patrick.net

CL says

Why did Mulally ask for the credit lines, and state, “In particular, the collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford’s top dealers also own GM and Chrysler franchises.”

In addition, Ford got the vast majority of the Green Car funding amounting to $6 billion or so there.

Contrary to popular belief, Ford was on life-support and happy for the entire industry to receive assistance.

Fuck Ford. Why do I care what they have to say?

The thing about the US auto industry in general was that when the recession hit there was a perfect storm that hit at the wrong time. Starting in the 70's and working its way all the way up to the 2000's the Big three were losing market share in particular to the likes of Toyota, Honda, and Nissan. This happened because for almost 60 years prior to that the big three reigned supreme with little to no competition.

The US auto industry also perfected the term " planned obsolescence" where a car model might receive a drastic redesign every year. For example my 55' Mercury underwent major design changes: in 1955 the car was more rounded with mild fins and conventional glass. The next year the entire shape was changed to be more square with a backwards slanting rear window that rolled up and down. But while the cars were styled differently, the 'innards' barely changed. Even when the Mustang came out some in the press said it was a modern looking car with 1910 technology under the hood.

Japanese auto manufactures adopted a just in time, lean manufacturing approach that also focused on high levels of quality control. Most of their cars were front wheel drive too. When the fuel crisis hit, US automakers raced to puke out their own small, FWD cars and these were totally awful and unreliable. Meanwhile the likes of Toyota and Datsun came in with small, reliable, and fuel efficient cars using time-proven FWD platforms.

And it was a slow downhill slide for decades. the remainder of the 70's, 80's and 90's were filled with typically boring, at best mediocre American cars and their competition from Toyota and others winning the most reliable car awards year after year. As a kid and even now, all my family owned were Toyotas and once they passed the 200-250k mark we traded them in for another. They never had any issues.

So you had an entire generation that grew up with highly reliable Japanese cars and often crappy and unreliable American cars. That began to change in the 2000's. GM and Ford both hired new people and spent some real quality time redeveloping their entire lineups. Cars like the new Malibu, Cadillac CTS, Ford Fusion, Fiesta, Focus, and Taurus were all miles ahead of their previous generation and as good or maybe better than the models from Toyota. But the recession hit just when these efforts started to take hold and it was impossible to avoid bankruptcy.

A great many of the new American cars today on the road were developed prior to the recession. As of now many are selling so well that for example, Ford had to open a second Factory in the US to build more Fusions due to demand. Had these cars been on the market sooner perhaps bankruptcy could have been avoided.

New Renter says

How is that different from spending stupid amounts of money on art only the artist could love?

http://www.artsumo.com/blog/post/4

The super wealthy have been spending huge amounts of money on otherwise worthless crap since forever.

If you look at how wealthy families in Europe preserved their wealth, it was through gold, fine art and real estate. This is nothing new; it's called preserving your wealth in a world awash with larger and larger amounts of paper currency.

Strategist says

Home builder stocks in my opinion will outperform home price increases.

Home builders (and health insurances) may see larger sales, lower margins.

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

Say hey! This was in the Wall Street Journal on March 30, 1999. Note "... how much it will buy."

Holy cow/interesting/compelling ...!

And where is it up to date??? Right here ... see the first chart shown in this thread.
Recent Dow day is Friday, December 13, 2013 __ Level is 100.8

WOW! It is hideous that this is hidden! Is there any such "Homes, Inflation Adjusted"? Yes! This was in the New York Times on August 27, 2006:

And up to date (by me) is here:
http://patrick.net/?p=1219038&c=999083#comment-999083

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

And http://patrick.net/?p=1230886

Homeboy says

CL says

Why did Mulally ask for the credit lines, and state, “In particular, the collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford’s top dealers also own GM and Chrysler franchises.”

In addition, Ford got the vast majority of the Green Car funding amounting to $6 billion or so there.

Contrary to popular belief, Ford was on life-support and happy for the entire industry to receive assistance.

Fuck Ford. Why do I care what they have to say?

Because nobody who manufactures cars believes what you or Reality believe. There was nobody in the business that bemoaned the bailouts due to not being able to scoop up this demand you referred to.

Instead, like the others are saying, it would have been devastating to the entire chain and would have brought down millions of jobs.

For the record, I thought it was a good idea even when Bush started it. There were no buyers for a giant auto manufacturer. We could barely sell Chrysler.

Refin shows anemic inventory rises for Alameda and Contra Costa Counties and slightly few homes sold (year-to-year for November). Certainly nothing to get excited about at this point. PPSF is holding steady (at highs) in Alameda, slightly down from Sept. highs in Contra Costa.

