No Malibu for you
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I said this last month …Look it up
Chances for a bailout around zero as consumers shun buying American
cars due to the fact they may not be around if any warranty work is
needed.
The CEOs of the big three automakers flew to the nation’s capital
yesterday in private luxurious jets to make their case to Washington
that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.
bho44,
Unfortunately, your prediction is as wrong today as it was last month, just perhaps in different denominations. The auto bailout WILL happen. They will get the @$14 bil. from treasury to tide them over until Jan. 20, 2009, then they’ll get whatever they need to placate the unions. After all, Sec. Tres. can spend the $750 bil. TARP in whichever way he/she chooses. No Congressional approval required. Hope I’m wrong. Unfortunately, I’m not.
Does it really matter?
A billion here, a billion there. Pretty soon we’re talking serious money
We are all screwed. There is no way we will ever recover or pay back this money
A few ivy-league propeller heads did what Osama bin-Laden could not – wreck the global economy.
BTW – One Dollar bill is 6 inches long and 2.5 inches wide. It’s roughly as thick as a regular piece of paper.
Fifteen billion dollars would be 60 feet high, 150 feet long, and 62½ feet deep.
Just thought I’d shock somebody with these statistics
The total projection of the “Bailout (of all sectors)” is already around $8 trillion. This is based on government estimates, so it may be safe to multiply it by a factor.
This all portends VERY serious trouble for the US economy. Glad I live close to the Bahamas.
I can only speak from my experience. And that is from the POV of an Advisor in one the nation's must populated regions and in the seat of some it's greatest wealth. In my neck of the woods service groups like the Lions club consist of people who are the little league coaches, community leaders and council people. The Rotarians, by contrast, are the money folks. Big money! And while the Rotarians may have a few of us advisor types on the rolls, it is a low percentage when measured against the whole. Of course there are no hard and fast rules to this, just an observation. People from either group can join whatever service groups they like. I can't speak for the Lions, maybe they are a dying breed. But the Rotarians, far from it. A great organization. We obviously come from very different places. People around here don't measure geographic location by using the term "Next town over." Still, and this was the point of my original comment, don't try BSing anyone over 40 about your net worth. They will see right through you. And wealthy people, like the Roraians in the Philly region, well, to them you're going to look just plain stupid. Usually not conducive to getting business. Most wealthy older investors will give a young person a pass on things like an expensive car. Less so on nice clothes. And not at all for Bullshit, which they can spot a mile away. For what it's worth.How do you figure the Lions run the town and rotarians own it? Everyone in the rotarian group in my town is either trying to get business(EDJ reps, Primerica reps, or a hodge podge of retired people(most of whom where airline pilot who lost a good chunk of there pension), but nobody with any connections are in rotary. And I am pretty sure that the Lions group in my town and the next one over are no longer there.
I think groups of these types are dying breeds.
We can do a lot with one trillion 1 dollar bills like:
If you laid one dollar bills end to end, you could make a chain that
stretches from earth to the moon and back again 200 times before you
ran out of dollar bills
or
One trillion dollars would stretch nearly from the earth to the sun
or
It would take a military jet flying at the speed of sound, reeling out
a roll of dollar bills behind it, 14 years before it reeled out one
trillion dollar bills
One thing we will not be able to do is pay it back.
It may be a brave, new world. My main question is, what will the rest of the western world’s countries do when they can no long depend on the USA’s military, under NATO, to protect them anymore? I fear very few of those countries will suddenly be able to afford a serious defense budget after being basically without for 30 years or more.
[quote=BondGuy]
B24, how about digging up something newer than six months old? The F150 is still number one. When I read a headline like that my first thought is all the anti advisor headlines i read in Money magazine and the like. The reporter had an agenda, one you agree with so you believe it. And maybe at the time it was valid. Closer to lying with statistics if you ask me. Similar to what we read from the do it yourself press.
Interestingly, even major ratings companies have an anti american bias. On one site, though two american cars rate higher than every vehicle except Acura, in that ratings company’s “Top Picks” category, based soley on the ratings, the american cars are left off the list. Go figure!
