- a collection of notes and reflections on urban living from the perspective of a family of five in Tokyo. My epiphany was many years ago, but being hit by a motorbike and seeing my life flash before my eyes caused a sudden change that slowly made me reflect on whether American style auto-centric urban transportation of the Roosevelt era really is a capital G "Good Idea" for civilized modern cities in the 21st Century. This blog explores the good and the bad in urban planning and design, here and elsewhere. The goal is simple - not "death to all cars," just more walkable communities, quiet tree-lined streets, good public transport, traffic calming, Velib style bicycle sharing and a bit of common sense. The bolg is mostly theraputic, so I don't go wanting to throttle every dangerous driver I come across, but partly also out of a real desire to see positive change. This blog explores how it can be done, the people who do it, and how, in many small ways, this very old idea may at last have found its zeitgeist. Comments and suggestions welcome.

Saturday, November 29, 2008

GMAC wants to become a bank ?!

So, let me get this straight - Ford Motor Credit, Chrysler Finance Corp., and GMAC have already been given access the Fed's commercial paper program and now they want to become banks in order to access federal government bank rescue funds because nobody in their right mind will lend to these auto related companies.

Let's think about this for a second. No-one wants to lend to auto finance companies because car prices and sales are falling rapidly, defaults are rising, and their business is dwindling away.

So because no-one in their right mind would invest in such companies, they cannot access credit. If they cannot access credit they cannot offer credit to car buyers. Doesn't sound like such a bad thing at all really. Do Americans really need to drive three trillion miles a year? And aren't Americans in too much debt anyway? Do most Americans really need to buy that new car right now? The consensus - even in the US itself, seems to be that it is time to ween ourselves off this addiction. More, it seems clear that feeding the addiction will only make the situation worse.

But the government is running scared. If they do fall prey to these threats, and step in to allow these particular companies to access the Fed's commercial paper program, indeed by allowing them to become banks (if they are in fact allowed to do so - I fail to believe that Congress could permit this), the government is effectively bailing out the investors and lenders who have enjoyed wonderful returns for the past or so decade. offering money to these companies so that these auto finance companies can continue to lend money to people with bad credit to buy new vehicles that will fall in value so that they can continue to satiate their addiction to automobile lifestyles - environment be damned, energy security be damned, everything else be damned.

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