Detroit Three executives

What is a "credit problem?"

In the "olden days" companies that ran cyclical seasons had things they called "cash reserves" They would scoop out a chunk of money from the cash reserve, fund whatever operation from it, and the cash reserve would then be replaced by scooping it out of the profits of that operation.

Companies could make a little money off interest on this reserve, or make a bit more loaning it to other companies if they had extra.

Then 10-15 years ago the eastern bankers convinced a lot of those companies that somehow it was better business to run with NO cash reserve, and whenever they needed money for some operation, to scoop the money out of the bank and pay the bankers interest on it, then when the profits came from whatever operation, they would scoop even more money out of the profits of their operation to pay back the bankers.

Frankly, my fervent hope is that credit is NOT EVER unfrozen, not at least for many, many years. I would like to see all the companies that fell for that bankers line of shit to go out of business. Not all companies fell for this and squandered away their cash reserves.

Banks need to get back into the business of making money by paying out 2% on passbook checking and savings accounts, and charging 4% on 30-year fixed mortgages. With the volumes of money the banks make, a 2 point spread

on just doing this only would make all of them many, many billions of dollars of profit.

Ted

...a place where they can do the least amount of damage.

The lateral arabesque (a rather elegant descriptive name coined by Dr. Laurence J. Peter).

Time Magazine, yesterday at the doctor's office.

Housing in this part of Texas continues to move, and people are still flipping in Austin and other desirable markets.

Here in Canada our banks are in good shape, our car sales are too. Retail surprisingly good. The banks won't lend money to the car dealerships. Now how can that be in Canada, where there is no real recession yet but not Austin?

We are wondering that too... Certain areas like Austin are high level, relatively low cost (compared to other areas in the USA) areas. Lots of people with money move to the "Hill Country" of Texas.

There is money to be had, if you have a decent credit history.

Floor plan loans are another deal...GM has provided this service in the past, I believe, just so that dealerships can keep products on display. It was relatively cheap.

Car loans to the consumer are a different subject. Certainly not every Tom, Dick, and Harry can walk in and get a top of the line car for nothing down and no credit history. But, we are not hard hit here in Texas at the moment. Are holding our breath, waiting for the other shoe to drop.

They basically took over the loans for the houses in the case of fannie and freddie. No more really bad loans issued and everything put on hold.

It would be possible to do the same for GM and friends. Take over all the loans on cars and stop producing more crap. It is basically what will happen anyway.