[/quote]I didn’t do much scientific research on this. I pulled the first thing I found. These are not subjective studies. This is number of units sold in 2008 (not sure the cutoff).
As far as the Rotary/Lions comment, I would totally agree (I’m a member). Although the younger members tend to be more the “service” types (bankers, advisors, accountants, etc), the older ones have serious wealth. I think this goes back to their old membership “rules”. Traditionally, you had to be a business owner or run a business, or something of that nature. They have loosened up a lot on those rules to keep membership up. And you are right about Lions - great group of guys - but they are the local yocals that hang out at the VFW, coach Little League, run the little shops in town, etc. Not a bad thing - at all. Great group. I love the pancake breakfasts. But they are not the real money guys.
[quote=PWM365]
Who said we are getting rid of the car because it's a probelm? It's not. Unlike some people, you for example, we can afford to drive new cars. It's really simple. BG, do you honestly think this a useful and constructive comment for this forum? You obviously have a strong opinion on this matter but that doesn't make you right and it certainly does not give you the right to belittle others who don't agree (and for the record I am one of those people). You seem to have experience and knowledge; why don't you use it for something constructive? [/quote] And who might you be? Another member of the hit and run change their screen name everyday crowd. But whoever you are here's a little note for in the comparative comprehension department: I opened this thread. I didn't come in on someone elses thread claiming the high road. Nor did i say i was right. In fact I said i didn't know. Regardless, my opening comment was opinion. I'm entitled to it. You are entitled to disagree. As for my comment, I don't see it as belittling. This is a business where perception is reality. That is, the prospect's perception of us translates into the reality of doing business or not. The poster i was responding to claimed the high road by bragging about his two high mileage cars. Under normal use a car with 85,000 miles would be about 7 or 8 years old. I'll admit i assumed, and maybe incorrectly that his cars were about that age. For those makes Honda and Toyota, both have undergone two major makeovers in that time period. If his cars are 7 or 8 years old both are seriously dated. And prospects will note that. There is nothing wrong with driving an older car into the ground if you're not in the success business. It makes no sense to go to a prospect meeting wearing a fine suit, shirt expensive shoes etc and then show up in a well worn car. The frugal advisor line will only go so far. No one will no the difference if you show up in a 05 Accord or an 08, but they will notice a 95. When i started in this business i was broke. i hid my car from prospects as much as possible. Say what you will about how i spend my time here, how about you? Why do you hide behind ever changing screen names?Oh, and for what it’s worth the UAW agrees with me. They believe the autobelt senators are working for the foreign auto makers to break the unions. From where i sit, i’d say he’s right. And people ask why life sucks for so many people living in those states?
And again, for what it's worth- their is a rising chorus of analysts and market commentators who beleive the UAW acted as they should have. At this point in time, those who side with senators honda, toyota, and hyundai appear to be in the minority. I agree with some of those analyst. First; in light of our economic condition not to give the big three the short term bailout would be a catastrophic mistake and second; it was unreasonable for the senators to demand, at the point of a gun so to speak, the concessions they were asking for. Give backs of that level are usually negotiated over months, not hours. Further, asking the UAW for give backs, while not holding the ajoining stakeholders to an equal level of give backs was unreasonable and that the UAW had little choice but to say no deal. Analyst say that over the coming months those talks should take place and they believe the UAW will give more concessions. According to UAW president Ron Gettlefinger, his union could work for free and GM would still run out of cash in January. The union isn't the problem but is being held up as the solution and also the scape goat. He is willing to do whatever it takes in a fair negotiation where all stakeholders share equally in the solution. At this point that's not what the senators from the south want or are demanding. So you see folks, there are two sides to every story. Listening to those senators in their press conferences and they made the UAW out to be the villian. Yet, listen to Gettlefinger and a different picture arises. Then senators come off as exactly for what they are; pimps for toyota, honda, and hyundai. And even while most analysts don't have the balls to openly agree with that statement, they do agree that Gettlefinger acted corectly and that it was the senators who were unreasonable, regardless of their motives. Disagree with what you will, those are the facts. I know that for you anti american anti union types this boils your blood.The unions didn’t cause the problems. They just happen to be one of the problems. If the big 3 go under, there will be a huge void in auto production. It will be filled by companies that know how to build autos and make a profit. I’m sure that some of the lazy union people will be hired to build cars for the new factories. The one’s who aren’t rehired should’ve been smart enough to save their unearned, excess income to support themselves. Sucks to be them.
