March 08, 2007

Make crappy cars nobody wants - check. Make loans nobody will pay back - check.

Man, you can't make this stuff up. Just when you thought it couldn't get worse for GM, it got worse.


It all comes together HP'ers. It all comes together. And yes, The Great Unwinding has more than a few surprises in store...

GM May Take Almost $1 Billion Charge for Mortgages (Update5)

General Motors Corp., the world's largest automaker, may take a charge of almost $1 billion to cover bad mortgage loans made by its former home-lending unit, according to a Lehman Brothers Holdings Inc. analyst.

Residential Capital LLC relies on loans to people with poor or limited credit records or high debt burdens, for more than three-quarters, or $57 billion, of its loan portfolio, Lehman analyst Brian Johnson wrote in a research report. Delinquency rates on such subprime loans made last year are at a record high.

Detroit-based GM, struggling to reverse more than $13 billion in losses over the last seven quarters through Sept. 30, delayed filing its fourth-quarter and full-year earnings to as late as March 16 in order to restate results. The company in November sold a 51 percent stake in General Motors Acceptance Corp. for $14.4 billion to a group led by Cerberus Capital

GM may have to spend as much as $950 million to make up the difference between the original value of the finance unit and any losses for subprime loans made by ResCap, he said last month.

About 13 percent of the subprime loans backing bonds issued in 2006 and rated by S&P are delinquent, with 6.65 percent of the loans behind in payments by 90 days or more, according to Standard & Poor's. More than 20 lenders have closed or are seeking buyers since the beginning of 2006. Subprime mortgages typically have rates at least two or three percentage points above safer prime loans.

57 comments:

Anonymous said...

.
.
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It would be fitting if the housing crash bankrupted GM

Anonymous said...

I wonder how many people bought GM cars with Housing ATM loot?

exuberant but complacent said...

That seems like a good reason for the market to rally.

Anonymous said...

Wouldn't it be nice if American manufacturing companies actually, you know, manufactured stuff? Stuff worth owning? But no. The financial hucksters and the b-school weenies all say, "look, easy profits from easy finance over here, no expensive engineers involved, just a slight fee for us...." Next thing you know China owns half the country's debt and America can't make anything but war machines used to secure oil for fuel-hungry foreign SUVs Americans don't even own but are borrowing with a cash-out, no-doc, interest-only HELOCs...

Crikey.

Anonymous said...

finally al-qweefer says something intelligent...GM does make crappy cars

Anonymous said...
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Anonymous said...

GM DOES NOT make Quality OK, That's why I bought a KIA, 10 yr warranty too!

o yeah said...

I gots my H2 wif 28-inch spinners

Anonymous said...
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Anonymous said...
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truthfart membrainless said...

truthfart member buys his Chinese made junk from Dollar General, which means that he is part of the ruling elite.

Anonymous said...

I bought a new GM Blazer in 1986. After 3 transmissions and only 30,000 miles I only buy Toyota and BMW.

American car companies sacrifice quality for profit.

There day of reckoning is coming.

They need to get rid of the unions and start building better vehicles.

Anonymous said...

You can't compare quality on an '86 bazer with quality on '07s. Night and day.

GreedKills said...

A friend recently visited me and rented the latest Pontiac "whatever".

I really don't even care enough to look up the exact model.

Anyways...it seemed to be a model that was placed to compete with cars like the Celica and the Eclipse as it took styling cues from each car for the rear half.

The front half was pure Pontiac.

We both shook our heads and came to the same conclusion.

If this is the best they can come up with...they're finished.

Anonymous said...

>>They need to get rid of the unions and start building better vehicles.

Another management water-carrier. Never mind that both Japanese and German plants are fully unionized.

No, it is American management (M-A-N-A-G-E-M-E-N-T) that has failed, not the production line workers that bolt stuff together.

See George W. Bush for an example of management failure in a different field.

Anonymous said...

Is that your old car from the Phoenix days?

JR Junky said...
This comment has been removed by a blog administrator.
trashwacker said...

Detroit junk, cookie-cutter cheap housing, Wal-Mart Chinese crap, corporate "restaurants"/fast food, the Iraq debacle and 8 years of the Bush administration.
The trash and scum of America running amok as a full scale American tragedy is playing out...how sad..how pathetic for this once vibrant country.
Where are you now Joe DiMaggio...?

FlyingMonkeyWarrior said...

March 08, 2007
US Car Manurfacturing Heads Toward Zero

One solution to the high cost of union labor, its pension and health-care requirements, is to build cars outside the US. The UAW will fight to the death to keep the jobs they have at Chrysler (DCX), Ford (F), and (GM) "in country" but the fact of the matter is the the number of cars produced in the US isn't what it used to be.

