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| User Info | Regulatory Fraud-By-Idiocy, Example #9463 in forum [Ticker] | |||
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Genesis Posts: 66464 Incept: 2007-06-26 
Royal Flush! 
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http://market-ticker.org/archives/704-Re....
---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2008-12-30 14:05:12
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Curbyourrisk Posts: 1617 Incept: 2008-08-19 Long Island, New York
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Gen: Whats the story? This is business as usual under these 2 idiots! I am being sarcastic. Why the masses have not demanded their heads is beyond me!  and  seem to be the only thing left!!!!---------- Hopium: hope filled delirium preached by the White House and Swallowed whole by the American Sheeple. "We saved the world from disaster" - Ben Bernanke - Jackson Hole 08/21/2009  2008-12-30 14:19:55
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Blackswan Posts: 3362 Incept: 2007-11-06 
Execution Pit Online
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The alcoholics are vomiting blood and their kidneys are shutting down and we just rolled in couple of more kegs and tar heroin for good measure. Drink up and tie off. Party on! ---------- The market can crash further then you can remain short. Trade the moon cycle not the tape you want. 2008-12-30 14:23:25
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Crow Posts: 165 Incept: 2008-02-25
Canada
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This kind of thing is happening all too often, you read about it and the two sides of your brain kind of go on a bit of hiatus while they try and decide wether this kind of idiocy can really be going on. Then there's the bit where you start to giggle in a nervous kind of way, I mean it has to be a joke surely.
---------- When does Keanu get here? 2008-12-30 14:26:57
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Lugnut Posts: 174 Incept: 2008-09-24 
New Jersey
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YahooFinance had a cute article that states that the money for this transaction was the Treasury equivilent of check kiting, namely that they paid the money out of the first half of the TARP which supposedly had already been spent. The Treasury merely stated, allocated? yes, spent? no. So they are I guess pulling that money out and presumably replacing it when the y get the second half of the funds approved. THe Fed is paying the Visa bill with the Amex card it would appear. Nice ticker Karl 2008-12-30 14:34:19
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Genesis Posts: 66464 Incept: 2007-06-26
Royal Flush!
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Good point; I just added that.
---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2008-12-30 14:35:54
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Margincalltime Posts: 811 Incept: 2008-04-01
NJ
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The vast majority of these "schemes" appear to me at least that they are simply trying to "buy" time with our taxpayer money. I think we're asking the wrong questions. The real question is buying time for what. For them to get out of office? for the bad debt to magically become good debt? for a military operation? for the inevitable bond market/stock market/fx dislocation? etc.
2008-12-30 14:36:30
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Mayorquimby Posts: 4463 Incept: 2008-09-18 United States of Mortgages
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Gen- Are there the same penalties imposed as with CC's? Meaning, you miss a pymt and your rate skyrockets? If so...well, you know.
---------- - It is impossible to introduce into society a greater evil than this - the conversion of the law into an instrument of plunder. - Government is a great fiction, by which everybody tries to live at the expense of everybody else. - Bastiat 2008-12-30 14:39:38
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Genesis Posts: 66464 Incept: 2007-06-26
Royal Flush!
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Mayor - nope. You miss a payment, they repo the car. I had a 0%/36 month loan post 9/11 on my truck. I was prepared and able to pay cash. They wanted to give me the money for three years at zero interest? Heh, sounds good to me! 0%/36 is crazy; 0%/60 is certifyable. ---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me Last modified:
2008-12-30 14:41:53 by genesis
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Earmark Posts: 6 Incept: 2008-02-28
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Please excuse my lack of understanding here, but if the percent markup on the product sold were to exceed the cost of money needed to produce it, could this not be profitable?
