Where's the "Stimulus" in the Bailout to Get Buyers Back on the Car Lot?
Americans have stopped buying cars and who can blame them?
With the stock market crashing and dire predictions of Detroit's bankruptcy, people are just not in the mood. But in all the thunderclouds of verbiage coming out of Washington along with the recently announced bailout, there's one word I'm not hearing: "stimulus package."
What's it going to take to get people buying again? Because, buy they must. No car company -- not even the mighty Toyota or Honda -- can't survive at the current sales numbers. So, what we are really talking about is a bailout of the car industry, not just Detroit.
Consider this: in a "normal" year, about 16 million people buy cars. This year, only about 12.7 million people have gotten new wheels. That means about 3.3 million Americans have postponed a needed trip to the car lot.
What will get those 3.3 million people off the dime? When will they say, "It's safe to go back to the car lot?" That's the part of the bailout that's being ignored. It doesn't make sense to carbuyers yet.
Look, it's one thing for a bunch of politicians and auto execs to reach an agreement. But that's not what it's about. It's all about boots on the ground. Or more to the point, customers on the car lot.
We have already seen a massive bailout of the banking industry where the government merely threw money at failing companies to keep them afloat. Notice how the real estate industry is going gang busters now? Maybe that should tell you something.
The stimulus part of the bailout is not an important part of the concept -- it's the most important part of any plan. If we give the car makers a loan, it won't do much more than put the auto industry on life support for another few months. But if the bailout can include a way to get car buyers on the lot, then the tide will turn.
So what's it going to be? For those of you who are reading this, who have put off getting a new car, what would it take to get you in that new car today? For starters, we have to offer loans that people can qualify for. But what about tax credits? Interest-free loans? How about a government guarantee to honor extended warranties and supply parts and service? Or, this is really wild, how about an amnesty program to forgive the negative equity many consumers are now carrying?
Ever notice how the best advertisement for a restaurant is a line of people waiting for a table? Get the stimulus package in order and 3.3 million people will flood car lots and pump cash back into our economy. Just think how that will look on the 5 o'clock news.
- Posted by
- Philip Reed December 19, 2008, 12:22 PM
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- Car Buying, Car Loans and Financing, Selling Cars
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- Big 3 Bailout, car buyers, car sales, Interest free loans, Stimulus package, Tax Credits
Remember the "stimulus" in May that cost $158 billion and everybody got a $600 check? How well do you think that one worked? I'd really like to know.
Good point. But I'm not suggestion we just write checks to car shoppers. We need tax credits, loan programs or warranty guarantees.
What would work for you?
Nothing.
Buy what you can afford, not this stupid goverment wellfare to incearse spending.
We are overspent, and overborrowed. Maybe its time to return to spending wisely and within our means. If that means a few automakers go under. Good, just means there were too many.
I just bought a new car a month ago. I saved, Fixed my credit, made sure everything was in order, and made a budget. I had enough money to spend close to 500 bucks a month. ~30k car. Man that would have been nice. Instead, I found something new that should last for 17k OTD.
And geuss what, the goverment gave me no money to do so.
Why should we now have car wellfare, the thought of that makes me SICK. Why should I HELP YOU BUY A CAR.
Buy your own D--m car, with your own money.
OP: The fact of the matter is that the Obama administration is going to enact some sort of stimulus package, perhaps as high as $1 Trillion in an effort to jump-start the economy and save/expand jobs.
Most economists agree that it is the right thing to do, even though it means expanding the deficit.
Offering a tax credit or deduction for purchasing a new vehicle is one way to do this as it helps keep people employed, from the factory down through the dealership.
It also helps to get older, less environmentally friendly, vehicles off the road.
The government is going to spend the money, so why not be a beneficiary of it.
I'm sorry lee, thats the wrong kind of thinking
"The government is going to spend the money, so why not be a beneficiary of it."
How about work to stop all the un-needed goverment spending.
But I geuss these days everyone wants a hand-out. Welfare for all.