[quote=BondGuy] Squash, tell me, do you show up at meetings wearing a tired suit, stained tie and shirt with frayed collar and blown out elbows? If not why not? After-all you don’t care what people think.
I think there is a difference between wearing dirty clothes and driving around a well kept car.
I also think our client base is different. My “typical client” didn’t make more than $150K/year ever, but retired with $2.5 million(not including extras like pension,ss).
My practice is in a suburban area of one of the 10 largest cities in the US. I do think there are some people who are put off by there advisor showing up in a car worth more than both of theirs combined, and I also think there is an equal amount of people who want to know their advisor is succesful and drives a nice car(though I think most advisors lease theirs to get to that perception because they couldn’t afford it when they started). And then there is another 33% who just don’t care either way.
For me I would rather spend the extra money on something else(second home on the beach, vacations with the fam etc…)
But I do have a friend that is an advisor in a similar location has car payments that are more than my rental house, buys all his clothes from Brooks Brothers and lives in $1mil house(probably worth $750K) and has the same amount of income as I do. But I think the pressure on him to keep that income up to pay for all that stuff is much greater than it is for me.
Sorry BG but you have it wrong. I have never changed my screen name. I simply have rarely posted any comment. This sight is about the sharing of information to help real advisors. I don't need to post rambling conversations daily to read and learn from advisors with more time in the business than me (LOS 5 years). That being said I have always found your posts previously to have some value, encouragement and usefulness to the general population on this site. That was why I was surprised by your comments.
As to the auto companies; I don't see how anyone who believes in the concept of capital markets can believe we should bail out an outdated, inefficient and poorly managed group of companies that produce low quality and over priced autos. In the United States we have the luxury of choosing from an array of products built by manufacturers around the world. Americans vote with their wallets daily and the results are pretty clear.
In my previous life I worked in international business development and worked with many household names that manufacture overseas. I don't know your background but I can tell you from first hand experience that america is second and quickly becoming third tier when it comes to our manufacturing capability . Our IP and creation of technology is first rate but when it comes to electronics, autos, etc.. we can't compete when it comes to producing low priced and high quaility products. Our cost to manufacture is too high and our workers feel some sense of "entitlement" that you will not see in most places outside of the US. I would hate to see the auto companies fail but where does this all end? First the banks, then the insurance carriers...what next? The car companies?, the airlines?, all the retail stores? We can't save everyone and who is to say which person's job is more important than the next?“And for those who say that the UAW killed the bailout, think again. Or more accurately, try thinking at all. The auto belt senators wanted parity between their workers and Detroit’s. And they wanted it in 2009. Under the current UAW contract they will have that parity by 2011.”
There's no reason on Earth the tax payer should have to wait for 2011 so see UAW wages be adjusted to be simply COMPETITIVE to that paid to other US auto workers. That's a UAW fiction. They were asked when they'd be willing to adjust those wages and they sat first on not until their current contract expires.[quote=chief123] [quote=BondGuy] Squash, tell me, do you show up at meetings wearing a tired suit, stained tie and shirt with frayed collar and blown out elbows? If not why not? After-all you don’t care what people think.
[/quote]
I think there is a difference between wearing dirty clothes and driving around a well kept car.
I was responding to the comment made you or someone that the didn't care what people think.
I also think our client base is different. My "typical client" didn't make more than $150K/year ever, but retired with $2.5 million(not including extras like pension,ss).
My practice is in a suburban area of one of the 10 largest cities in the US. I do think there are some people who are put off by there advisor showing up in a car worth more than both of theirs combined, and I also think there is an equal amount of people who want to know their advisor is succesful and drives a nice car(though I think most advisors lease theirs to get to that perception because they couldn't afford it when they started). And then there is another 33% who just don't care either way.