2008-12-30 14:56:32
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Samadams Posts: 339 Incept: 2008-12-03
San Antonio, TX
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Earmark, GMAC is a separate legal entity (now a bank holding company, if you believe that). It has a separate set of books and records, and a separate tax return from GM. It is at least nominally supposed to try to make a profit on each transaction. Borrowing at 8% or 9% and lending out at 0% is a guaran-****ing-teed way to lose money. 2008-12-30 14:59:45
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Ck_dexter Posts: 1149 Incept: 2007-07-19
SE PA
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If a $30,000 pile of steel is really worth $20,000, it is a steal. If the 60th payment of $500 is worth more than the 1st payment of $500, it also works. ---------- "This market smells like ass" ~KD, numerous times, week of 11/9 2008-12-30 15:00:12
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Samadams Posts: 339 Incept: 2008-12-03
San Antonio, TX
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Karl, once again we have a logical disconnect. All of the shennanigans you mentioned in your ticker, the obvious fraud by Treasury and the obvious money-losing proposition of these loans...and the Dow is up over 100 points. I guess it is a case of "Eat, Drink & Be Merry, For Tommorrow We Die." 2008-12-30 15:01:28
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Pinal Posts: 699 Incept: 2007-08-16
Chicago
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We are lucky this dividend is not a Pay-in-kind program where debt is paid by issuing more debt to the creditor. Although, it may actually be just that and we just don't know it yet.
2008-12-30 15:03:00
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Musashi Posts: 2476 Incept: 2007-11-06
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This is what dooms the Detroit auto manufacturers to BK. The progression. Make loans to sub prime people to buy the car. They default. The car is repossessed. It has to be sold at auction for whatever they can get. The resale value of similar cars collapses. It isn't just the associated image, it is a business decision for anyone that can qualify for cars that retain value better to not touch a detroit car with someone else's "pool stick". 2008-12-30 15:11:23
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Curbyourrisk Posts: 1617 Incept: 2008-08-19 Long Island, New York
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Pinal: Thos who pay with PIK notes....will die from PIK notes. The debt accumulates on one book, while it appears as cash received on the other book. How ****ED UP IS THAT?????  Bernanke and Paulson need to spend some time in  . Where they can get to know how we feel  after years of dealing with their mess
---------- Hopium: hope filled delirium preached by the White House and Swallowed whole by the American Sheeple. "We saved the world from disaster" - Ben Bernanke - Jackson Hole 08/21/2009 Last modified:
2008-12-30 15:27:48 by curbyourrisk
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Schwantz Posts: 4681 Incept: 2007-11-12
Monkey Do
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This isn't about proper lending behavior by GMAC, its is about subsidizing the losses by the GMAC bond holders and letting Cerberus cash out of its equity swap commitment by lending GM an extra $1B to buy out that equity position. The bold holders have already made back more than the 8% difference on any loans, just on the bailout news. http://www.marketwatch.com/news/story/GM.... GMAC Financial Services' bonds surged Tuesday, a day after the financing arm of General Motors Corp. said it had tapped $5 billion from the Treasury Department's $700 billion financial rescue fund. GMAC's 7.75% bonds due in 2010 climbed 12.25 cents to 90 cents on the dollar, said data supplied by junk bond specialist KDP Investment Advisors. GMAC's 6.875% bonds due in 2012 gained 6 cents to 67.50 cents per $1. General Motors and Ford Motor Co. bonds also rallied, though GM bonds are still trading at distressed levels under 20 cents on the dollar. http://biz.yahoo.com/ap/081230/autos_fin.... In addition to the $5 billion for GMAC, the Treasury also will lend up to $1 billion to GM so that the company can purchase additional equity that GMAC is planning to offer as part of its effort to raise more capital. Here's the new GMAC ownership/control structure: http://www.nytimes.com/2008/12/31/busine.... The Fed’s approval of GMAC’s bank application will require G.M. to reduce its stake in the finance company to less than 10 percent. GMAC’s majority owner, Cerberus, will have to cut its stake in the finance company to 33 percent, from 51 percent, and reduce its voting stake to less than 15 percent. ---------- Dives sum, si non reddo eis quibus debeo Smash the Keynesian idiocracy! 2008-12-30 15:39:13
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Themortgagedude Posts: 3344 Incept: 2007-12-17
saint louis
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621 isn't that bad Gen, just 18 months ago they could have got a stated income stated asset no downpayment interest only teaser rate arm to buy their first home one day out of bankruptcy.
