with GM on a yearly basis and each year I come out thinking how dumb GM is when it comes to business.


RE: I think
By lotharamious on 10/13/2008 5:36:48 PM , Rating: 1
quote:
GM is run by a bunch of morons anyways I work in a career field that directly interacts with GM on a yearly basis and each year I come out thinking how dumb GM is when it comes to business.

I don't have personal relations with GM, but the dozen or so people I do know that work for them say the whole company is a shit show. Bad PR, bad image, bad everything.

That's just what I've been told. Take that as you will.


RE: I think
By crleap on 10/13/2008 7:27:35 PM , Rating: 3
You hit the nail on the head. It takes 3 weeks for it to trickle down to $2.99 a gallon here right now, but I'm waiting for the morning I wake up and it's jumped back up to $4.19 overnight. It's going to happen, and I figure soon.


RE: I think
By Mitch101 on 10/13/2008 12:27:41 PM , Rating: 5
Totally agree with you there. Our focus over the next year is to remain employed and pay down debt while trying to squeeze another 2 years out of our current vehicles because of all the talk of what should be arriving from car manufacturers in 2010.

I am not a tree hugger but I certainly don't want gas prices to effect my income if I can help it.

Our new president may also play a role in whether alternative energy vehicles may be an option to consider going forward.


RE: I think
By JediJeb on 10/13/2008 12:30:07 PM , Rating: 2
Maybe people are starting to realize that a car can last more than 3-5 years and are starting to hang on to them longer. My truck is 12 years old with almost 200k miles on it and is still as good as when I bought it. One dent and a couple scratches isn't reason enough for me to trade it. If people start treating houses and cars as long term investments instead of fashion statements that need to be updated every few years then the sales are really going to fall off.


RE: I think
By The0ne on 10/13/2008 12:50:08 PM , Rating: 2
I plan to keep my 2nd for another 10 years. I'm not sure why some people don't have this train of thought. I still have my first car after 10 years and it's still running. I only bought the new one because I...could. But it's not a DD, the old one has twice the mpg. 10 year old technology that gets better mpg, go figure :/ Sad really.


RE: I think
By Spuke on 10/13/2008 12:56:31 PM , Rating: 3
quote:
Maybe people are starting to realize that a car can last more than 3-5 years and are starting to hang on to them longer.
The only realization here is that your average person can't get a loan to buy a new car. You CAN still get loans though as evidenced by California's 50%+ increase in home sales in the last 4 months (over 400k homes sold each month). It's not totally dried up just a lot more difficult than it's been in the last 10 years. Which, to be honest, may not be all that bad considering that EVERYONE could get a loan before.


RE: I think
By masher2 (blog) on 10/13/2008 2:22:34 PM , Rating: 4
> "Which, to be honest, may not be all that bad considering that EVERYONE could get a loan before"

That's the point most people (including our government) seems to miss. The best thing for the economy right now is a short-term decrease in credit availability, to allow overheated sectors to return to normal, and to allow rates to equalize with market risks. What people are seeing as the disease is really the cure.

The Fed kept interest rates far too low for far too long, and Freddie Mae made far too much money available to people who could afford their home financing only as long as the market was rising. Even now after the crash has hit, those organizations are taking just the opposite action that they should (FM just lifted the charge for mortgage insurance fees, to "keep housing affordable for low-income applicants").


RE: I think
By Spuke on 10/13/2008 4:09:16 PM , Rating: 2
quote:
Even now after the crash has hit, those organizations are taking just the opposite action that they should (FM just lifted the charge for mortgage insurance fees, to "keep housing affordable for low-income applicants").
If they keep messing up, they're going to end being a sub to Bank of America or Wamu/Chase.


RE: I think
By FITCamaro on 10/13/2008 2:58:48 PM , Rating: 1
I am approved for the GTO I am buying once I sell my Cobalt. And with an even lower interest rate.


RE: I think
By zombiexl on 10/13/2008 4:17:36 PM , Rating: 1
You have a cobalt? why, oh why? Two of my friends have those and like them, but i think they are too small. Of course I have 2 kids and usually at least one extra kid tagging along.


RE: I think
By lagomorpha on 10/13/2008 6:46:57 PM , Rating: 2
If a Cobalt is too small then your kids are too fat.


RE: I think
By Tsuwamono on 10/17/2008 11:48:01 AM , Rating: 2
Or you're 6'2 and all your friends are above 6 foot. That could be it too...


RE: I think
By zombiexl on 10/22/2008 9:14:42 PM , Rating: 2
So you think the cobalt can fit 5 comfortably? Maybe your brain is to thin to do the math of 2 kids and usually at least one more tagging along.


