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Government continues putting good money after bad to bail-out GM and its financing arm, GMAC. Notice that GM is offering $7000 financing and GMAC is financing the deals, so that government can induce debt-ridden consumers to buy more crappy GM cars:
· GMAC: Back in Line for Another Injection of YOUR Money - (www.wallstreetpit.com) Turning the corner? No more bailouts? You didn’t actually believe the wizards in Washington, did you? Why? GMAC is back in line for another injection of YOUR money. Recall that GMAC was bailed out initially during the government takeover of GM. GMAC was then spun off in order for Uncle Sam to effectively provide taxpayer funded consumer auto loans and mortgages. GMAC is not a public entity and thus not currently able to hoodwink investors and raise equity capital. What’s a cash strapped entity to do? Let’s play some more of that ‘bailout bonanza.’ The Wall Street Journal just reported on this developing story and writes, GMAC Asks for Fresh Lifeline: In a stark reminder of how some battered financial firms remain dependent on government lifelines, GMAC Financial Services Inc. and the Treasury Department are in advanced talks to prop up the lender with its third helping of taxpayer money, people familiar with the matter said. The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government’s 34% stake in the company could increase if existing shares eventually are converted into common equity. The willingness by Treasury officials to deepen taxpayer exposure to GMAC reflects the troubled company’s importance to the revival of the auto industry. Founded in 1919, GMAC has $181 billion in assets and is a major financing provider on car purchases from General Motors Co. and Chrysler LLC. The new capital would help firm up GMAC’s balance sheet and solidify its auto-loan business.
· GM launches clearance sale on Pontiacs, Saturns – (www.latimes.com) General Motors is offering a $7,000 sales inducement to its dealers for every Saturn and Pontiac vehicle left in inventory as the automaker phases out the two brands. Assuming the cash is passed on to consumers, the move could result in savings for buyers looking to snap up one of the few remaining unsold Pontiacs and Saturns. But the savings might not be as much as you would think. To qualify for the incentive, dealers have to put the vehicles in their rental or service fleet before selling them to consumers. That means they technically will be classified as used vehicles when they are sold to the public, though buyers apparently would get a new car warranty. GM already is offering $6,500 in incentives on new Pontiacs, including 0% financing for up to 72 months, narrowing the margin of benefit on those vehicles even further, according to online auto info site Edmunds.com. “This program is more hype than substance,” said Jessica Caldwell, Edmunds.com senior analyst. “There is no benefit for the consumer to purchase a used vehicle when a new vehicle can be had for a similar price.” That said, hype can go along way in the car business, and GM hopes the program -- and the publicity it generates -- will rid it of the final reminders of two brands headed for the auto graveyard. “It’s designed to help us clear the deck so we can more quickly move on and focus on our four core brands -- Buick, Chevy, Cadillac and GMC," GM spokesman Tom Henderson said.
Video: The World's Largest Shopping Mall (Guangzhou, China) In Almost Entirely Empty - (www.video.pbs.org) The world's largest shopping mall, in Guangzhou, China, is almost entirely empty after stealing land from farmers fields. Only 10-12 tenants operating.
Congress Travels More, Public Pays - (online.wsj.com) The expenses racked up by U.S. lawmakers traveling here for a conference last month included one for the "control room." Besides rooms for sleeping, the 12 members of the House of Representatives rented their hotel's fireplace-equipped presidential suite and two adjacent rooms. The hotel cleared out the beds and in their place set up a bar, a snack room and office space. The three extra rooms -- stocked with liquor, Coors beer, chips and salsa, sandwiches, Mrs. Fields cookies and York Peppermint Patties -- cost a total of about $1,500 a night. They were rented for five nights. While in Scotland, the House members toured historic buildings. Some shopped for Scotch whisky and visited the hotel spa. They capped the trip with a dinner at one of the region's finest restaurants, paid for by the legislators, who got $118 daily stipends for meals and incidentals. Eleven of the 12 legislators then left the five-day conference two days early. The tour provides a glimpse of the mixture of business and pleasure involved in legislators' overseas trips, which are growing in number and mostly financed by the taxpayer. Lawmakers travel with military liaisons who carry luggage, help them through customs, escort them on sightseeing trips and stock their hotel rooms with food and liquor. Typically, spouses come along, flying free on jets operated by the Air Force. Legislative aides come too. On the ground, all travel in chauffeured vehicles.
