Dating back to President Carter, the government has been coercing banks into making millions of toxic loans (they call them “subprime”), then backing these loans, making them appear to be reliable assets. So Wall Street and Main Street (predictably) treated them as reliable trustable assets. Worked fine until housing prices started to decline, then the whole house-of-cards came tumbling down.

http://en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis

Blaming Wall Street for a collapse like this is kind of like blaming trees for a forest fire.

Wall Street has PROVEN that they cannot operate in the shadows with little or no regulations. Their greed and incompetence can cause FAR more damage to society than some punk who sticks up a convenience store. Obviously, the WORST “bad guys” are on WALL STREET these days. They deserve to be called “banksters”. They’ve earned it.

The new Obama administration and Congress need to have some MAJOR overhauls of the regulations on Wall Street. Major new laws “with teeth” like they say. If Wall Street schemers break laws or regulations they get HUGE fines. CEOs and their cronies GO TO JAIL for a LONG period of time …. 20+ years. Wall Street “banksters” need to live with a lot more FEAR when they think about bending regulations, cooking the books, and doing other fraudulent things. They need to be thinking about JAIL TIME, being put in the poor house, etc.

The guy who wrote this column is a Nobel Prize winner in Economics:

http://www.nytimes.com/2009/01/23/opinion/23krugman.html?ref=opinion

“This is, first and foremost, a crisis brought on by A RUNAWAY FINANCIAL INDUSTRY. And if we failed to rein in that industry, it wasn’t because Americans “collectively” refused to make hard choices; the American public had no idea what was going on, and the people who did know what was going on mostly thought deregulation was a great idea.”

I get your point, although Canada and Mexico are technically part of “America”. I probably should have said “US-based auto companies” instead of “American made”. Either way, we’re pretty much talking about the big three.

Now it’s my understanding (since I’ve read it many times) that the sale of a GM vehicle assembled in Canada or Mexico still benefits the USA much more than a Toyota vehicle assembled in the USA. If that is wrong, I would love to see some evidence to the contrary.

And even as a US citizen, it’s hard for me to blame GM for having plants in Canada and Mexico. The US government has created a business environment in the US (high taxes, destructive unions, legal hassles, etc) that is not competitive. I blame the US government more than I blame GM.

I MAY disagree with you on this. If GMAC is requiring a substantial down payment and financing to only, say, 80% of real vehicle value (that would be the price after incentives) and considering only wholesale book on any trade in lieu of cash down payment, then approving a FICO 620 for buyers with good income under those conditions is probably reasonable.

Much of GM/GMAC’s problems came not just approving way low credit scores but from approving loans way beyond real vehicle value, especially playing games with residuals on leases. The declining value of the assets put everybody in the wringer.

1) Repeal Sarbanes-Oxley, since it stifles innovation more than it regulates behavior. People who break the law can go to jail.

2) Eliminate the capital gains tax so that people with money will be eager to invest in brilliant technology. That should help solve the credit problem.

3) Flatten the income tax. Same percentage for everyone, period. Let’s say 25%, so that everyone starts to care how their tax money is spent. That should help cut down on government pork.

4) Add a $1/gallon gasoline (not diesel) fuel tax with the revenue to be used for one purpose: a $5K income-tax credit toward the purchase of any American-made automobile. Adjust these rates each year as needed, so that Detroit neither dominates or dies.

My plan may not be perfect, but it seems better than the socialism-now debt-later plan being pitched by Pelosi and the democrats.

Lyle,

Here’s a question you could ask. The Fed gave GMAC, GM’s financing arm $6 Billion awhile ago. Where there strings attached to that money which limited the use of those funds only to GMAC’s home loans or can it also be used for auto loans. Obviously if they could use it for auto loans it would certainly help GM.
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Woohoo! Finance questions, I’ll take this one, lol.

There were no strings attached in so far as their lending operatings. As soon as they got the money 5+1 to convert to a bank holding they immediately got access to around 17.5 BILLION of gov’t backed debt to ’shore up its capital positions’ – thats FDIC insured bonds, backed up through the gov’t TLGP program.

(I’m sure your still with me at this point, so I’ll go on…I imagine you sitting on the edge of your chair, shaking with anticipation).

Mere moments after this delayed ‘Christmas Miracle’ for GMAC, they began recreating the mistakes of 2007/2008 that got them into trouble, by giving out credit to the creditless for a ‘Brand New Car’ ….thats a 620+ FICO score, or over 80% of the population, just slight down from the 770+ Wagoner said they cutoff was at the bailout hearings (about 10% of the population)

So, I would say yes, Frankie, that is certainly going to help sales for January 200 (and throughout the foreseeable future), GMAC financed almost 50% of car sales for GM in 2007…in November of 2008, they were down to 4%.

/I’m sure their ’surprising’ rebound to only being down 20 odd percent this year will be attributed to some kind of scrumtrulecent ‘turnaround plan’ though
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Side note to RB #89: Your are darn popular around here the last few days! Welcome to the club, hehe. Just take it as a sign of approval, and keep posting like crazy…thats what I do, lol.

The results lead to billions of dollars lost in missed work days, missed school, unnecessary illness, unnecessarily prolonged illnesses, and unnecessarily severe illnesses. This is a backwards way to raise the next generation of America’s workforce. One way or another the private sector or government will provide a form of health insurance. Either systematically by enrollments or haphazardly through the emergency room to the county morgues. The second way is likely economically considered a drag on productivity.

Last I checked medical payments are made in dollars. Whether from insurance, private parties or the government, they are paid with actual dollars and dollars always act as an incentive for people with better ideas.

GM will either become nationalized or go bankrupt. The bond holders and union will not blink and Obama won’t play along.

A bunch of banks will be nationalized the shareholders wiped out and the CEOs fired with no golden parachute. They too are gaming the government and Obama won’t play along.

At least I hope Obama won’t play along. I really am tired of the taxpayers getting the shaft here.