CL says

Because nobody who manufactures cars believes what you or Reality believe. There was nobody in the business that bemoaned the bailouts due to not being able to scoop up this demand you referred to.

So your only argument here is that because ONE auto exec said he was glad GM got a bailout, that demand for cars would instantly drop off by the exact amount that GMs production dropped off, and that no other auto maker would be able to sell cars to the consumers who stopped buying GM cars?

Your logic is flawed. I have never heard ANYONE, in my entire life, say "Gosh, if I can't get a car from GM, I'm just not gonna buy one at all. So please explain how there would have been a vacuum of supply that couldn't in any way be met by other manufacturers. Propping up bloated businesses with bad business models is not good pubic policy.

Homeboy says

I have never heard ANYONE, in my entire life, say "Gosh, if I can't get a car from GM, I'm just not gonna buy one at all.

Well, each of the employees are also consumers, and that goes for each of the employees of companies up and down the supply chain. As far as I know, none of those suppliers had anything to do with causing the economic crisis.

I think if you know that we were trying to boost demand and cut unemployment, it would have been a terrible time to let the manufacturers go under. There would have been so many secondary and tertiary businesses that would have been unduly affected as well. The system didn't react well to Lehman and other shocks either.

If Big Auto were to find a buyer a year or two later, there would have already been a loss of talent, suppliers, etc that would have been extremely difficult to recreate.

I think this is why large manufacturers and mills would rather have a slowed factory than a completely idled one, right? It's hard to get the wheels moving again.

And can you imagine if they had sold even part of GM off to Fisker? The Republicans would still be talking about it--even worse than Solyndra!

If your theory rests on the idea that other manufacturers would have stepped in, then why didn't Ford jump at the chance to watch GM die, rather than weighing in in favor of the bailout? They would have been a beneficiary under your logic.

Reality says

And Big Business is in bed with the politicians and bureaucrats.

its not that Business, Govt and Unions are in bed and one is screwing the other..

they ALL pretty much figured it out and have instituted a plan to work together, collaborate , an make japan a economic power. Its all about NATIONALISM !

I witnessed home prices drop off a cliff from 90 to 95 and watched numerous amounts of my parents neigbors and friends walk away from homes that lost 40% of their value ...it was like a long slow bleed

A bubble means things pop, which means it will never inflate again.

Things inflated in 1987-1990, deflated in 1991-1995 and went on the create an even bigger balloon. That part is proven. There was no bubble in the 1990's because as you know, house price was already doubled by 2001.

If anything, it is a careful reminder to buy on the backdrop of a declining market becuase the 5 years thereafter will be the most amazing. 2011 anyone?

When a bubble bursts there is supposed to be a total repudiation and revulsion of the asset. This is what I have not understood about the "recovery" from the recent undeniable bubble in RE.
It SHOULD BE like the retail equities market from the 30's through the 50's.
People would punch you if you tried to sell them stocks.

Robert Sproul says

When a bubble bursts there is supposed to be a total repudiation and revulsion of the asset.

Aparently there is too much wealth out there looking to be invested, and since interest rates are SO low, the money goes into equities, real estate, metals, anything where people (and importantly money managers) think they can do better than 2 or 3 %.

So what happens if interest rates were to go up ? That is real interest rates
(the difference between inflation and interest rates) ?

It would seem, it's taken as an axiom that that will not and can not happen.

Certainly many defaults but no bail outs...

And you cant blame wall street, bankers,
basel II or de-regulation ( Glass-Steagall ).

did matter back in early 2000- 2005, everyone
was in denial. RE only goes up...

Thomas--

Just curious--what's your definition of bubble? Any time prices rise then fall?

bgamall4 says

Lol. Remember the movie office space? They robbed the company a penny at a time? That was similar to LIBOR robbing everyone on the planet a penny at a time.

LOL! when was the last time you went to your local gas station....

did you ask the attendant ..who changes the prices ? and what method

does the station manager/owner use ?... and look across the street to see the

other guys prices are also off by a cent or two....

bgamall4 says

Libor Lies Revealed in Rigging of $300 Trillion Benchmark

no one pays just libor.. its always libor + points... in this low rate global economy

its all way way too low, well below the norm cost of lending ...

have you seen these lower rates anytime before in your or anyones lifetime...

Its all noise level at the end of the day...

tatupu70 says

Just curious--what's your definition of bubble? Any time prices rise then fall?

whats your definition of "fair valuations" ?

at least on "the price is right" one learns

if you go over the right price, you lose anyway.

http://www.youtube.com/embed/BMCFRElyaCc

Thanks for playing anyway...

