Subprime Bailout

[tw]

Originally Posted by lumberjim

how do yuo feel about 0.00% apr loans on cars, mr smarty pants?

0% interest his how money games claim profits on cars that are so bad as to otherwise not be saleable or profitable. Company plays money games. Mortgages its future profits to realize that same money as a profit today. It's a 'hope and a prayer' that the company can build something profitable next decade.

Why 0% car loans? Because the vehicle that sells at almost no profit is both grossly overpriced and technologically obsolete. 0% is a gimmick to dump bad products on the public.

Same gimmick in the 1990s was to claim profits while shorting pension funds. Pension funds are $7 billion short, the company's products are still crap, and a new "money game" is needed to keep the products moving. Mortgage the finance unit to make the auto assembly unit look profitable. Mortgage X and make Y look profitable. If done overtly, it would be called criminal. 0% interest is simply a money game so that a pathetic product can continue selling for another 10 years.

Meanwhile the intelligent consumer never borrows money for a disposable item. If one cannot pay for disposable item, then one does not need that disposable item. Borrowing money for a car (or any other non-capital item) is just another form of addiction.

Even at 0% interest, if the consumer needs a car loan, then the consumer never needed that disposable item. Loans are for capital items whose value is expected in increase with age such as a home, an education, or to build a business. Car loans are simply another example of consumer addiction - so that a debtor will never become a creditor.