tag:blogger.com,1999:blog-14963913.post2544763258166992886..comments2023-10-27T20:27:57.900-04:00Comments on Kid Dynamite's World: GM Wants More Subprime BuyersKid Dynamitehttp://www.blogger.com/profile/17475987512856310577noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-14963913.post-43874179077204653462010-05-17T20:43:22.879-04:002010-05-17T20:43:22.879-04:00The US lost 1.6 Billion on the Chrysler deal, wow....The US lost 1.6 Billion on the Chrysler deal, wow. That used to be big but now not so much.<br /><br />Just like homes, unless credit can be real loose sales will fall. No one but the government wants to make home/auto loans to crappy borrowers right now.EconomicDisconnecthttps://www.blogger.com/profile/02802078645713106743noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-51857180023971119142010-05-17T13:46:19.163-04:002010-05-17T13:46:19.163-04:00Ken,
There was a time when GM product was obvious...Ken,<br /><br />There was a time when GM product was obviously worse than Honda/Toyota product. <br /><br />But the game has changed on both sides. Honda quality is not where it was and GM's is greatly improved.<br /><br />I'd argue that sets up a good value opportunity.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-65367815441765507412010-05-17T13:30:00.166-04:002010-05-17T13:30:00.166-04:00Kid, I'm not sure why GM's the bad guy her...Kid, I'm not sure why GM's the bad guy here.<br /><br />If GM turns away a buyer, that's one more (very expensive) nail in their coffin. The customer goes down the street to the Kia/whatever dealer will give them financing. Someone on the sales floor is required/inspired to be hungry-enough to finance the sale. <br /><br />When keeping a roof over your head and food in the belly depends on straight-sales it takes away your imperious distaste for poor credit.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-33702210963849956592010-05-17T13:07:17.119-04:002010-05-17T13:07:17.119-04:00The solution is simply.
The government already o...The solution is simply. <br /><br />The government already owns the majority of Ally Financial. <br /><br />A quick name change to AllyMae and they can assume the role of Fannie/Freddie as it relates to auto loans. <br /><br />It certainly would ensure the government can take GM public much sooner and at a much higher price than anyone dreamed. <br /><br />The funniest part of the article was the reference to Honda having such a huge market share of the subprime market. <br /><br />Gee, you think that might be driven by the fact Honda's do not depreciate nearly as quickly and hold their resale values much better than the typical piece of junk offered by GM. <br /><br />It is shocking to discover the underlying quality of the assets actually matters in the world of financing.Kennoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-6876069164956181492010-05-17T12:30:02.179-04:002010-05-17T12:30:02.179-04:00"I'm not sure that the reason buyers didn..."I'm not sure that the reason buyers didn't default is because "the value of cars never became overinflated" - if buyers can't pay, it doesn't matter what the value is. The reason buyers didn't default probably has much more to do with the fact that the car payments are much lower than the house payments!"<br /><br />I'm sure this is part of it, but houses are harder to reposes. If you get foreclosed on you may end up living in the house for a year + fighting (or just ignoring) the process. With a car once they find it they take it. This means you get much less benefit from the period that you aren't making payments and it also means that stopping payments on your car can mean a very sudden inconvenience. One day you wake up and you can't get to work or take your kids to school. With a house you have months in advance warning (as well as cash being offered for your keys to help you get out).Baconbaconhttps://www.blogger.com/profile/13511082564082971086noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-22003462798850646082010-05-17T08:24:40.490-04:002010-05-17T08:24:40.490-04:00Seems like the classic sales/accounting conflict t...Seems like the classic sales/accounting conflict to me--sales doesn't give a damn if the customer can pay, they just want to make the sales; accounting doesn't give a damn if there are any sales, they just hate writing off accounts receivables. . .But What do I Know?noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-71672203310084447072010-05-16T23:27:59.500-04:002010-05-16T23:27:59.500-04:00right transacioncosts, sure - i'll nod to mos...right transacioncosts, sure - i'll nod to most of that (although subprime mortgages certainly weren't designed as a way for people to bet on housing appreciation, even though they rapidly evolved into that). and YET - subprime loans - auto or home - are still to lower quality borrowers, who are a higher credit risk - no matter how you cut it...Kid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-17970108088491589232010-05-16T23:04:30.396-04:002010-05-16T23:04:30.396-04:00The reason subprime mortgages are doo-doo is that ...The reason subprime mortgages are doo-doo is that they're used to make bets on the future appreciation of the underlying asset (real estate). It's a way for people to bet with money they can't otherwise borrow. When they lose the bet, we all lose.<br /><br />Cars will never appreciate, and everybody knows this. So a subprime car loan doesn't carry the same danger, because the borrower isn't going to use it as a cheap way to bet on the auto industry.transactioncostsnoreply@blogger.comtag:blogger.com,1999:blog-14963913.post-83042443582407562382010-05-16T22:18:30.199-04:002010-05-16T22:18:30.199-04:00Just one more piece of evidence that we're try...Just one more piece of evidence that we're trying desperately to creep back to the credit bubble again. It was just too much fun to resist going back there, eh?<br /><br />And of course there's the huge moral hazard that our fearless leaders have stoked to ever higher levels. Wonderful.Onlookerhttps://www.blogger.com/profile/07742157936955263465noreply@blogger.comtag:blogger.com,1999:blog-14963913.post-71872552406213774592010-05-16T21:52:11.778-04:002010-05-16T21:52:11.778-04:00Ronnie James DIO died today. Over time all your h...Ronnie James DIO died today. Over time all your heroes will fall. 67 is a good run, but he was a metal god.EconomicDisconnecthttps://www.blogger.com/profile/02802078645713106743noreply@blogger.com