RE: I think
By Alexvrb on 10/13/2008 9:33:54 PM , Rating: 2
The Cobalt is a small car. It's kind of like saying "You wear size 9 shoes? Why, oh why? They're too small for my feet!"

Anyway, maybe he has a Cobalt coupe - in which case, plenty of room for 2.


RE: I think
By William Gaatjes on 10/13/08, Rating: -1
RE: I think
By Fanon on 10/13/2008 1:43:23 PM , Rating: 2
I think intelligent people know that fuel prices fluctuate and won't stay low or high forever. Therefore, they buy what they can afford to buy.


RE: I think
By Reclaimer77 on 10/13/08, Rating: -1
RE: I think
By William Gaatjes on 10/13/08, Rating: -1
RE: I think
By Reclaimer77 on 10/13/2008 1:55:29 PM , Rating: 1
Yup, I got excited and made typos and errors and frankly didn't care to go back and edit them. Point ? Or are you really using the spelling rebuttal tactic ?


RE: I think
By William Gaatjes on 10/13/2008 2:00:42 PM , Rating: 1
No it was none you have described. :)
Relax, i am not a typo fanatic unless it's my own post.
I found your choice of words rather amusing. :)


RE: I think
By lotharamious on 10/13/08, Rating: 0
RE: I think
By Reclaimer77 on 10/13/2008 5:47:46 PM , Rating: 2
" Someone " is driving a 1994 Mazda Protege LX. You know, the four cylinder ? Its funny but when I pull up to the pumps there isn't a magical Economy Car price, I pay the same as everyone else.

Just because I have a problem with the OP calling everyone who buys a truck a moron, doesn't mean I am one.


RE: I think
By spwrozek on 10/13/2008 8:04:14 PM , Rating: 2
I agree with you. I own a truck and my wife has a 4 cyl Saturn SL that gets 41/25 mpg. Guess what we drive around for groceries, or trips around town, or any trip which we do not need to bring a lot with us? Yet I still have the truck for my mountain bikes, snowboards, skis, kayaks, and trailers. I bought a truck and I am not a moron (although I have a GMC Sonoma which is a small truck, I get 21/17 mpg). Thanks for defending me.


RE: I think
By Reclaimer77 on 10/13/2008 8:47:22 PM , Rating: 2
OMG you STILL own a truck !?? Well thats just not acceptable. Gas is still too cheap apparently. We MUST raise it to $10 / gallon so idiots like you are FORCED to do the right thing and stop being so selfish !!111!!!

:)


RE: I think
By Nfarce on 10/13/2008 9:09:01 PM , Rating: 5
Well said R77. One other thing you won't hear people like the "truck/SUV" haters tell you is that at least half of the trucks sold in this nation are sold to people who need them: plumbers (you know, like the one who asked Obama the other day about his income tax plan and Obama said "we will spread the wealth around"); electricians; lawn maintenance folks; handymen; your other typical hard working blue collar men (and women).

I have one (full sized Chevy) because I can't tow a boat or camper with an Infinity G35 sedan very well (nor would I want to tear that car up doing so). It also comes in handy for taking things like the lawn mower to the repair dude, bringing plants home from Home Depot, bringing firewood home, football game "tailgate" parties, yadda yadda. In short, there is no shortage of me finding some use for mine seemingly at every turn (literally). Americans are not like Europeans; the majority of us don't live in tiny or cozy towns and big cities where tiny cars are useful (if allowed at all) and mass transit it pletiful. We are spread out. And that's one of the great things of this land we live in. We can choose to live in a city and not own a car at all, or we can choose to buy farm land in middle America and own a truck.

That said, even if people are jealous or whatever their motivation is for hating truck owners, they should at least grow up enough to know that a LOT of truck owners out there need one to make a living.


RE: I think
By just4U on 10/14/2008 2:52:51 AM , Rating: 2
Being in Construction I agree with you totally.


RE: I think
By MamiyaOtaru on 10/14/2008 4:29:12 AM , Rating: 2
Look a nerd! He used big words!
/dumbjock


RE: I think
By foolsgambit11 on 10/13/2008 3:55:23 PM , Rating: 3
First, let me say that I don't totally agree with the OP and his insinuation that people who buy trucks are morons. There's definitely a legitimate market for trucks.

But let me get this straight, you believe the fault for the current economic situation falls on government and utilitarians? Socialist utilitarians, specifically? So those would be the people who feel that the means to achieving the greatest good for the greatest number of people is socialism, I assume? And you decided the OP was one of these socialist utilitarians because.... he seems to dislike truck owners?

