posted on May, 21 2009 @ 08:42 AM
GMAC until Chryslers recent Bankruptcy was also partnered with Chrysler's lending unit. The merger of the entities hurt them both during the economic
GMAC also suffers from over exposure to mortgages having become a recent home lender in recent years.
GMAC is also burdened by a record and staggering amount of automobile loan defaults.
In normal times GMAC like other banks would simply reposses the vehicles sell them at a local auction at a slight loss and recoup their money and
There defaults are averaging not 100% greater than normal but over 100 times greater than normal.
Not only is it logistically almost impossible to 'snatch' and reposses all those cars but if you could, for instance if you run 10 Chevy Malibus
through a local wholesale auction on any given day they will all hold close to wholesale NADA black book value, if you had to run 100 Chevy Malibus
through a single auction on any given day they would bring thousands belowe wholesale NADA black book value because there are so many of them
available...if you ran 1,000 Chevy Malibus through the local wholesale auction on any given day it would totally not only destroy their wholesale
value bringing in just a fraction of their wholesale price, but every GM Franchise that was stockign pre-owned Chevy Malibus that they had bought and
financed on their GMAC lines of Credit would plummet right along with them, giving those dealers no chance of ever getting the money back out of what
they invested in the car as a trade-in or a wholesale purchase for their used car business.
Toyota is posting a 10.2 billion dollar loss in the first quarter this year and is forecasting it's vehicle sales will be off by 1,000,000 units this
Americans who don't shop, buy or drive domestic cars think this is about mismanagement.
Try telling that to Toyota...it's not about gross mismanagement it's 90% of all car consumers finance all or a major portion of the purchase and the
banks simply are still not lending money after 2 trillion in bailouts auto and home loans are still almost impossible to recieve for people with
perfect credit scores and good jobs.
I urge my fellow Americans to not let poorly formed preconceptions based on a market you likely have little frequent first hand interaction with
create knee jerk reactions that is only going to further hurt the 1 in 7 Americans directly and indirectly employed by the car business, not to
mention the huge charity grants and donations car dealers make in their local communities in liue of tradditional advertising.
It's not just car dealers and their employees and union workers who are going to continue suffering as a result of the frozen credit markets but
shippers, advertisors, youth sporting, civic orginizations and church groups that the lack of retail auto sales prevents dealers from being able to
The big gamble in giving the big three money is will they use that money to set up more manufacturing aimed at capturing share of the huge exploding
Chinese Car Market that bought more cars last year than America did.
Our love of cheap Chinese manufactured goods and Wal-Mart has created a rival market that the big corporations many of them America see as a far more
lucrative and growth oriented one than America since they do now have all our manufacturing and a real sustainable wage base and disposable income to
buy products we no longer do.
Americans really need to start thinking for a change instead of simply reacting and allowing themselves to be misled and herded. That's what got all
of us into this mess not just the big 3. If you still aren't prepared to acknowledge how each and every one of us has played a roll and is
responsible for how we earn and spend our money and where and want to make this just the government's fault, and just the corporations fault, and not
intelligently realize how you and I and everyone else has done some pretty stupid things in how and where we spent out money that has in effect slit
our own throats and doomed our own economy then well...we really are screwed because if we can't get it together and figure it out, chances are the
government and the corporations are going to figure out as usual what's in their best interest and not ours!