[DeTomaso] NPC: REALLY NO PANTERA CONTENT, US Auto Industry Bailout OPINION

[Peter Kovacs]

Good thoughts. figure out how to avoid unwanted side affects in two areas.

If you don't limit the ability of the person who just obtained the new vehicle to immediately sell the car, the first come entrepreneurial eligible person could purchase the new car(s) with the voucher, resell it for cash and further soften new auto sales by adding almost new cars back to the market at reduced cost.
 
You would also need to insure that a person benefitting from the new vehicle would not subsequently let their existing vehicle be repossesed further stressing the banks and credit markets. Possibly limit eligibility to people who have not recently let a gov back home loan go into foreclosure or short sale,default on a student loan, filed BK, etc and impose a consequence if they do within 24 months. 
 
Current policy is to throw money at a problem. That keeps the problem coming. Throw money at the solution, things may change. 
 
I agree with your concept. Reward the responsible people and encourage the others to be responsible. Stop rewarding the irresponsible and encouraging others to be irresponsible.
 
Thanks for letting me vent. I am still at work sifting through the carnage created by irresponsible people and choices as it relates to Central Valley Real Estate and loans....so I really apprecaite your way of thinking.
 
 

 
Peter Kovacs
Property Equity & Mortgage Mgmt
209 345-6708 
209 523-4919 fx




________________________________
From: Asa Jay Laughton <asajay at asajay.com>
To: Pantera Forum <detomaso at realbig.com>
Sent: Friday, December 5, 2008 8:21:49 PM
Subject: [DeTomaso] NPC: REALLY NO PANTERA CONTENT, US Auto Industry Bailout OPINION

This is POLITICAL, but NON- PARTISAN. (no stumping candidates, not 
speeches, no jokes)
If this gets me banned... oh well, I've said my peace.
This is -MY- opinion.  If you AGREE, I would strongly encourage you to 
WRITE your congressman (or woman)
This is about the AUTO BAILOUT being considered in the U.S. Congress
If you are NOT INTERESTED, DELETE NOW

***************************************************************
The REAL way to Bailout the Auto industry:

Two sections:
- Why Congress should NOT give any money to the automakers directly
- How the money -should- be put to use and why


Why Congress SHOULD NOT give any money directly to the automakers:
    - This will only put money in -their- pockets
    - It will NOT reduce inventories
        - It will NOT make room for more manufacturing
    - It will NOT benefit anyone down-line (dealerships, parts makers, etc.)
    - It will NOT prevent layoffs
    - It WILL ALLOW the Big Three to payoff the unions even if it can't 
give out work.
    - It WILL ALLOW high level corporate employees, CEO's, etc. to 
BAILOUT of the company with high dollar pensions, bonuses and severance 
packages.  (It happend with the banking bailout, what makes you think it 
won't with the auto makers?)


- How the money -should- be put to use and why:
    - GIVE THE MONEY TO THE TAXPAYERS
    - A sight-draft type of check
        - Can ONLY be cashed in at a Big Three auto dealer
        - May NOT be used to buy a foreign car (made by anyone other 
than a big three company)
        - May NOT be cashed at a bank
        - Transferable (in case the taxpayer does not or can not drive)
        - Auto makers and dealers may NOT manipulate MSRP
    - Who get's them?
        - Impractical for every taxpayer
            - 140 million taxpayers as of 2007 (IRS data)
            - $25 billion divided by 140 million is $178 per person.
        - Eligible group must be narrowed:
            - $25 billion divided by a $20,000 sight-draft per person is 
1,250,000 recipients
            - The number of recipients goes up if Congress approves more.
            - Possible eligibility by income level?
                - To what income bracket will 1,250,000 checks be used up?
            - Possible first come, first served
                - Apply with U.S. Government
                    - Web site or phone line
                    - similar to the TV Converter coupons
                - Must be an eligible Taxpayer
                - Must be registered to vote
                    - voters are the people who should have a say in this
                - Must have valid drivers license
                - Only ONE per eligible person or family (household)
                - U.S. Government verifies eligibility and issues 
sight-draft      
    - The dealer completes the sight-draft check with a valid VIN and 
presents it for payment.
    - The dealer pays the Big Three auto maker
        - And thus, they get their bailout money
    - Benefits the Tax payer
        - They can get a new car increasing personal equity, mobility, etc.
    - Benefits the environment
        - New cars are more efficient
        - Many buyers will most likely get rid of their older car
    - Benefits the dealership
        - They sell the cars, stimulating local economies
    - Benefits the Big Three auto makers
        - They get rid of inventories
        - It makes room for more manufacturing
    - Benefits the auto parts industry
        - The Big Three will need more parts to build more cars
        - People will need spares or replacements for parts that break
    - Benefits local governments
        - Sales taxes, license fees, etc.
    - Keeps more people employed
        - See the benefits listed above

Think about it for a minute, it makes more sense.  Giving the auto 
makers the money doesn't stimulate local economies.  It just lets them 
continue with the status quo; supplying overpriced benefits and inflated 
wages to union employees, building more cars in an already 
super-saturated market. In addition, not many people are buying new cars 
right now, so if you give the auto makers the money, it may just put 
more unsold inventory into the pipeline which in turn increases the 
entire problem they have in the first place.

Who says giving the auto makers the money will change their strategy?  
If I had been a CEO of a major auto maker, I would have been re-thinking 
business strategy years ago, not living with razor thin profits, or even 
losses.  You don't run a successful business that way.  I wasn't too 
surprised when they showed up in Congress the first time with no plan, 
and frankly if they had a plan they wouldn't need the money in the first 
place.  So if Congress wants to bail them out by giving them money, 
fine, but let them get it as they deserve, from the taxpayers and not 
directly from Congress.  Give the bailout money to the taxpayer and let 
the taxpayer make the choice of who they bailout by exercising their tax 
money as a vote when they buy a car.

It's an all around better idea.

Write your congressman (or woman)

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