For me I would rather spend the extra money on something else(second home on the beach, vacations with the fam etc..) Extra money? There is no such thing. There is only money. How one decides to spend that money is a personal choice. For you it's a vacation home. For others it's a boat, car, airplane etc. There is no right or wrong as long as the money spent brings the expected result. And you may smugly believe you are being smarter with your money. Being smart with your money is a poor measure of a life well spent when it comes at the expense of doing something you truely wanted to do. I've found it's a mistake to judge how people spend their money.
But I do have a friend that is an advisor in a similar location has car payments that are more than my rental house, buys all his clothes from Brooks Brothers and lives in $1mil house(probably worth $750K) and has the same amount of income as I do. But I think the pressure on him to keep that income up to pay for all that stuff is much greater than it is for me. Again, his personal choice. I know people who can't work this biz unless a gun is pointed to their head. Perhaps he is like that, the pressure is what drives him? [/quote]
[quote=PWM365]
Sorry BG but you have it wrong. I have never changed my screen name. I simply have rarely posted any comment. This sight is about the sharing of information to help real advisors. I don't need to post rambling conversations daily to read and learn from advisors with more time in the business than me (LOS 5 years). That being said I have always found your posts previously to have some value, encouragement and usefulness to the general population on this site. That was why I was surprised by your comments.
You know, I gotta tell ya, after your post i re-read my original comment and i could see that it could be taken as a put down even though that was not my intention. But even so- a benign one at that. Very weak. So much so i'd get cut from any serious mud slinging team on the net. Then I thought, with all the crap that goes on, on this website, that this person, you, picked my comment to take a stand. Believing you aren't part of the New Name-A-Day crowd is a stretch. As to the auto companies; I don't see how anyone who believes in the concept of capital markets can believe we should bail out an outdated, inefficient and poorly managed group of companies that produce low quality and over priced autos. In the United States we have the luxury of choosing from an array of products built by manufacturers around the world. Americans vote with their wallets daily and the results are pretty clear. This entire comment is a load of uninformed BS. Not trying to belittle you, just my opinion. In my previous life I worked in international business development and worked with many household names that manufacture overseas. I don't know your background but I can tell you from first hand experience that america is second and quickly becoming third tier when it comes to our manufacturing capability . Our IP and creation of technology is first rate but when it comes to electronics, autos, etc.. we can't compete when it comes to producing low priced and high quaility products. Our cost to manufacture is too high and our workers feel some sense of "entitlement" that you will not see in most places outside of the US. Again, uninformed and biased. With your international experience I would hope you'd know better. I'll give you one star out of five for being partially right about U.S. manufacturing becoming a second teir industry. The economy moved to a service economy in the 80s. I would hate to see the auto companies fail but where does this all end? First the banks, then the insurance carriers...what next? The car companies?, the airlines?, all the retail stores? We can't save everyone and who is to say which person's job is more important than the next?The airlines have already gone through this. Did you miss that? And retail is a revolving door in Bankruptcy court. With LOS of less than five years, unless you are super advisor you are just starting to move beyond survival level. You may not see it quite that way, but that's where most young advisors find themselves. You're off the runway, and in the air, but you're still in a low speed nose high climbing attitude without a lot of space between you and oblivion. If GM goes under it's going to take what's left of consumer confidence with it. Today, our business is suffering. Biz is down. Biz is bad! The Wealth Manager-asset gather types of advisors are suffering. The General practicioners are suffering. The only advisors not suffering are us fixed income types and some insurance specialist. The point being, as it stands many advisors in the survival segment of their career won't be here a year from now. If any of the big three go down, those who might have eeked thru this recession aren't going to be here as well. The herd will be even more thoughly culled. As a young advisor, if I were you, I'd set the anti american diatribe aside and vote with all my will for a bailout of the big three. Because I gotta tell you, the auto workers aren't going to be the only ones hitting the bricks. [/quote]Bondguy, maybe you can explain something to me. I can understand why someone can think that the consequences of not doing a bailout will be severe. However, I still have not seen anything that would lead to a conclusion that a bailout will do anything other than delay the inevitable. Is $14 billion dollars going to stop a bankruptcy or is it going to simply be the first installment of long term tax payer financing of the industry? What am I missing here?