John Rubino: "The Last Time That Happened Was During the Great Depression" - (www.dollarcollapse.com) Until a few years ago, running a U.S. city was pretty easy. You added services when voters asked, you hired more workers (who were likely to vote for you come election time) to provide the services, and you promised lavish retirement benefits to cops and teachers who weren’t going to retire until long after you left office. If tax revenues didn’t cover day-to-day operations, no problem; Washington was sending plenty of aid to make up the difference. No longer. The gap between what a typical city gets from sales and property taxes and what it owes its employees is a now a chasm that even trillions in federal stimulus money can’t fill. So for the first time in most Americans’ memory, cities actually have to live within their means. The result, according to today’s Wall Street Journal, isn’t pretty. As Slump Hits Home, Cities Downsize Their Ambitions: MESA, Ariz. — The police department in this city of 470,000 has lost about 50 officers, and is hiring lower-paid civilians to do investigative work. The Little League has to pay the city $15 an hour to turn on ball-field lights. The library now closes its main location on Sundays, and city offices are open only four days a week. This holiday season, the city didn’t put up festive lights along the downtown streets. Mesa’s tax receipts, depressed by the recession, will likely come back one of these days. But Mayor Scott Smith doesn’t believe city services will return to prerecession levels for a long time, if ever. “We are redefining what cities are going to be,” says Mr. Smith, a Republican who ran a homebuilding company before his election last year.
NY Fed Chief Abruptly Resigns - (www.nytimes.com) Stephen Friedman, the chairman of the Federal Reserve Bank of New York, abruptly resigned on Thursday, days after questions arose about his ties to Goldman Sachs. Mr. Friedman was chairman of the New York Fed at the same time that he was a member of Goldman’s board. He also had a substantial stake in the firm as the Fed was devising a solution to keep Wall Street banks afloat. Denis M. Hughes, deputy chairman of the board, will take over as the interim chairman, the New York Fed said in a statement. (Read Mr. Friedman’s letter after the jump.) Because the New York Fed approved a request by Goldman to become a bank holding company, the chairman’s involvement in Goldman was a violation of Fed policy, The Wall Street Journal said in an article earlier this week. The New York Fed asked for a waiver, which, after about two and a half months, the Fed granted, the newspaper said. During that time, Mr. Friedman bought 37,300 more Goldman shares in December, which have since risen $1.7 million in value.
Credit card's newest trick: 79.9 percent interest - (news.yahoo.com/s/ap) It's no mistake. This credit card's interest rate is 79.9 percent. The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It's a strategy other subprime card issuers could start adopting to get around the new rules. Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card's credit line. In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn't set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent. "It's the highest on the market. It's the highest we've ever seen," said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.
OTHER STORIES:
GMAC, FNM, FRE, AIG Now Permanent Wards of the State - (www.nytimes.com)
Tom Engelhardt: No Holiday Season for War - (www.motherjones.com)
Federal Reserve: The Appearance of Control - (www.elliottwave.com)
Paying a High Price for Saving - (www.nytimes.com)
Free Market Fantasies: Capitalism in the Real World - (www.chomsky.info)
Bernanke One Step Closer to Appointment, but Confirmation Not Assured - (www.washingtonpost.com)
US Warplanes Vulnerable to Electronic Interception - (www.wired.com)
Greenspan Says Deficits Pose Potential Disaster - (news.yahoo.com)
US Dollar: From Panic to Embrace - (www.elliottwave.com)
1 comment:
I am very much agre with all of your points....
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