JCCIII

Wall Street Breakfast: Must-Know News

"[Chrysler warns on dealership legislation. Chrysler warned it could face liquidation for a second time if lawmakers move forward with a plan to reinstate terminated dealership agreements. The House of Representatives has already approved a measure to restore contracts with 789 dealerships, but the bill's future in the Senate is less certain.]

If every dealership had $5MM worth of inventory in cars and parts, aggregate would be about $4B in total. This is a travesty for the small business families. " Quote, spald_fr above.

I have an old master's degree (1975) in economics and have given the reductions in dealerships some thought. While it is true that the dealerships do not cost Chrysler and GM directly, they compete against each other and, therefore, lower the average cost paid by the average US new car buyer and, therefore, lower the amount every dealer can pay and that Chrysler and GM can demand for each new car. Arbitrarily reducing the number of dealerships is a way to reduce dealership competition and increase the cost of a new car beyond what it needs to be by, you figure, something in the 2% to 10% range and increase profitability at Chrysler and GM and subsequently raise union wages; it is a transfer of wealth from ordinary new car buyers to Chrysler and GM to union wages to democrats via campaign contributions, accomplished by restricting trade/free competition. Do you really think a democrat congress is going to force Chrysler and GM to recognize the now or soon to be shut down dealerships?

Wall Street Breakfast: Must-Know News

Stimulus bill: "Around 35% of the package is earmarked for tax cuts." When you back out the welfare portion of the tax cuts - that would be refunds of income tax to people who do not pay income tax - the percentage of tax cuts becomes around 20%-22%.