uncle bubba

GMAC's Bad Medicine: Rates Were Never the Problem

One last thought, with the government using the TARP funds to help GM this program may do what it was intended to do. The economy is slow due in large part to people not buying, not putting dollars through the system. If Joe six pack buys a car, the dealer profits, the manufacturer profits. Those profits are paid to employes who in turn spend at the local resturant and stores and the economy starts working its magic as the dollars turn. This seems to me to achieve the ends envisioned by the congress as opposed to the banks who have held on to their funds to make the balance sheet look better without putting the money into the economy.

GMAC's Bad Medicine: Rates Were Never the Problem

The help is the stability of GM and keeping GMAC out of bankruptcy which could have pulled GM down further. The fact is credit is and has always been availible to anyone with decent credit. GMAC went to cutting off approvals at anything below a 700 credit score because they did not have the funds to lend. They now can and will look at credit down to a 621 credit score. This is still much higher than in the past, persons with scores as low as 480 had sources for financing with high rates. Credit now is generally unavailible to persons below 600. Credit has tighten but not for the majority of the country. The news made it sound that even with good credit auto loans were hard to get or unavailible. This news helps GM from the standpoint of changing that perception. It is amazing that people with very limited understanding of the financial workings in general are given space to write about things they don't understand.

Playing the Auto Bailout With Yields as High as 45%

Debt restructure aims for 33 cents on the dollar, or in the case of XGM. $25.00 face, would reduce price to $8.25 per bond which currently trades for $3.29 per bond, thats 250% return to those who gambled at 3.29. plus the balance of the original share cost in new equity shares, which wipes out the current equity holders. Plus the ex-dividend date is 12/29 and those who gambled at 3.29 will receive a dividend in January of aprrox 55% return on the original investment. Gambling, yes, high return if you win, you bet. The guy who thought it was only 30% return doesn't understand this bond and where it will go if they survive.