Welcome to the New Socialist Country formally known as USA. Now Renamed the USSA.
We havent expanding the defict, we blew it up, to blow it up more is nuts.
The old saying goes, 'two wrongs dont make a right'
And since when did the ends justify the means?
Let me ask the questions simple.
If you wanted a car tommorow, would you ask your neighbor, or a guy on the street to help you pay for it?
I know I wouldn't. But if your for tax credits/cuts/stimulis checks, you might as well just ask the guy next door for a few bucks
Look, I am in 100% agreement with you, do it on your own. I don't have credit card debt, I have a savings and I have a mortgage that I can afford.
It burns my ass that all the people in this country (from the government, to wall street to the person on main street) who spends more than they have, doesn't save money, leverages theirs (and other people's money) 40-1 and tries to live a lifestyle based on future earnings has brought this country's (and the world's) economy down to its knees.
However, that is the situation we are in now and we have to deal with it. If your neighbor's house was burning down because they were stupid enough to smoke in bed, would you blame them and do nothing as the flames threaten to spread to your house and your entire neighborhood? No, you would do everything you can to help put the flames out.
Well, we are in the economic equivalent of that right now. The economy is rapidly shrinking and jobs are being shed at a rate of 500,000 every week. This type of job loss paralyzes the economic psyche of the populace and perpetuates further constriction of the economy and more job loss. It has to be stopped. The fastest and most effective way to do this is by massive economic spending by the government.
Look up the history of the Great Depression and you will see that most blame Hoover for not spending enough to pull us out (along with trying to raise taxes at the worst time). Roosevelt also didn't spend enough, and it wasn't until the Japanese Economic Stimulus Act of 1941 that caused massive spending and employment were we able to get out of it.
The alternative to massive government spending and stimulus is huge job losses and huge revenue losses (from lack of income and sales tax). Plus, the government will have to spend on things like unemployment benefits and medicaid for those who are out of work and unable to afford things. Plus, massive defaults on loans and mortgages. All of this would get paid for by borrowing money.
You are going to pay for this one way or the other. So the country may as well benefit from economic stimulus spending as opposed to recession (or worse, depression) spending.
Ahh so once again the responsible get screwed for the actions of the those that spend money on things they cannot afford.
We already have dropped 1+ trillion dollars in on the finacial markets. Killed the value of the dollar, dropped interest rates to near zero (heck if I had 20% down right now, i'd be buying a house, 4.5-4.75% house loans?!)
Its one thing to boost the economy its another to help people buy things they do not need. Thats what got us in the mess to being with. Excess spending, people buying cars/houses/toys, they should not have, and could not have afforded.
Yet your solution is to encourage more of the same.
Last week, the news came out, that even after mortage modification 58% of borrowers defaulted AGAIN. After 3 months the number was ~36%. You know what that tells me, Alot of people borrowed money they never intended to pay. After 6 months it was 56%. And after 8, 58%.
To I dont think anyone even knows the fallout of car loans, and credit card debt. And for anyone to encorage that kind of behavior again makes me sick.
You are right, it will probably cost us alot in unemployement, and medcaid etc. At the end of the day, I'm fine with that. The country will comeout stronger.
I dont belive, that its right, in any way shape or form, for my taxes, err, MY MONEY, MY WORK, to help pay for someone elses toys.
Like I said, I just bought a car. There was no goverment handout to help me buy it. IF the economy gets better, but my industry goes to hell afterwards, who's going to be their to help save me? No one, because no one will care. And thats life. Its not fair, we all cant have everything we want. We can WORK for it. But we should not be given it.
I just get sicker and sicker, every day this thinking spreads. Its a diease, and its spearding like wild fire. The sickness of dependance. I can't do this, I NEED the GOVERMENT. We need goverment? Wow, might as well just become socialist, let goverment decided who works where, what we all get paid. Why bother having private industry. Whats the point, if when it breaks down, goverment has to pay us.