I think the bailout is a waste of time and if we weren’t going through this financial debacle, I don’t think they would be getting bailed out. Judging by the hearings not all would fail, I think Ford has been doing the right thing and getting rid of non-core businesses and stockpiling the cash. For Chrysler, I think that is a prime example of when private equity didn’t do their homework. There is nothing at Chrysler(Jeep is the only viable brand they have, and that is just a specialty(SUVs, not even trucks). For GM, the same problem as always 5 cars renamed and sold at different dealerships. Too many distributors selling the same product, I think you would need to kill at least 30-40% of the dealerships. GM is burning through more cash in a month than some make in a year, and what is going towards? The Chevy Volt?(That car will be useless by the time they get it out)
[quote=BondGuy][quote=B24]BondGuy, you have single-handedly contradicted the experience of most US consumers. I take that back - having to buy a new U.S. made car because 80,000 miles is too much is pretty much par for the course. I have a Toyota Highlander and a Honda Accord. Not a lick of trouble, and both have over 85,000 miles on them. To me, they are preactically brand-new. My in-laws drive a Malibu POS, with about 40K on it, and a Ford something-or-other with about 50K on it, that’s a heap of sh1t also.
The problem is, those foreign car makers actually know how to run a business. They sell cars that people will buy, at prices they will pay. The U.S automakers make cars that they cannot even sell for full-price. BondGuy, you are living a fairy-tale. So, explain to me (in less than 700 words please), exactly how a bailout will help GM? Will they magically find religion? Do you REALLY think their insane plan to rescue the company on the backs of fuel-efficient vehicles will work? What exactly will make them profitable? If a 160B company can't weather a recession, they don't deserve to be in business as they are.[/quote] I knew someone would respond with a "my japanese car is so good i would marry it if I could" story. Thanks for not disappointing. Who said we are getting rid of the car because it's a probelm? It's not. Unlike some people, you for example, we can afford to drive new cars. It's really simple. My daughter said she wanted a new car. I said go pick one out. Your thinking is really skewed. You assumed something was wrong with the car. Google Toyota lemon. Over 1.7 million hits. The company you worship is far from perfect. Just my dumb luck to pick two bad cars at random. I'm sure they are able to build a good car, I just haven't gotten one yet. Add to that, to find a car in the color my wife wanted the dealer had to trade for it. The three on the lot had defective paint jobs. Some people don't care about bad paint, we do. Why are you driving two high mileage cars? Just curious as to why a successful business person would drive high mileage cars? I mean, i have a Jeep with 82k on it, but it's a third vehicle kept around to do tow/off road duty. Primary vehicles are no older than two years. So what's the story? [/quote] BG, First, I was simply explaining to you the reality of the situation. Foreign automakers have made better cars, from a quality standpoint, in the past 20 years. We can dance around all we want. It's just a fact, and I prefer to buy quality cars. I could drive a $17,000 new Malibu POS, or I could drive a $28,000 Toyota Highlander. Everyone raise your hand that would prefer the Malibu! (crickets...............). As far as why I drive two "high-mileage" cars? Well, first of all, I like them. They give me no trouble, they look good, and for a Honda or Toyota, 85,000 miles is not "high-mileage", it's just broken-in. It would be high-mileage for your Malibu. I never intended to get into this pee-pee contest. I guess I just thought it was just conventional wisdom, and widely accepted that more foreign-made cars on the road today are of superior quality to domestic made cars. FWIW BondGuy, I also have a Dodge Ram that I don't drive very often. It's my weekend/Home Depot/dump run/mulch pile/friend-moving machine. Hate to say it, but it's awful. The 4WD is terrible and I have spent a fortune on repairs. I can't imagine getting rid of it - it's only an '01 with 70K on it, but it drives like a '94. I wouldn't get anything for it, and I can't imagine buying another truck that I would only put 1,000 miles per year on. The again, maybe I'll just replace it with a Tundra.......