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alstry (35.42)

This is Gonna HURT !!!!! REALLY BAD !!!!!!!

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July 25, 2008 – Comments (14)

July 25 (Bloomberg) -- Chrysler LLC, hurt by plunging prices for used sport-utility vehicles, said its finance unit will stop offering leases to customers on Aug. 1.

``It profoundly hurts me,'' said Alan Helfman, owner of Helfman River Oaks Chrysler Jeep in Houston. ``I was doing 20 to 30 leases a month.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWSTe6VT1UeE&refer=home 

Chrysler's announcement also comes as Chrysler Financial has been trying to persuade more than 20 banks to renew a $30 billion credit facility -- backed by car loans, leases and loans to dealers -- that was issued by the auto-finance company last year when it was carved out of the former DaimlerChrysler AG. The debt represents a sizable chunk of Chrysler Financial's $70 billion portfolio in working capital. The higher financing costs could further complicate the attempt by private-equity firm Cerberus Capital Management LP to turn around the auto maker.

Alan Helfman, a dealer in Houston who was informed of the change by Chrysler, said the change will make it more difficult to sell vehicles because a number of rebates and sales incentives kick in when customers lease through Chrysler Financial. "It will hurt," he said.

http://online.wsj.com/article/SB121701005398185331.html

$30 BILLION BEING REFINANCED IN EARLY AUGUST???????? 

Can you imagine being a Chrysler dealer?  Leasing is a huge part of any dealer's business.  It will be interesting to see if floor planning financing is also affected by this......

Tightening credit and declining asset values is destroying wealth.  Everyday America gets poorer and poorer and credit is getting tougher and tougher to obtain.

Now rumors are circulating that deposits are flying out the door at WaMu?  Bloggers are recommending that all deposits over $100K should be transferred.  What do you think that will do to WaMu's capital base?

Actually, should anyone maintain over $100K in deposits in any one FDIC institution?

If you don't things are deteriorating rapidly yet.......just wait until you read how quickly high yield bonds are becoming distressed!!!!!!!!!!!!!!!!!!!

NEW YORK, July 25 (Reuters) - U.S. junk bonds trading in distressed territory rose in July to their highest level since March 2003 as troubles in the auto sector took a toll on bond values, Standard & Poor's said on Friday.

About 23.5 percent of U.S. junk bonds were distressed in July, up from 13.7 percent in June, S&P said in a statement.

Bonds are considered distressed when their yields, which move in the opposite direction of prices, are at least 1,000 basis points higher than those on safe Treasuries of comparable maturity.

The low prices on distressed bonds often make them the target of so-called vulture investors, who specialize in debt of bankrupt or financially stressed companies.

About $159.2 billion of bonds were distressed in July, up from $70 billion in June, the rating agency said.

FOR THOSE WHO CAN'T ADD, THAT'S DOUBLE IN JUST ONE MONTH!!!

MY CAPS BUDDIES.....THINGS ARE SPINNING OUT OF CONTROL......JUST WAIT UNTIL NEXT WEEK!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

14 Comments – Post Your Own

#1) On July 25, 2008 at 7:30 PM, alstry (35.42) wrote:

Another example of tightening credit squeezing Commercial Real Estate:

“You drive through Orange County and you see all these buildings with no people in them,” says Caitlin Zimmer, Studley’s research director. “And it has not plateaued.”

In the second quarter, a fourth of the county’s Class A office space, the newest and most desirable buildings, was available for rent....

http://lansner.freedomblogging.com/2008/07/25/25-of-ocs-top-office-space-seeking-tenants/

25% VACANCY RATE FOR CLASS A SPACE!!!

Remember, California is running a huge budget deficit.  Taxing these building owners ain't going to work.....

America is facing an unprecedented issue:

What happens when the revenues to its citizens, businesses, and governments is not enough to pay its debt obligations?

Can anyone say massive defaults and foreclosures??????  Could this be The Greatest Depression?????

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#2) On July 25, 2008 at 8:25 PM, motleyanimal (81.46) wrote:

Just for you!

http://ca.youtube.com/watch?v=bKNn486Oorw

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#3) On July 25, 2008 at 8:47 PM, StockSpreadsheet (71.58) wrote:

According the following article, Chrysler is in part getting out of leasing because the lease prices have risen to the cost of loan payments for new buyers, so it is as cheap or cheaper to just buy the car/truck instead of leasing it. 

http://www.fool.com/news/associated-press/2008/07/25/chrysler-to-get-out-of-leasing-business.aspx?ref=foolwatch

Some of it might be spin, but some of it might be true.  As for the office space vacancy rate, yep, that is going to hurt, pushing down rents and more landlords try to attract tenents for their vacant office properties.   