Detriot/the big 1.8 are currently nationaly companies, the workers are being paid for by taxpayer dollars. 14+ billion dollars for a measly 60 days, that for the 500k (roughly) direct workers, means a wage of >$70/hour. So not only do we have big 1.8 wellfare, its very good paying.
The left loves JFK. Greatest democrate ever (doubtfull but, he's on a pedestal).
Most famous quote? "And so, my fellow Americans: ask not what your country can do for you - ask what you can do for your country."
Yet less then 50 years after that speach. Most americans are now crying for the tit of america.
I am not here to try to convince you of something that is going to happen, regardless of what you think.
I am just telling you why it is going to happen and why.
As much as I hate what is to come, I firmly believe that your course of action would be far worse, as history has shown.
This is not a left/right, conservative/liberal or Republican/Democrat issue. It is an American issue, and as an American, I believe the government is doing what must be done. You may not, and that is your right.
So then Lee, How much of my paycheck do you want?
50%? 80%?
Op, calm down! Lee's not even disagreeing with you, he just figures it'll cost responsible people less if we do the wrong thing. By not bailing people out we'd be hurting ourselves just to teach people a lesson; the more it costs us, the less appealing that is.
Personally I'm not convinced that the bailouts and possible stimulus packages will work... but it's easy for me to say because I have a very long timetable and don't mind if things fall apart around us for ten years. If I were close to retirement I'd be all for trying things with a low chance of working.
But I don't think a stimulus would work because a) people don't buy cars while afraid of layoffs, and b) lower sales numbers are probably more realistic when people aren't going into unreasonable quantities of debt. It's going to be a smaller pie... I don't see how a car company that was losing money in the good times can survive the future.
Here you go Lee. Heres your freaking stimulis bill:
http://thomas.loc.gov/cgi-bin/bdquery/z?d110:s.03737:
To sum up, Get 10k towards the purchase of a new car, if its more fuel efficent. And drum roll.
If you make less then 40k (married), 25k (single).
Brilliant. Gald you support crap like this. Because this is the kind of crap Washington DC puts out.
Give 10k to people that pay no taxes, and should not be buying new cars.
A little self-reliance can certainly go a long way, but come on -- even the "Man vs Wild" guy stays in a motel room once in a while.
This isn't an economic glitch like the 2001 tech bubble, this is an economic crisis the likes of which most living people have never seen. Sure, it was caused by a laundry-list of dumbass mistakes, but if a dumbass mistake causes a 100-car pileup, you've still got to clean it up and help the victims.
You'll see -- nothing changes a libertarian's mind faster than being broke.
The problem with this entire mentality is that everyone talks like it will just be a one-time thing. But, historically, it never is. The debt never gets paid down, the programs never go away, and the newly formed agencies become entrenched. Then, ten years later, everyone begins discussing the situation as though it could never be any other way, as if they have a right to the handout/service/whatever, as if people WILL DIE if the government hand is withdrawn from their lives.
I'd really like to make something of myself. I'd like to be as successful as I believe I have the potential to be. However, there is simply no doubt in my mind that within the next few years we will be seeing unrestricted warfare waged against the upper-middle class. As a result, it is simply a fact that my family's interests are best served by staying out of that class. In other words, if you can't be rich, be lower-middle class. Otherwise, you are the sucker footing the bill for everyone elses' failures.
Got news for you laissez-faire holdouts: The bulk of the money from this year's various bailouts is going to the top tiers of our society -- as in banks, brokerages and multinational companies. At least the Detroit bailout should have some sort of beneficial effect on a larger segment of society.
But none of the working stiffs I know are getting direct handouts from the government.
Some people act like any kind of economic stimulus is the equivalent of putting 300 million Americans on the dole. Guess what: Consumer spending is the heart of a capitalist society. You can't excoriate your fellow citizens for their past spending habits while slamming the government (or private industry) for its attempts to revive consumer spending.
Calling it "socialism" or "corporate welfare" is pretty ignorant; for better or worse, this is the government's chosen method to save capitalism.