It's the thing forming out my ass after I gorge myself on the ten dollar vat of guacamole...

tatupu70 says

Thomas--

Just curious--what's your definition of bubble?

bdrasin says

That's not what the claim was. Don't change the subject. The working poor pay lots of taxes, and because they don't pay much into one particular kind of tax people like you are lying and saying they don't pay any taxes at all. End of story.

You were the one trying to change subject. Either that or you didn't know how to read. Mish's article clearly stated that the numbers were based on all taxes paid, not just income tax or any other "one particular kind of tax."

Yes, I agree, "the working poor" is also being ripped off by the non-working poor, assuming the particular "working poor" is not getting more back in EIC, food stamps, Medicaid, Section-8 etc. etc. than his/her payroll tax.
%0

thomaswong.1986 says

whats your definition of "fair valuations" ?

Fair valuation is a very subjective term. Each person has a different answer. A 5BR house probably has only slightly more value than a 3BR house to a family of 3, but to a family of 5 or 6, it has a great deal more value.

Or a stock--someone who believes that AAPL will double earnings next year will value the stock much more than someone who thinks earnings will stay flat.

There is no "right" answer for intrinsic value.

thomaswong.1986 says

at least on "the price is right" one learns

if you go over the right price, you lose anyway.

So, I ask a very simple question and you post a video of The Price is Right? Are you incapable of answering the simplest of questions?

The Chinese should have purchased GM. Then taxpayers would not be out $10B. But then it's only paper (or bits and bytes).

CL says

Well, each of the employees are also consumers, and that goes for each of the employees of companies up and down the supply chain. As far as I know, none of those suppliers had anything to do with causing the economic crisis.

So, your brilliant idea is that no company can ever lay off any worker regardless the worker's performance (or lack thereof)? No bad business can ever go under either, apparently.

CL says

I think if you know that we were trying to boost demand and cut unemployment, it would have been a terrible time to let the manufacturers go under. There would have been so many secondary and tertiary businesses that would have been unduly affected as well. The system didn't react well to Lehman and other shocks either.

Propping up inefficient businesses by taxing efficient ones is what's causing high unemployment and sluggish economic performance. Secondary and tertiary businesses should be affected due to their association with failed businesses. That would provide incentive for businesses to choose partners according to market performance not government bailout potential. The final liquidation of Lehman's derivative books didn't cause any disruption in the financial market. The round trip down and up in the stock market was sheer speculative move, and would/did expose the highly leveraged players.

CL says

If Big Auto were to find a buyer a year or two later, there would have already been a loss of talent, suppliers, etc that would have been extremely difficult to recreate.

I think this is why large manufacturers and mills would rather have a slowed factory than a completely idled one, right? It's hard to get the wheels moving again.

Why the stoppage? Someone would have bought the liquidating assets without the debt obligations. Production would have continued except for perhaps union sabotage.

CL says

And can you imagine if they had sold even part of GM off to Fisker? The Republicans would still be talking about it--even worse than Solyndra!

That's why GM should have been bought by a market agent with its own resources, not some government subsidized entity like Fisker, or "new GM."

If your theory rests on the idea that other manufacturers would have stepped in, then why didn't Ford jump at the chance to watch GM die, rather than weighing in in favor of the bailout? They would have been a beneficiary under your logic.

That's why Ford was given its own wad of government subsidy money. All those wads of money given to other carmakers all around the world were all part and parcel of the cost of keeping UAW alive.

CL says

If your theory rests on the idea that other manufacturers would have stepped in, then why didn't Ford jump at the chance to watch GM die, rather than weighing in in favor of the bailout? They would have been a beneficiary under your logic.

So then you believe that every public statement by high-profile business executives is completely genuine and in no way calculated to derive political benefit?

Ha ha - tell me another one.

CL says

I think if you know that we were trying to boost demand and cut unemployment, it would have been a terrible time to let the manufacturers go under.

I don't see the logic here. How does propping up inefficient mega-corporations with taxpayer dollars "boost demand"? A given person either needs a car or doesn't need a car. As I said, I've never heard of anyone saying, "If I can't get a GM car, I'm just not going to buy a car at all." Obviously the demand would shift sales to other companies. There is no shortage of automobiles for sale; a quick trip to any car lot will tell you that. If you want to BOOST demand, you should give more money to consumers, not take money AWAY from consumers and give it to GM execs.

Homeboy says

I don't see the logic here. How does propping up inefficient mega-corporations with taxpayer dollars "boost demand"?