---------- Since September it's just gotten colder and colder. There's less daylight now, I've noticed too. This can only mean one thing - the sun is going out. In a few more months the Earth will be a dark and lifeless ball of ice. 2008-12-30 15:43:38
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Finn Posts: 1144 Incept: 2007-08-02 Near Russia
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This 0% interest thing is not that bad for GMAC, provided that GM has enough profits in each sold car and one way or the other it shares enough of that profit with GMAC. So in theory, selling at 0% might make sense. Practice might be different, and selling something at a loss with 0% makes no sense. Anyway, selling a $20k car for $30k and 0% financing makes sense, it's just a marketing tool targeted for idiots who think it is free money, when it is in fact not. The question is, what is the cash price for the same cars? Should it be the same as with 0% financing, you have found a very ugly way of wasting taxpayer money. 2008-12-30 15:57:38
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Genesis Posts: 66464 Incept: 2007-06-26
Royal Flush!
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GMAC is a separate corporation (in theory) now. BTW the cash price is the same. Why do you think I took the 0% back in 2001? ---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me Last modified:
2008-12-30 15:59:12 by genesis
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Themortgagedude Posts: 3344 Incept: 2007-12-17
saint louis
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Yeah GMAC is separate so if they are doing 0% that means its getting factored out at about .80 on the dollar for perfect credit and probably .70 for not so perfect credit. So in theory you should be able to get about $6000 in rebates on a $30000 car and it would all work out the same.
---------- Since September it's just gotten colder and colder. There's less daylight now, I've noticed too. This can only mean one thing - the sun is going out. In a few more months the Earth will be a dark and lifeless ball of ice. 2008-12-30 16:02:23
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Finn Posts: 1144 Incept: 2007-08-02 Near Russia
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My new car purchasing experience is limited to a single car from another manufacturer than gm, and a 0% offer wasn't on the table, plus I was able to drop the price a bit by making a quick cash purchase. Not is usa. So I paid cash. If cash doesn't get one any price benefit, one would of course take the "free" money and invest the cash. IMO financing should be according to individual credit score to make sense. Now it sounds someone with 621 gets the same deal as someone with 800. Which one is the bigger risk? Regardless, for the 0% financing to make any sense, gm has to be throwing money at gmac from each financed sale. Separate or not separate, gmac can not function for long by paying 8% to lend at 0%. They might as well burn the fed money in buckets, that gives a warm feeling for a while as well, until it doesn't. 2008-12-30 16:24:03
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Architect Posts: 770 Incept: 2007-07-11
london UK
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ok Dude.. is the explanation that the money passed back by GMAC to GM is heavily discounted? sufficiently to offset the interest payment and the default risk. Strikes me that this is going to be a lot more than 20-30% but it makes sense of an otherwise totally insane proposition
2008-12-30 16:29:22
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Searay Posts: 24 Incept: 2008-05-28
Charlotte
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TMD - Agreed. This thread (the lunacy of GM borrowing at 8% and lending at 0%) only works if GM isn't passing on its funding costs to the consumer within the price of the car. 0% financing is a gimick intended to sell cars to people who think they're getting free money. In a preverse way, I think these 0% financing campaigns say something awful about what the car companies think about the intelligence of their customers. Wait a minute... maybe we just diagnosed thier problem. Of course I'm not saying that all people that take the 0% deals are stupid... some probably come out ahead if they keep the car for the term of the loan. But those who choose the 0% financing instead of the rebate, only to trade the car in a year or two, they're getting hosed. We can only hope that GM is dealing with the underlying over-capacity and cost issues that precipitated 8% government financing. From my bank auditing days we were trained to determine how the loan helps the company. If the taxpayer loan isn't used to make GM a better company, then the taxpayer is getting screwed, again. 2008-12-30 16:44:37
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Searay Posts: 24 Incept: 2008-05-28
Charlotte
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Karl - by the way, I've only seen 0% financing offered in lieu of a rebate. Your situation was quite different (0% financing same as cash). Appreciate what you do. 2008-12-30 16:57:23
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