Craig 

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#4) On July 25, 2008 at 10:36 PM, jesusfreakinco (28.92) wrote:

Alstry,

You want to really be freaked out, you should read Sinclair's commentary these past few weeks and tonight's in particular.  He says the collapse is here...  Gold going to $1650 sooner than he thought and is making him believe gold will go well beyond $1650.  I guess we'll see.  If he is right, many of us will make a ton of money.  If he is wrong (well, let's not discuss that...).

www.jsmineset.com

JFinCO 

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#5) On July 25, 2008 at 10:53 PM, alstry (35.42) wrote:

Remember when we were told that subprime problem was only going to be $25 Billion?

Subprime alone has already cost over $400 Billion.

Now we are bailing out banks for $30 Billion.  Bailing out Fannie and Freddie for $800 Billion.  Chrysler has a $30 Billion dollar refinancing coming up in a few weeks.  California is running a $20 Billion dollar deficit and growing.

To put things in perspective, we have only about $50 Billion in the FDIC to protect all of our savings.  The total FEDERAL National Debt accumlated over the past 200 or so years is $9.5 Trillion with all of the federal assets to protect that relatively small debt.

THE PROBLEM RESTS WITH NON FEDERAL DEBT...BOTH PUBLIC AND PRIVATE.

We still have Trillions in Municipal Debt that does not have the benefit of the Printing Press to cover the obligations.  Don't Worry.....AMBAC and MBIA have a few Billion insuring us.

Sorta nuts when you think about where the money is going to come from to deal with these "little" issues.....ya think?

Potentially, Chrysler alone is a $70 Billion dollar debt issue.  Ford alone is a $300 Billion dollar debt issue.  GM alone is over a half a Trillion dollar debt issue and revenues for all three are evaporating.  Corporate Junk debt is deteriorating at an amazing rate over just the past month.

What about all the Trillions of Commerical Real Estate debt that can't be serviced because of rising office and retail vacancies?

And the government tells us that FNM bailout will only be $25 Billion.......strange times indeed.

Folks, the NON FEDERAL system is basically bankrupt, will will likely see in the next few weeks to months how this will play out.

 

 

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#6) On July 25, 2008 at 10:59 PM, alstry (35.42) wrote:

jfc,

We are at the edge of a pivitol point right now.

The Fed will have to make a choice.  Either protect the dollar and deal with the effects of a controlled depression.....or hyperinflate, and deal with the prospects of rewarding the reckless borrowers and be faced with a growing number of retirees that can't afford to live on a fixed income.

Very interesting times indeed.

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#7) On July 25, 2008 at 11:52 PM, MarketBottom (29.25) wrote:

Take the time to read this report, and there will never again be any doubt as to what occurred, and who is responsible.

http://mwhodges.home.att.net/nat-debt/debt-nat-a.htm

 

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#8) On July 26, 2008 at 12:13 AM, hansthered0 (< 20) wrote:

Al,

Not to downplay the Chrystler lease thing, but what if more people actually buy new vehicles instead? Maybe one vehicle purchased is as good for the economy as two vehicles leased.

Consumers may also just lease from someone else.

 

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#9) On July 26, 2008 at 12:57 AM, lquadland10 (< 20) wrote:

Hey Alstay, Banks and Auto loans default and repos. Banks and Credit card defaults. But the good news for the banks are. Credit card. 5k person stops paying. Add in fees late fees and intress. It becomes 10k. Sell to debt collector for 5k. Reports the 5k loss and gets the tax write off and still has the oriningal 5k. to lend again. Then they cry  to congress about how bad it is out there and they need a bail out. 30 years latter I am thinking that this is so much worse than the S & L crises under bush. Does real estate run in their blood? bush sr. s&l bush jr housing I am seeing a picture here. They are the front men for their friends. Obama is related to cheny who is related to bush and mc cain is related to  laura bush so they will not get charged. Cause and Effect Of the Economic Depression (1929 thru 1930s) The Great Depression started in 1929 when the economy of the world suffered an enormous drop in output and an outrageous increase in unemployment. It continued in a downward direction until 1932 when it hit bottom at 50% of its 1929 level. Unemployment elevated, in the United States as it peaked at 24.9% in 1933. It stayed above 20% for at lease two more years, and continue to decline to 14.3% by 1937. It then jumped back to 19% before its drastic decline. During that time most households had only one income per the equivalent modern unemployment rates would likely be much higher. The overall economic output (real GDP) declined by 29% from 1929 to 1933 and the US stock market lost 89.5% of its value. The Great Depression had the highest, worst and longest period of high unemployment ever recorded to date. During an economic depression, all labored institution reduced its labor force to the minimum, stores close, and small businesses and farms fall into ruin. The United States has experienced short periods of depression followed by periods of prosperity, but the Great depression of the 1930's was a 10-year long nightmare.  Sound like anything today? Just one little problem. Bush,Clinton,Bush sold our jobs to china and mexico so what will we produce to sell? Oh yea we will our finical services. We need to stor importing and start manufacturing again.The middle class is disappearing," says Sanders. "In real ways we're becoming more like a third-world country."  But wait...... our government allows large corperation to outsource. This is how it works. The country not just the government is 53 trillion in debt and the fact is fan and fred won't need to raise money unless the market goes south. At least a 20% drop in home prices yet to come is forcasted. They will need to raise more money and our government will give it to them. It is going to be a bad Depression. We are now at the 1930 levels and after the deal with housing it will only get worse. Go to the fed web sight and look at the Dynamic Maps of Nonprime Mortgage Conditions in the United States Current6 Mo. Change Real bad out there.Oh yea thank you bush for this one also. And we want to give money to fannie and freddie to IE CHINA AND RUSSIA