Bank of American is out with a report that shows China's car production hit 5.2 million vehicles compared to 4.4 million in the US during 2006. Ten years ago, China only produced 6% as many cars are the US built.

Clearly the Chinese market is one of the fastest growing in the world, but the numbers point to another trend. American cars sold in China are usually built through joint ventures with local companies. US can companies are also building product in places including Mexico and Australia. With market share dropping the the US, the Big Three are trying to solve the problem, at least in part, by moving to the low cost environments outside the US.

Moving production creates a number of problems including quality control, but the US auto worker may be heading the way of the Dodo.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.


http://www.247wallst.com/2007/03/
us_car_manurfac.html

Anonymous said...

Stupid part is, outside North America GM makes plenty of good cars. Particularly the ones that come out of Opel in Germany. Here in Oz we own a Holden Astra (re-badged Opel) that we've had for six years and driven over much of Eastern Australia. It's a great little car; economical, refined, superb (BMW-level IMHO) engineering, cheap to service etc etc.

The Australian-built Holden Commodores also seem to have a good reputation in the UK as muscle cars.

So why are they building crap in the US?

Anonymous said...

Sadly our only true export is our acumen at socially organizing the world towards our best interests.

You think you have a better life than the billions in China because YOU are SPECIAL??

No. The USD is important. Our military is important.

Anonymous said...

My old man owns a 1999 (I think) Chevy Blazer. It was leaking a bunch of fluids on the garage floor and so I took it into a shop for an evaluation . The shop owner said, "Oil pan leaks and needs a new gasket." There were other things that needing fixing as well. I wasn't too concerned until I was quoted a price for over $1000. I just about lost it. Whattttt?, I shrieked. The owner explained that if you want to replace the oil pan gasket on that model you've got to hoist the engine several inches out of the chasis to gain access.

I so hope that GM goes bankrupt.

Anonymous said...

Anonymous said...
I wonder how many people bought GM cars with Housing ATM loot?

March 08, 2007 11:08 PM
---

I have a friend that re-fi'ed his house to buy a used Vette, like he always wanted. It broke down and now he can't afford to fix it...

Anonymous said...

what happened to AMERICA
how did this all happen
what happened to AMERICA

Anonymous said...
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Anonymous said...

What happened to America is that, we became a throw-away society. If something breaks, just throw it away and get a new one.

Lost Cause said...

In the old days (1998) if a company was late with its earnings report like GM is late with its earnings report, people would run for the exits.

I guess it is different this time.

What's good for GM is good for America. Apparently, America needs a massive enema, but it will feel better in the morning.

bozonian said...

It may be that the two reasons for our economy becoming more and more "broker" oriented:

1) When money made by shuffling around other money (capital gains) is taxed less than hard work, gee, you get what you reward, a bunch of produce-nothing Jabba the Huts like Lee Raymond:

http://www.commondreams.org/headlines05/images/1027-06.jpg

http://freespace.virgin.net/john.coppinger/Jabba%20face%2001%20copy.JPG

Oh no. I'm Ann Coulter. I don't see ANY similarity!

2) The "money" people (banks) get first crack at new money from the Federal Reserve. They can borrow ALL they want, anytime so they can take complete advantage of any arbitrage (price differentials) around the world. How fair is that? New money should be injected into the system by giving every American born citizen person $100,000 when they turn 30. Otherwise, the rich will just continue to get richer.

Anonymous said...

You oh yeah!

I don't roll like dat. You betta brush yo teef.

bozonian said...

I've got a pretty bad feeling that the big banks are keeping a poker face to the world while they are collapsing inside, scrambling to liquidate their vulnerable positions before the whole infrastructure collapses. Even the CEOs might not know what's going on inside their own companies as their underlings lie and tell them everything is going to be ok. Bullshit.

A lot of them were holding huge positions in these lenders, actually wrote the insurance on these loans and fronted the cash for these loans. I think they are forcing rallies that keep failing to pump and dump their losing stocks. If you are buying lender stock because "its bottomed" you are going to be left holding the proverbial bag.

There ain't gonna be no houses sold this year folks. How is a mortgage lender supposed to survive that? I have no sympathy for anyone who loses money in lender stocks right now. Terry Schiavo had more brains that some investors. Without suicide loans to keep the bottom layer afloat, the middle and higher people can't sell their current houses to move up. The housing values are going to plummet and all the vectors that pushed the boom up, will reverse and push it down.

Someone is soon to be out several trillion dollars and even the big guys are not going to be able to hide that forever.

jt said...