I'll admit it, I'm probably a liberal in your view. But when you have something to say, I don't just sum it up as "blah blah blah, I'm a nazi" (or whatever ad hominem attack might kind of fit). Your arguments after the introduction were strong enough to stand on their own without stooping to insults.

Lastly, I would point out that people are anticipating that the number of foreclosures will continue to go up (barring government intervention) for at least another year. Some estimates are that as many as 25% of home loans may end up in default. I'd imagine the true extent of the 'crisis' lies somewhere lower than that number, though. That would still leave the 'huge' majority of Americans as responsible with their finances. But even 8% of home loans is millions of people who were irresponsible with their finances (I prefer personal responsibility, even for those 'duped'. It's their fault for not doing the necessary research). As long as you're going to accuse the OP of being ignorant of the facts, I thought I'd try to give a more accurate assessment of the situation than your cherry-picked numbers.

In other words, I agree with much of what you say, but you make me want to argue against you because of your strident tone. That's my own personal character flaw.


RE: I think
By Spuke on 10/13/2008 4:21:52 PM , Rating: 2
quote:
But even 8% of home loans is millions of people who were irresponsible with their finances (I prefer personal responsibility, even for those 'duped'.
Although, that number is probably true (haven't looked it up), most of that number resides in the states of California and Florida. It's not really representative of the state of the nation as a whole. To make that number more accurate, you would need to break it down by state.

And 8% really isn't that big even if you look at the amount of home owners in trouble. The VAST majority are STILL on time. Should the 8% be trivialized? Yep, because 92% of home owners ARE on time with their house payments.


RE: I think
By Solandri on 10/13/2008 4:40:40 PM , Rating: 2
quote:
But let me get this straight, you believe the fault for the current economic situation falls on government and utilitarians? Socialist utilitarians, specifically?

There's some frustration among the right that the public's blame for the current economic situation seems to have fallen entirely on their mantra of deregulation. I never really "got" how Democrats complained about Reagan's "teflon" image until now. No matter what Republicans say about how Democrats were also complicit in causing this, none of it seems to stick in the public's mind.

Frankly, there were two forces which were complicit in causing the housing bubble. Republicans loosened regulation thus allowing banks and lenders to make riskier loans. Democrats encouraged the same banks and lenders to loan to low-income folks (a greater portion of whom had poor credit). Both of these two agendas synergized into a orgy of lending which led to higher prices. When you make more people eligible to buy a home, the demand for homes increases. When demand goes up, prices go up. It's as simple as that. The Republicans didn't really try to stop Democrats' efforts because banks and lenders were making money hand over foot from the loans. Democrats didn't try to stop the Republicans' efforts because more lower income people were becoming homeowners. It was a win-win, or so they thought.

quote:
Lastly, I would point out that people are anticipating that the number of foreclosures will continue to go up (barring government intervention) for at least another year. Some estimates are that as many as 25% of home loans may end up in default. I'd imagine the true extent of the 'crisis' lies somewhere lower than that number, though. That would still leave the 'huge' majority of Americans as responsible with their finances. But even 8% of home loans is millions of people who were irresponsible with their finances

The problem now is that the effect of the housing bubble's burst has trickled down into the rest of the economy. At this point, I think the default rate on mortgages has less to do with the soundness of the loans, and more to do with how the economy reacts to the credit crisis. If frozen credit markets cause businesses to go under, people will lose their jobs, be unable to make their mortgage payments, and will default. That can happen regardless of whether you were responsible or irresponsible with your finances when getting a mortgage. At this point I think your chances of defaulting due to a poor economy / losing your job are much, much higher than your chances of defaulting because you bought more house than you could afford. The side-effect has become a bigger problem than the cause.


RE: I think
By andrinoaa on 10/13/2008 4:59:15 PM , Rating: 1
The mere fact that up to 8 million people got it wrong with loans says some something about your "free at all costs" culture. It says that 8 million people had "the american dream" but didn't quite get there. The myth that deregulation and small government is the way to go, surely has hit the wall. From the outside , you guys got rid of government responsibilities and loaded up the "War Machine".
This economic bubble had its birth when Iraq was bombed. A trillion dollars and still rising. Trillions in national debt. Its like a home that lives beyond its means. Lots of time bombs that all seemed to go off at once.


RE: I think
By Ringold on 10/13/2008 9:22:23 PM , Rating: 2
quote:
The mere fact that up to 8 million people got it wrong with loans says some something about your "free at all costs" culture.