Perhaps it would have been better stated--keeps demand from falling. When you're laid off, your demand for a new car is probably reduced. Wouldn't you agree?

tatupu70 says

Perhaps it would have been better stated--keeps demand from falling. When you're laid off, your demand for a new car is probably reduced. Wouldn't you agree?

So then you believe that no business, no matter how poorly run, should EVER be allowed to go bankrupt or be purchased by another company?

Homeboy says

So then you believe that no business, no matter how poorly run, should EVER be allowed to go bankrupt or be purchased by another company?

Nope. Try not to emulate Mr. Wong with his strawman arguments

tatupu70 says

Nope. Try not to emulate Mr. Wong with his strawman arguments

Not a strawman. It's the logical conclusion of your line of reasoning. You believe that GM had to be bailed out because of the risk that its employees would lose their jobs, and therefore decrease demand for cars, right? That IS what you said, isn't it? Therefore, if lost jobs hurts consumer demand, because, as you said "When you're laid off, demand is reduced", then that must be true of ALL lay offs, correct? Therefore, ALL companies must be prevented from laying anyone off, right? If that is not the inescapable conclusion from your line of reasoning, explain why not.

Homeboy says

Not a strawman. It's the logical conclusion of your line of reasoning. You believe that GM had to be bailed out because of the risk that its employees would lose their jobs, and therefore decrease demand for cars, right? That IS what you said, isn't it?

No--don't think so. Can you link where I said that? Because in this very thread I believe I've said the exact opposite. So it is most definitely a strawman.

In any event--all time periods aren't equal. A company going bankrupt when unemployment is low is not nearly the same as if the country is on the verge of a depression.

It also depends why the company has to declare bankruptcy. Every case is different. I'm only marginally familiar with the GM case and probably agree that it should have been allowed to go bankrupt. But I would also state that GM going bankrupt would have been (significantly) most costly to the US than the bailout.

http://finance.yahoo.com/echarts?s=SRS+Interactive#symbol=srs;range=1m;compare=iyr;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

I expect that RE downtrend to continue. IMO RE can only hold some if outperformed by another broad-based bull run which would lift all boats and that doesn't seem likely. Plant yams now!!

tatupu70 says

Fair valuation is a very subjective term. Each person has a different answer. A 5BR house probably has only slightly more value than a 3BR house to a family of 3, but to a family of 5 or 6, it has a great deal more value.

Or a stock--someone who believes that AAPL will double earnings next year will value the stock much more than someone who thinks earnings will stay flat.

There is no "right" answer for intrinsic value.

How wrong you are!

There is only one answer, one figure, you can come up with when pricing a share of stock, bond or option. Its basic finance question any finance/accounting major know. Its not subjective and to think it is pure stupidity.

APOCALYPSEFUCKisShostikovitch says

Who comes up with these show concepts? This is obscenely bad. Let's get people to guess on the price of crap that no sane person would want near them. Duh.

How else does the public view 'the right price" when buying a home.

It's a possibility - the numbers look ugly.

the landlord of the house we used to rent had bought in and around 1988-89' and told me about how much value the house lost afterwards. Bubbles are a part of the Bay Area's DNA. Usually expect to see bubbles inflate and deflate in 5-7 year cycles. That's how its been forever here.

thomaswong.1986 says

There is only one answer, one figure, you can come up with when pricing a share of stock, bond or option. Its basic finance question any finance/accounting major know. Its not subjective and to think it is pure stupidity.

You've got to be kidding me. You've obviously never done a valuation of a stock, bond, or option. It is basic finance--I can't believe you are so ill informed.

In order to do a proper valuation you must ESTIMATE future cash flows. And discount rate. Five people that do a valuation will almost certainly come up with five different answers.

Is it coming back now Thomas?

tatupu70 says

Homeboy says

Not a strawman. It's the logical conclusion of your line of reasoning. You believe that GM had to be bailed out because of the risk that its employees would lose their jobs, and therefore decrease demand for cars, right? That IS what you said, isn't it?

No--don't think so. Can you link where I said that? Because in this very thread I believe I've said the exact opposite. So it is most definitely a strawman.

Can I link to where you said that? Sure - right here:

tatupu70 says

Perhaps it would have been better stated--keeps demand from falling. When you're laid off, your demand for a new car is probably reduced. Wouldn't you agree?

So you are claiming that your statement that GM laying off employees reduces demand, is the "opposite" of saying that GM laying off employees would reduce demand? Um, yeah - that makes sense. LOL. Did you get confused as to what the word "opposite" means?

NR said: So what about Stockton and Sacramento?
Inventory is up by 25% in Sacramento (according to Redfin, year to year for Nov) with a slight decline in homes sold. PPSF is holding steady.