According to a report in Monday’s Izvestiya, the Kremlin now wants to use Cuba as a base for its long-range Tu-160 and Tu-95 strategic nuclear bombers. Citing a “highly-placed military source”, the paper said discussions had taken place.

“While they are deploying the anti-missile systems in Poland and the Czech republic, our long-range strategic aircraft already will be landing in Cuba,” the source told the paper. No final decision on landing bombers in Cuba had been taken, it added.

Today defence analysts told the Guardian there was little strategic point in using Cuba as a nuclear base - adding that the idea appeared to have been floated simply as a way of irritating the US and underscoring Russia’s anger.

Russia’s ageing nuclear aircraft have a range of 2,000-3,000kms - allowing them comfortably to fire a nuclear missile at the US from much further away, defence expert Pavel Felgenhauer said. “Frankly in Cuba they would be sitting ducks,” he added.

Additionally, there were other places were the planes could refuel, he said. “Any deployment in Cuba would be highly provocative and very costly. There would be no military advantage. Cuba would want compensation,” Felgenhauer said.

He added: “They [the Russians] are trying to tell the guys [in America] that if they don’t back out of their missile defence shield in Europe, we can make mischief in different places.”

It was not immediately clear whether Cuba had agreed to Russia’s proposal. In a brief, cryptic note posted on a government website, Fidel Castro said his brother Raul - Cuba’s president - was wise not to respond to the report.

Castro said that Cuba was not obliged to offer the US an explanation for the story, “nor ask for excuses or forgiveness.” Most observers believe that Raul - who took over from his brother in February - would be unlikely to agree to any request from Moscow.

 

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#10) On July 26, 2008 at 1:06 AM, lquadland10 (< 20) wrote:

Sorry left out part in the above our government allows large corperation to outsource. This is how it works.This is how it works. One Example: Take Ford. They open factories in Mexico. Job loss in the USA. Buy the parts from China. More job loss for the USA.Then after they get the cheep labor they are allowed to bring the cars back to the USA to sell and they get a tax credit because they are a large corperation in the USA. . Everyone forgot one thing. No job Low Pay Job.No money to buy the car. Same goes for IBM Herseys Microsoft cat de hal kbr ge and so on an so forth.30 years of giving away our jobs and now they want to take what little we have left to bail these companies out  by saving fan and fred (IE. Russia and China) so they take more of our jobs.

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#11) On July 26, 2008 at 1:11 AM, lquadland10 (< 20) wrote:

A: The National Debt on January 1st 1791 was just $75 million dollars. Today, it rises by that amount every hour or so.

The following graph shows how the National Debt has grown year by year since 1940 in actual dollar amounts, uncorrected for inflation:

 

This data was gathered from the U.S. Treasury department's web site.

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#12) On July 26, 2008 at 1:55 AM, zygnoda (27.24) wrote:

http://biz.yahoo.com/ap/080726/bank_takeover.html

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#13) On July 26, 2008 at 2:01 AM, alstry (35.42) wrote:

Hans,

From a input basis, a leased car into the system is not that much different from a purchased car.  We are simply analyzing a slowdown....not judging the behavior.

If the premise is that much of our economy over the past 10 years was simply due to easy credit and lax lending standards, the issue is how deep will the contraction be when there is more stringent credit standards applied.

This is simply an example of what happens:

WASHINGTON (Reuters) - U.S. regulators took over two banks on Friday and sold them to Mutual of Omaha Bank, the sixth and seventh bank failures this year as financial institutions struggle with a housing bust and credit crunch.

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Two weeks after the Federal Deposit Insurance Corp seized IndyMac Bancorp Inc (IDMC.PK), the Office of the Comptroller of the Currency said it closed First National Bank of Nevada and First Heritage Bank NA of California.

 

The FDIC said the cost of the transactions to its insurance fund is estimated to be $862 million,

http://news.yahoo.com/s/nm/20080726/bs_nm/banks_fdic_dc

You think the insurance fund is getting smaller?

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#14) On July 26, 2008 at 2:02 AM, alstry (35.42) wrote:

zyg,

We must of read the article at the same time....

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