Silly me, I thought it was reflection upon the failure of public school education. People make stupid choices, and you blame government? Beautiful. If someone drinks a bottle of Jack Daniels, then gets in a car, and ends up wrapped around a tree, is that the governments fault too? They're all stupid choices.

quote:
The myth that deregulation and small government is the way to go, surely has hit the wall.


Lets see. According to wikipedia, which sites a NYT article, the total US mortgage market is 12 trillion dollars. Bloomberg said Fannie and Freddie held 5.2 trillion of these, or 43% of all US mortgages. Also throw in some VA-backed mortgages, "low income" housing, and other types of market manipulation like allowing home mortgage interest to be deducted from income for federal taxes that amounts to a government policy of encouraging 100% home ownership rates, whether or not people are capable of it.

What part of all that market manipulation and 43% of mortgages being owned by government-sponsored enterprises leads you to believe that this is a failure of the free market? Where the hell is the free market here? By this logic, France is a rapacious, hard-nosed supercapitalist state. This is like saying farming is a capitalist, competitive international market, and ignoring the massive subsidies and protective tariffs.

quote:
This economic bubble had its birth when Iraq was bombed.


What credible person who knows whats gone on really believes Iraq is relevant here? A range of government policies going back many years, the Federal Reserve lowering interest rates too low for too long, and simultaneous housing booms taking place in Europe all contribute, but the expense of Iraq has been a comparable drop in the bucket. A relatively small number of men are tied up there, and part of that "expense" goes right back to US-based firms and as wages to soldiers. In that sense, if Iraq has damaged the economy, welfare, Medicare and Medicaid are every bit as bad; they're all just redistributions for reasons other than economic activity.


RE: I think
By Felofasofa on 10/13/08, Rating: 0
RE: I think
By masher2 (blog) on 10/13/2008 11:53:41 PM , Rating: 4
> "The free market has failed by allowing predatory lending"

And once again, someone steps in to point fingerd of blame everywhere except where they really belongs. There's nothing predatory about offering someone a loan. Even a balloon mortgage isn't predatory -- especially when the lender is required to inform the recipient in big bold letters that they'll have to acquire a new loan when the original expires.

Given that as many as half the defaulted loans may be fraudulent and/or held by illegal immigrants, the "predatory" part here is the loan recipients preying on the banks-- and ultimately on us the taxpayers.


RE: I think
By Felofasofa on 10/14/08, Rating: 0
RE: I think
By masher2 (blog) on 10/14/2008 12:46:43 AM , Rating: 3
> "It is when you know full well that the recipients have no capacity to pay it off"

You couldn't possibly be further off base. Lenders follow a set of rules to determine eligibility....rules set by the government , not by them. Had they chosen to deny any of those loans, they would have been breaking the law. In fact, Barack Obama himself sued Citibank under the CRA (Community Reinvestment Act) for it doing just that -- denying loans to people it didn't think could repay them.

> "it's a classic case of Capitalising the profits and Socialising the losses"

It most certainly is. However, Fannie Mae, Freddie Mac, and the bailout in general is about as far as one can get from a capitalist enterprise as possible. There is no such thing as "socializing the risk" in a free market.

Since you entered this thread with a misdirected diatribe against capitalism, I think this statement of yours indicates you've finally realized just how seriously you've lost your way.


RE: I think
By Felofasofa on 10/14/2008 1:21:20 AM , Rating: 2
quote:
Lenders follow a set of rules to determine eligibility
No they didn't, they were way over zealous in their interpretations, liquidity was there, Bush didn't try to stop it, and so it marched on.
quote:
There is no such thing as "socializing the risk" in a free market.
Oh really? So what is a tax-payer funded bailout, plus reduced living standards, anything but a socialised loss.
quote:
However, Fannie Mae, Freddie Mac, and the bailout in general is about as far as one can get from a capitalist enterprise as possible.
Freddie/Fannie were saved because the Chinese had a $400 Billion exposure, end of story. Not bailing them out was unthinkable. You really don't understand the precipice your country stands at. Change is beyond your control now, although this has obviously not sunk in yet.


RE: I think
By masher2 (blog) on 10/14/2008 1:41:16 AM , Rating: 3
> "No they didn't"

They most certainly did. But under the Community Reinvestment Act (CRA), The Equal Credit Opportunity Act (ECOA), the Fair Housing Act and several other pudding-headed federal programs, lendors cannot deny loans if they meet government-set criteria. Point of fact, when Citibank attempted to stop making loans to people it felt couldn't afford them, it was immediately slapped with a class action lawsuit.

See Buycks-Roberson v. Citibank Fed Savings Bank for details. The settlement agreement forced Citibank to dramatically increase the number of subprime mortgages it underwrote.