A colleague of mine works foreclosures in Detroit and he says Detroit is the worse (or should I say Best) place in the country for foreclosures. Houses at price points considered dirt cheap elsewhere are being foreclosed on left and right. Auto industry there is tanking or has tanked. People are fleeing. Detroit is the armpit of america, he says. NOt my view mind you, I've never been there.

Gloria White said...

they can't make good cars, they should at least learn to make good loans. What a disgrace GM has become.

bozonian said...

I have to wonder why people would invest in train wrecks like Ford and Genital Motors? Why would people keep holding stock in Exxon when the CEO walked off with 400 million dollars of stockholder money? That money wasn't paid to stockholders as dividends. Why would people invest in mortgage lenders and why Fannie Mae which hasn't reported in what, 2 years, still listed on the Exchange?

There is something rotten going on that lets those loser companies survive. I don't know what it is, but I certainly won't invest in them.

Like anyone cares about little old me.

Anonymous said...

Has anyone else noticed the trend that, right up until a collapse, everyone is smiling and saying everything is just fine?

Wake up people.

AMIGAUSER said...

I did not care when I purchased my TV from a Japanese manufacturer - it was cheaper, and better quality.

I did not care when the car I bought was made in Mexico

I now care because my job is being outsourced, exported etc.

I think its pathetic the way you dance around celebrate the export of good paying jobs.
Without the competition from GM, FORD and CHRYSLER for labour, how long before your employment conditions become worse? Does Walmart pay the same as GM?

What arguments can you give young people to enter manufacturing, when they see that jobs could be outsourced at any time? Its far better in America to become a realator, since you can earn a high wage, and have a job that is impossible to outsource.

Do you really think that America can remain a stable society, if most of the people are living as modern day serfs. Check out what happens in other countries when you get huge disparities of wealth/power.

gringo star said...

GM has turned around quite nicely in regard to vehicles. saturn aura won car of the year, the new silverado won truck of the year.
all new cadillac CTS looks much more upscale than cheapo-interior BMWs and Mercedes.
wake up people, its no longer 1982.
now, chrysler, they are still making junk.

Phil MyCracken said...

GM is run by retards - no offence to the mentally challaged, but if your *REALLY* mentally F'd up you work for and / or manage GM. I can't wait for that company to die, they deserve all the bad coming to 'em.

Anonymous said...

I bought a new 1988 S-10 truck from GM and dumped it with 10K miles on it because the computer would kill the engine and needed a half hour to cool down to restart. Towed 5 times, dealer even took it home with a diagnostic monitor attached. Yep, broke down on him too. I asked him what his diagnostics said. His reply, no error codes were reported so we can’t find any problem. The F$!@#*& moron failed to realize that the microprocessor was crashing before it could store error codes.

Bought a new 1993 Corvette. The POS pissed steering fluid all over my garage floor, transmission back up light switch, power window failed and the water pump failed causing fluid to get sucked up into the electronic ignition module located right under it. All this by 12K miles. Dumped that POS too.

I have been a happy Toyota owner since. GM=POS

Anonymous said...

Unions sold out the workers. Buyouts replaced good wages & benefits w/poorly paid workers who will still pay union dues.

Mort said...

bozonian sed:

Someone is soon to be out several trillion dollars and even the big guys are not going to be able to hide that forever.

And then later:

Why would people invest in mortgage lenders and why Fannie Mae which hasn't reported in what, 2 years, still listed on the Exchange?

The fact that big banks and corporations can continue to operate for years while totally bankrupt proves that they are not subject to the same rules as average citizens. Abandon all hope, the games will continue indefinitely. But you're right, J6P should get out of the market pronto. The old rules don't apply, anything could happen.

Anonymous said...

How come Japanese companies make great cars in the US but GM/Ford/Chrysler make shitty cars in the US?

The answer of course is unions. All Japanese plants in the US are non-union. All GM/Ford/Chrysler plants are union.

Conicidence?

Stuck in So Pa said...

"jt said...
A colleague of mine works foreclosures in Detroit and he says Detroit is the worse (or should I say Best) place in the country for foreclosures. Houses at price points considered dirt cheap elsewhere are being foreclosed on left and right. Auto industry there is tanking or has tanked. People are fleeing. Detroit is the armpit of America, he says. Not my view mind you, I've never been there."

Want a real eye opener as to how far an American city(s) can go to hell just Google: urban decay Detroit. The city is an unbelievable ruin. After I picked up my jaw off the floor, I almost cried! Is this the fate for all of our cities?

Anonymous said...

