US Auto-Makers Take it on the Chin

Posted on June 3rd, 2008 in Daily Stock Market / Economic News - The Real Story

Whew! Lucky we are not in a recession, as CNBC tells us all day long, or this could be really bad news.  Of course, this is being made out to be a ‘surging gas prices’ story and not a ‘broader economy’ and ‘housing-related’ story already.

These sorts of things are bound to happen when you shut a half million people out from using their Home Equity Lines of Credit in a single month. Due to this, a consumer falling flat on their face was one of the easiest calls in history. This is likely the first of many stories like this over the near-term.

I wonder if GM has access to one of the numerous new Fed facilities? If not, I bet they will soon. Then, the brokers and the auto-makers can pretend like they are banks!

 Bloomberg has a very detailed report of this sad story that is worth a read.

 June 3 (Bloomberg) — Asian automakers outsold Detroit’s Big Three in the U.S. for the first time last month as fuel-conscious consumers shunned General Motors Corp. and Ford Motor Co. trucks for Honda Civics and Toyota Corollas.

Japanese and South Korean companies boosted May sales by 3.7 percent. GM, Ford and Chrysler LLC fell a combined 21 percent as gasoline near $4 a gallon drove U.S. consumers from pickups and sport-utility vehicles.

There is one auto sector analyst out there who smells a rat…people get paid for this? 

“I’ve never known the market to change this much this quickly in my lifetime,” said Jim Hossack, a market analyst for AutoPacific Inc. in Tustin, California, and former engineer for Ford, Chrysler and Mazda Motor Corp. “It’s fueled by gasoline prices, obviously, but there’s more to it than that.”

Anyway, this is as bleak as it get and definitely worth the read. –Best, Mr Mortgage

Other Mr Mortgage Goodies

CA Housing Crisis, The Real Story…4.25 Years Supply???

Look Out!!! Home Equity Line Suspensions Go Countrywide…City by City

2 Responses to “US Auto-Makers Take it on the Chin”

  1. I rarely play on the dark side but I bought some puts 2 weeks ago on a slate of Hotel names. I just think the days of putting your family on an airplane, flying from Boston or Chicago into LAX or SFO, renting a mini-van, then driving to Sea World, Fisherman’s Wharf, etc for a week, and staying in hotels–that game is over now, for the general public.

    Meanwhile, the LA Times, (which I remember as a fairly “light” newspaper) has actually been doing some very good reporting on the housing crash. Today’s blog took a look at Merced. Whoa.
    http://latimesblogs.latimes.com/laland/2008/06/in-merced-a-tsu.html

    You know, all one has to do is study the regions and ports that are the key exporters of soft commodities in the US, and, the Stockton River Delta is still a heavy hitter. So eventually, there will indeed be a bottom in Calif’s central valley, and a resurgence will unfold. But it could take time.

    As for CNBC, which for mental health reasons I try not to watch, I must say that the guy who has set himself up as a Goat is Brian Wesbury, who is recalcitrant and beligerent that 1. There is no recession, and 2. The FED should never have cut. (well, since the FED cuts unleashed nascent inflation, this is debatable, I suppose).

    I think the FED is going to panic again sometime this Summer, and there will be another cut in 2H 2008 which will do nothing, but the poor guy really has no options. Once the market finally gets it 100% that the FED is out of ideas, watch out. This means that gold and foriegn currencies will likely have another big ramp before 2008 is over.

    I’m very worried for California. On the energy side I am benefiting enormously, but it frankly makes me sick to my stomach.

    Oh, looks like the Hummer is going out of production. Duh.
    http://latimesblogs.latimes.com/laland/2008/06/so-long-hummer.html

  2. It’s not as simple as that. Here’s why. The foreigners are stuck with humoungous amounts of US dollars. Nobody wants to really liquidate the stuff like US real estate in California or Las Vegas.

    No one really wants to depeg their currency to the US dollar. China wants to keep on exporting like crazy. So does Japan and Korea. Russia wants to keep on growing their stash. You can expect a lot of investments in Lehman Brothers and the likes before it really crashes. Sovereign funds will do almost anything to keep alive Wall Street firms. They need the buggers. Nobody in China, Japan, Corea, Quatar and Saudi Arabia has an interest to see going them under.

    So they will finish by controlling a good chunk of the place. Your next boss at Goldman Sachs, at Morgan Stanley, at Merrill Lynch or at JP Morgan will eventually be chineese, arab and who knows, maybe even russian. That’s what I see coming real soon.

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