> "So what is a tax-payer funded bailout, plus reduced living standards, anything but a socialised loss"

Since you've forgotten your own words from 2 hours ago, allow me to repeat them: "The free market has failed".

The free market didn't fail here. Government meddling is what failed. As it always does.


RE: I think
By Felofasofa on 10/14/2008 2:07:03 AM , Rating: 2
quote:
The free market didn't fail here.
It did, the government didn't tell Bear Stearns to lend $30 for every $1 on deposit. Greedy buggers at the top did. The models are history now, what banking is left is being partly nationalised. Whether you like it or not, regulation is coming. Good riddance to the money go round. Despite what you think, I'm no communist, but a small business man willing to compete in a free market, but I would see no loss in the removal of the derivative/futures market, in which values get very difficult to determine.


RE: I think
By nycromes on 10/14/2008 9:07:31 AM , Rating: 2
Let me just add one point that should trump all other points here.... no one forced the borrowers hands. They signed the loans on their own accord, they should have known better. I know many people who were offered mortgages that they couldn't afford and didn't accept them.

Bottom line: If people did what was in their best interests in this situation, they wouldn't have signed loans they couldn't afford. The predatory lending wouldn't have mattered and we wouldn't be in this situation. You can blame blame blame all you want, but in the end, the responsibility for one's situation falls squarely on the shoulders of the individual (at least in this situation).


RE: I think
By masher2 (blog) on 10/14/2008 9:20:34 AM , Rating: 3
This crash wasn't caused by Bear Stearns; it was caused by the meltdown in the subprime market. Bear Stearns hedge funds were all linked to mortgages.

Further, you seem to have lost your train of thought. You initially blamed this all on "predatory lending"....but Bear Stearns didn't loan money to homeowners. So which is it?

Still further, blaming this all on "greed" is about the most utterly puerile response possible. The federal government caused this massively expanding subprime market. And take a look at what happened to any bank which didn't participate in it-- they lost so much market share during the boom years that most wound up being marginalized or bought out by their larger competitors. When the Fed sends signals, banks either listen or perish. It's not their fault those signals were false.

> "but I would see no loss in the removal of the derivative/futures market"

Then tell the government to stop promoting it. 90% of the derivatives market is nothing more than a bet on how the Fed will move interest rates -- a business the government shouldn't even be responsible for in the first place. Individual banks themselves should set rates, just like prices are set in a free market.


RE: I think
By JediJeb on 10/14/2008 10:17:16 AM , Rating: 2
And take a look at what happened to any bank which didn't participate in it-- they lost so much market share during the boom years that most wound up being marginalized or bought out by their larger competitors.

I agree with you on everything but this statement is a little to generalizing. When I got my home loan I went through a small local bank, they required at least 10% down with a co-signer if you couldn't go 20% down. They have only 4 branches in two counties, so very small operation. There are many banks like this out there in the rural areas, and they have faired quite well even through all this mess. The big banks like Citi, Chase, Wachovia ect are the ones hurting because they have become too big. They all say then need to grow to be able to provide better service at lower cost, but yet my local bank provides me free checking, refunds my ATM fees nationwide, gives 5.5% interest on my checking, has free bill pay service and internet banking. I think a lot of this is possible because it doesn't owe a huge portion of its profits to a large number of stockholders. This is the problem with most companies, either the stockholder or the customers can win but rarely both. So many companies have started out with a mid priced high quality low volume product then ended up with a low priced, low quality high volume product once they went public ( this applies to manufacturing, retail and banking if you think about it).


RE: I think
By Felofasofa on 10/14/2008 8:36:09 PM , Rating: 2
quote:
You initially blamed this all on "predatory lending"....but Bear Stearns didn't loan money to homeowners. So which is it?
It's both. No one factor caused this. The end result is the same. More to come as well. Think personal credit.
quote:
Still further, blaming this all on "greed" is about the most utterly puerile response possible.
Yeah right greed had nothing to do with it, get real, and keep up the personal attacks, it really strengthens your arguments. As if discussing the US going down the financial gurgler is so sacrosanct. Bad luck, it's happening, and there is absolutely nothing you can do about it. Losing financial hegemony is a bitter pill to swallow, so I understand your grief.


RE: I think
By Reclaimer77 on 10/13/2008 5:24:59 PM , Rating: 4
quote:
Frankly, there were two forces which were complicit in causing the housing bubble. Republicans loosened regulation thus allowing banks and lenders to make riskier loans.


This is an outright lie. That bill was passed by a completely Democratic majority in congress back in 1970-something. I'm sure some Republicans DID vote for it as well, but to say " The Rebublicans passed " it is being , at the least, misleading.