Don't you morons understand? Manufacturing is finished in the US. It's done. Kaput. Finito. Bye bye. Adios. Sayonara.

To answer the question of does Walmart pay more than GM? No. But google does and so does yahoo and Microsoft and Intel and exxonmobil and so does goldman sachs and merrill lynch and kpmg and deloitte and pfizer and merck and viacom and bellsouth and thousands of other US non-manufacturing firms employing tens of millions of people in high paying jobs right here in the US of A.

Anonymous said...

>> There ain't gonna be no houses sold this year folks.

Um, I sold mine (Central OH) 3 weeks ago.

Anonymous said...

>> The owner explained that if you want to replace the oil pan gasket on that model you've got to hoist the engine several inches out of the chasis to gain access.

Yeah - that, and (1) still putting batteries in the engine compartment and (2) putting the oil filter on the bottom of the engine, thus requiring the car be lifted.

Anonymous said...

In my opinion, the biggest failure of unions in the US has been their refusal to get everyone together, and say to the IRS "FUCK YOU! You're NOT going to be withholding from my paycheck!" It would take a large group of workers, such as a union, to change our tax system. They have failed not only their membership, but all working Americans...

FlyingMonkeyWarrior said...

we care bozonian.

HiRohler said...

GM got screwed over pretty bad by the UAW. I once visited a GM manufacturing plant in Georgia and found workers getting paid $27.00/hr to test CD players. All they had to do was press couple of buttons and the machine auto-tested the CD players automatically. Those workers were so bored that they were playing crossword puzzles on company time. The problem is GM became too complacent, enjoying huge sales in its heyday that it never tried to fix their internal problems that are becoming all too obvious in today's global market.

buy_high_sell_low said...

mort said:

"The fact that big banks and corporations can continue to operate for years while totally bankrupt proves that they are not subject to the same rules as average citizens."

Casey seems to have been "operating" for quite a while now even though he is esentially bankrupt.

buy for rain said...

Buy cheap chinese-made crap from Best Buy - check

Anonymous said...

anonymous said.

To answer the question of does Walmart pay more than GM? No. But google does and so does yahoo and Microsoft and Intel and exxonmobil and so does goldman sachs and merrill lynch and kpmg and deloitte and pfizer and merck and viacom and bellsouth and thousands of other US non-manufacturing firms employing tens of millions of people in high paying jobs right here in the US of A.

Read it and weep.

http://www.financialsense.com/editorials/navarro/2007/0204.html

Quote to remember:

"While the offshoring of U.S. manufacturing has been a body blow to the blue collar segments of Americana,

this more recent and accelerating trend towards offshoring science-driven industries much higher up the value chain could well be a knockout punch to future American prosperity."

China is cheaper in medical and electronics/computer development too. Given time the PRC will end up owning the USA, if not by military might, than by economic control of wall street, banks, drug companies, etc.
Best to start a business to sell to the Chinese just to survive in the future.

Anonymous said...

Bought a kia ,what a underpowered tin can that is. Made by Korean people who make $2.00 per hour too,and also ownrd by the Korean government.So you should be proud of yourself . One day soon when the u.s. is broke because of all the foreign junk,you'll be working for the government too making $2.00 an hour in america dummy.

Anonymous said...

just six more payments and that car is all mine!

blowfly!

Anonymous said...

If you believe GM makes crappy cars you are truly, truly ignorant. You a just a "Made in USA" bashing lemming. Go ahead keep telling yourself any excuse to convince yourself that supporting your neighbor's job is not important. A gazzilian GM cars will reach 100k miles this year without ever needing a repair. That's a fact. How do you expalin that off? Sleep well lemmings.

Anonymous said...

"Anonymous said...
I bought a new GM Blazer in 1986. After 3 transmissions and only 30,000 miles I only buy Toyota and BMW.

American car companies sacrifice quality for profit.

There day of reckoning is coming.

They need to get rid of the unions and start building better vehicles. "

Ignorance knows no bounds. Early Toyota Tundra owners had to carry spare trannys they broke so often. Couldn't get parts to fix them either. You people are too funny. Go to your beloved Toy, Nissan, Kia, etc. dealership and take a look at the service department. Lots of cars in there "being reliable" huh?

You turned your back on good US jobs and you suck for it, stop making excuses and call it what it is.

Anonymous said...

Didn't Chrysler just announce a big recall?

Why can't America build a car that lasts?

Anonymous said...

Anon Said: "Didn't Chrysler just announce a big recall?

Why can't America build a car that lasts?

March 12, 2007 11:51 PM "

Ignoramous! Jap cars have recalls all the time.