[dbotsfordtat]

Originally Posted by garagelogic

Where is this credit "crisis" we hear so much about? The only people I have seen turned down for a loan are those that are probably a risk to extend credit to. I guess it's a crisis to some because, unlike the decade leading up to this most recent recession, banks and institutions that loan money are subjecting the borrower to much greater scrutiny before extending credit and, as a result, fewer people are qualifying for loans.

IMHO, if the banks would have kept their standards high in the first place we would not have the economic situation we have to day, or at least it would not be as damaging or widespread. Unfortuately, that did not happen and now we all, those with good credit and bad credit, are paying the price for the lack of self-regulation.

If GM had a truly viable recovery/restructuring plan, then private lenders would be lining up to extend loans to them. Instead, since private lenders were unwilling to offer GM and Chrysler the loans it needed just to survive, they had to petition the government. Since the government has no money of it's own, you, I and our successive generations are stuck with the bill.

As for people buying cars, look around on this board, it seems to me the people that are willing/able to buy a new car are having little difficulty getting loans. The fact of the matter is, given the current economy, fewer people are choosing to make a major purchase such as an automobile or house. ALL auto manufacturers have felt this, not just the few that were in financial jeopardy prior to the recession. That a recession did happen just made transparent what GM/Chrysler and other already knew; they were in major trouble and without a complete restructure of their core business they were on the road to bankruptcy.

I agree, in order for the restructuring plan they had alreay embarked on to work, it would call for them to sell a certain amount of cars. When that did not happen, for whatever reason, their plan was no longer viable.

The credit crisis isn't about quailified buyers. The problem is between financial institutions, and is more accurately described as a liquidity crisis (money has to move thru the economy just like blood has to move thru the body). Many of the institutions are sitting on mountains of bad debt, this has resulted in a fear of lending between institutions ( you wouldn't lend money to someone if you weren't sure they could pay you back.) which has resulted in the current crisis, Think of it as a blocked artery and a resulting Heart attack. Many Banks and Businesses depend on overnight loans to conduct business but because of the lack of transparency amongst the many businesses the loans aren't being made (the blockage). That has now morphed into a crisis for the real economy (the heart attack), better known as a negative feedback loop. Businesses are laying off employees because they can't make payroll/buy supplies without the overnight loans, consumers have reduced spending because they are afraid of being laid off, ect... GM is getting a double whammy because their suppliers want to be paid before delivering nessesary parts and their customers are afraid to buy big ticket items because their afraid they're going to get laid off. I hope that makes sense, it does in my head.