Also your outright wrong about what it did. The bill REGULATED the mortgage industry by forcing them to offer loans to people who , before, would have been rejecting by lending institutions. Because it wasn't " fair " that people were being rejected based on their income and monetary status. Hmmm now I wonder, what party does that sound like ? Making decisions based on feelings...

The government CREATED the sub-prime market. This is NOT an example of deregulation.

Every single time the government interferes in private markets there is a negative reaction. I'm amazed people like you still don't get that.


RE: I think
By MamiyaOtaru on 10/14/2008 4:38:19 AM , Rating: 2
You're not talking about the same thing. The law mandating loans for lower income houses was indeed the Democrats' responsibility. But he seems to be talking about Gramm-Leach-Bliley, repealing the prohibition on investment banks owning commercial banks and vice versa, which was passed by a Republican congress.


RE: I think
By Reclaimer77 on 10/13/2008 5:13:13 PM , Rating: 2
quote:
, I assume? And you decided the OP was one of these socialist utilitarians because.... he seems to dislike truck owners?


Many reasons. I mean, did you actually read his post ? Hes across the board wrong and liberal in all his assumptions.

1. Gas prices, in his mind, are the only reason those " idiots " aren't buying SUV's and trucks anymore. Forgetting the fact that foodstuffs is at an all time high and consumer confidence across the board is low.

2. People buying to fit their needs or wants are somehow ignorant idiots because they didn't conform to a current trend or something the OP " knew " was coming. Is this not America anymore ?

siiigh ok I'm stopping. This is why I said " bla bla bla hes a socialist ". Because when you argue with a liberal or communist, I end up writing a million words and they STILL won't see your point anyway. Its also hard to debate against someone who seems to be lacking understanding of such utterly basic and simple ideals to most of us.

Please, read his post again. Note the liberal slant, the socialist talking points, his use of class envy warfare. And, of course, the lack of common sense or understanding about how things actually work. Hes doing a HELL of a lot more than simply " not liking " truck owners.

quote:
Lastly, I would point out that people are anticipating that the number of foreclosures will continue to go up (barring government intervention) for at least another year.


This is just a prediction.

quote:
As long as you're going to accuse the OP of being ignorant of the facts, I thought I'd try to give a more accurate assessment of the situation than your cherry-picked numbers.


So wait, my factual number gets outweighed by your PREDICTED figure ? I'm the one cherry picking here ?

quote:
In other words, I agree with much of what you say, but you make me want to argue against you because of your strident tone. That's my own personal character flaw.


Well it takes a big man to admit character flaws. Good post man, no hard feelings of course. I'm glad you agreed with most of what I said and got the gist of my argument. Thats enough for me.


RE: I think
By Yossarian22 on 10/13/2008 7:16:52 PM , Rating: 4
Its really an atrocity that a post like yours exists. If you are going to disparage a term, please take the time to learn how to spell the term and what the term is. If you can't do that, don't attempt to sound intellectually superior

A utilitarian argues that we have a moral obligation to do whatever brings the greatest amount of happiness to the greatest number of people. Your association of socialism with utilitarianism is "asinine" (1 "s" by the way). I can be a capitalist and be a utilitarian at the same time; all I have to do is believe that capitalism brings the greatest number of happiness to the greatest number of people.

Your post can be summed up as "bla bla bla, I'm not a very intelligent libertarian." Its amusing that libertarians have their image tarnished not by dissection of their ideals, but by idiots like you. Your inability to notice the irony of saying "libs and enviromental wackos" and "Sure its the Internet, but honestly, who the hell are you to make judgements on millions of people you don't even know ?" in the same breath speaks volumes about your intelligence and integrity.

And really, do you think 8% is a compelling number in and of itself? If I said that 8% of banks were failing, you'd probably be kind of worried wouldn't you?


RE: I think
By Reclaimer77 on 10/13/2008 7:23:46 PM , Rating: 1
Ah a parody post. How amusing and original.

Come up with your own format, lightweight.


RE: I think
By Yossarian22 on 10/13/2008 9:50:57 PM , Rating: 3
Again, you demonstrate an inability to grasp English. A parody necessarily copies the format of what it ridicules.

The above is moot anyhow, as my post was not a parody. It simply pointed out the stupidity of your post. A quality that you cannot remove from your comments apparently.


RE: I think
By nycromes on 10/14/2008 9:08:49 AM , Rating: 2
Uhh... you did copy his format to a certain degree.


