Parity at last...

I was watching ABC's Good Morning America this morning when they related a story about the automotive financing model and how unsound modern financing models are for the car business in general. Some of my regular readers will remember that I blogged about the exact same problem back in November 2007 in the Rick Peet Sucks Blog. That's not a new problem, it is just more visible in the wake of the sub-prime mortgage debacle. People learned that selling homes to people who cannot afford homes wasn't as good as it sounded, because they entirely avoided the concept of what "cannot afford" meant. It meant they couldn't pay for the home.

It looks like 2008 will be the year of correction in automotive financing. The reason that automotive financing has been able to avoid a crash similar to the mortgage sub-prime industry is due to the fact that people can continuously roll over bad debt into new vehicles. You can't do that with a house, buy a new one every 12-18 months and roll over previous debt into the new loan on the new house. People have never advertised to put you in a new house, buying your old house even if you have bad credit and owe $80,000 more than your old house is worth. That's why the sub-prime market collapsed so quickly, there was no mechanism in place to roll over debt on a regular basis.

They've been doing that with cars for decades, and now the times are fixin' to change. If I were in the car business, I would start looking for some other line of work now, before it is too late. But, you actually deserve to be broke and out of a job, because it was the car business that created the problem in the first place. Don't cry about it now.

Selling cars to people who cannot afford them makes no sense. Selling cars to people who haven't paid for their last car makes no sense. Financing a car for more than that car is worth makes no sense. Attracting customers with a history of not paying their bills makes no sense. You have no one to blame but yourself, so don't cry about the situation you have created. For damn sure don't ask for any of my tax dollars to help you out, most of you should be prosecuted for fraud and misrepresentation. And you know it.

The bad thing about the whole situation is that General Motors and Ford are going to take one hell of a hit at their weakest moment in history. All manufacturers will take a hit, but domestics will be hit hardest because they are already having troubles unrelated to automotive financing. I'm sure they'll figure it out. All the manufacturers are going to be surprised at how many cars they over-manufacture annually when only people who can afford cars can actually buy cars.

Ask the housing industry how many extra houses per year they were building prior to last year.

That should make the global warming fanatics happy, higher gas and fewer cars on the road will decrease pollution across the board all across the United States of America. Anything that shuts them dumb asses up for a while is fine with me, ACORN and GreenPeace have never done anything but push a selfish and unscientific agenda that drives the cost of everything sky-high, and has kept things like nuclear power generation out of the United States in any meaningful amount. We could use some nuclear power plants to help allay the costs of energy.

They should use tried and true naval style Nuclear Reactors to power cities, just like they power our SuperCarriers and submarines. We should have been doing that for 30 years, but, thanks to outfits like GreenPeace and ACORN, we have to pay out the ass for energy from people who mostly hate our guts. Then, our own money goes into financing the killing of our soldiers and civilians all over the world. Thanks, ACORN, we appreciate that. One day there will be an adjustment in the environmental activist sector. I hope it is sooner rather than later.

People should stop listening to dumb asses, we'd be a better country, and have more money in our pocket.

Anyway, getting back to the main premise, it would appear that there is a crack in the dike that is automotive financing. It was bound to happen someday. You can't keep selling cars to people who cannot afford them. There will be another side-effect of an adjustment in the automotive financing sector: people who can afford cars won't be signing stupid loan agreements, nor will they be paying stupid ancillary charges for worthless extended warranties and paint protection.

Sensible people will pay sensibly for products they can afford. That's a scary thought for a car dealer.