RE: I think
By Spuke on 10/13/2008 11:15:04 PM , Rating: 2
quote:
If I said that 8% of banks were failing, you'd probably be kind of worried wouldn't you?
I wouldn't be worried because 92% of banks are still good.


RE: I think
By Felofasofa on 10/13/2008 11:43:27 PM , Rating: 2
quote:
please take the time to learn how to spell
Sorry for being pedantic, but grammar is worth checking as well.
quote:
the greatest number of happiness
Such as in this case.


RE: I think
By advanceduser on 10/17/2008 12:05:16 PM , Rating: 1
8% ? Where did you get that figure? Its more like 4% per Transunion

http://newsroom.transunion.com/index.php?s=43&item...

"The national 60-day mortgage delinquency rate among mortgage borrowers is expected to continue to rise throughout 2008 from a value of 3.53 percent in the second quarter of 2008 to just over 4 percent by year end," said Carson. "This is primarily due to the continued economic weakness in certain segments of the country combined with the continuing fallout of the mortgage crisis."

However, TransUnion forecasts that later in 2009 the rise in mortgage delinquency rates will taper off as economic conditions improve and home prices begin to stabilize. As far as state projections go, Nevada (8.7 percent) is anticipated to experience the highest average delinquency rate by the end of 2008, while North Dakota (1.3 percent) is expected to show the lowest level of delinquency.

Now keep in mind the industry total is 12 trillion, so at 4%, they could have paid off all the bad mortgages with under 500 billion, and made them worth 100 cents on the dollar instead of forcing banks to accept government ownership and investment.


RE: I think
By bentonar18 on 10/13/2008 2:11:34 PM , Rating: 2
There are still lots of people that can use trucks IF (big IF) gas stays affordable. I live in a rural area, and the most common "soccer mom" vehicle is a 4-dr full-size pickup. It has to double as a station wagon and a work vehicle, so it makes sense to have a full-sized truck. Gas is a little cheaper out here in the country, too... A truck is still an intelligent choice out here; it allows me to make a living.


RE: I think
By Staples on 10/13/2008 2:12:15 PM , Rating: 1
Give this guy a 6.

I think we will see a spike in truck sales next month. It may not be an increase of over the same month last year but it will be a smaller loss than we have seen in past months.


RE: I think
By Davelo on 10/13/08, Rating: 0
RE: I think
By JediJeb on 10/13/2008 5:49:46 PM , Rating: 2
Gas will never again drop below $3 and he knows it.

That's odd, gas where I live just hit $2.86 and seems to still be falling.


RE: I think
By Spuke on 10/13/2008 11:17:57 PM , Rating: 2
Unless you live in CA, gas is already below $3 a gallon. It's the lack of demand that's currently driving down prices. I foresee prices going down even further once car sales pick up and people continue the current trend of more fuel efficient cars. It is quite possible that we could see $1.50 a gallon gas in some areas.


RE: I think
By rudolphna on 10/14/2008 1:16:58 AM , Rating: 2
or new york, where its 3.24 because of all the gas taxes here


RE: I think
By Reclaimer77 on 10/14/2008 2:43:25 AM , Rating: 2
Wait.. are you saying oil is getting cheaper because people are " buying more fuel efficient cars " ??


RE: I think
By Spuke on 10/14/2008 12:20:22 PM , Rating: 2
Nope. Demand for gas is down which is lowering gas prices.


RE: I think
By stryfe on 10/15/2008 3:57:09 PM , Rating: 2
That and you can't mount a gun rack on a Ford Fiesta!


RE: I think
By Gzus666 on 10/13/2008 11:09:57 AM , Rating: 2
I think you are assuming the average consumer actually thinks about that. They see cheap, they dive on it. Average consumer doesn't have that kind of forethought.


RE: I think
By therealnickdanger on 10/13/2008 11:17:53 AM , Rating: 4
I think people that need or really want trucks will do what they've always done throughout history: buy trucks.


RE: I think
By kamel5547 on 10/13/2008 11:47:18 AM , Rating: 1
People won't go back to trucks because no one will give them a loan for one... at least for now.

People are very good at rationalizing any decision they make, whether or not it is actually rational.


RE: I think
By paperfist on 10/13/2008 11:49:50 AM , Rating: 2
Eh maybe they should apply fuel economy to trucks?! I need one for work and would happily pay more for a fuel efficient truck which the auto industry keeps as their dirty little secret. The EPA never made them count toward their MPG ratings so they never bothered to compete at that level and now they have a chunk missing from their back sides.


RE: I think
By DeuceHalo on 10/13/2008 12:19:35 PM , Rating: 2
I completely agree. I still need a vehicle I can tow my boat with on the weekends, and a little Prius isn't going to cut it. If I could get a fuel efficient truck, I'd do it.


RE: I think
By Cypherdude1 on 10/13/2008 1:55:59 PM , Rating: 2
Actually, a little Prius could cut it, if you dropped a truck engine into it.

B ^D
quote:
I completely agree. I still need a vehicle I can tow my boat with on the weekends, and a little Prius isn't going to cut it. If I could get a fuel efficient truck, I'd do it.


RE: I think
By masher2 (blog) on 10/13/2008 2:27:50 PM , Rating: 5
> "Actually, a little Prius could cut it, if you dropped a truck engine into it..."

And stiffened the suspension, added a transmission intercooler, increased the load-bearing capacity of the rear tires, and possibly strengthened the frame and/or rear bumper assembly.

There's a bit more to towing than raw horsepower. :)


RE: I think
By jRaskell on 10/13/2008 5:16:57 PM , Rating: 5
quote:
> "Actually, a little Prius could cut it, if you dropped a truck engine into it..."

And stiffened the suspension, added a transmission intercooler, increased the load-bearing capacity of the rear tires, and possibly strengthened the frame and/or rear bumper assembly.

There's a bit more to towing than raw horsepower. :)


And Voila, you have a 20mpg Prius. ;)


RE: I think
By SavagePotato on 10/16/2008 10:40:12 AM , Rating: 2
Wouldn't you feel silly though when your front wheel drive prius's front half was driving away from you while you in the back half of the car and your trailer were still sitting at the stop light because the car broke itself in half?


RE: I think
By itserix on 10/13/2008 12:02:06 PM , Rating: 2
i think there are still a lot of people rely on trucks for work


RE: I think
By jimbojimbo on 10/13/2008 2:23:25 PM , Rating: 3
For every 1 person that uses a truck for work there are hundres of people with SUVs that never go off roading or tow anything.


RE: I think
By drebo on 10/13/2008 4:14:37 PM , Rating: 2
And it should be their perogative to buy any damn car they want to. I drive a mid-size because I don't want to be crammed into a sardine can. Some people have 4-5 kids and drive a Suburban or a Tahoe because they'd prefer the extra size and power to that of a minivan.

At what point did the government get the right to tell me which cars I can and cannot buy? At what point did they get the right to tell car companies which cars they should and should not be making?


RE: I think
By lagomorpha on 10/13/2008 7:03:56 PM , Rating: 1
"At what point did the government get the right to tell me which cars I can and cannot buy? At what point did they get the right to tell car companies which cars they should and should not be making?"

At what point did the government get the right to tell me my car has to pass crash tests and have air bags? At what point did they get the right to tell car makers what features needed to be in their cars?

If anything crash testing should be done like this:
Crash vehicle being tested into a common compact car. If the dummies in the compact car survive then the vehicle passes. It is my right to endanger myself with my vehicle choice, it is NOT YOUR RIGHT to endanger others by purchasing a landdreadnaught with a bumper height that puts others at risk. Oh and btw I'm not an environmentalist but I've pissed on the door handles of hundreds of Suburbans and Expeditions.


RE: I think
By Nfarce on 10/13/2008 9:26:29 PM , Rating: 3
quote:
It is my right to endanger myself with my vehicle choice, it is NOT YOUR RIGHT to endanger others by purchasing a landdreadnaught with a bumper height that puts others at risk.


If the government says it's safe for the road, then IT DAMN SURE IS MY RIGHT . You sound like a fascist. Stay off the damn road if you feel threatened then. But do NOT tell others what they can and cannot drive. Comparing government safety regulations to the CHOICE of buying what you want that PASSES government safety standards is nothing but fascism.

quote:
Oh and btw I'm not an environmentalist but I've pissed on the door handles of hundreds of Suburbans and Expeditions.


I'd be careful if I were you, dude. I read about one guy getting so severely beaten when caught doing that he never walked or looked the same again...and the truck he peed on didn't belong to the attacker.


RE: I think
By porkpie on 10/13/2008 10:09:51 PM , Rating: 2
quote:
Oh and btw I'm not an environmentalist but I've pissed on the door handles of hundreds of Suburbans and Expeditions
Very classy of you. I bet you clean your ears with your car keys when you go out for a "fancy" meal at the local BBQ joint too.


RE: I think
By Spuke on 10/13/2008 11:23:03 PM , Rating: 3
quote:
Oh and btw I'm not an environmentalist but I've pissed on the door handles of hundreds of Suburbans and Expeditions.
That's really dangerous and stupid dude. But, feel free to continue doing that. The gene pool gets a little murky sometimes and requires occasional maintenance.