The Solution to the Mortgage Problem:
Don't Buy Stuff You Cannot Afford

Bill Heard Bites the Dust



In January 2006, I reported on Bill Heard Chevrolet as perhaps being the worst auto dealer anywhere. Bill Heard also happened to be the largest Chevrolet dealer in the country, 14 locations moving about $2 billion in sales. That's history now. This past week, Bill Heard Enterprises, Inc. filed for Chapter 11 bankruptcy. There are some signs that they were shut down by GMAC, the company that floorplanned the dealer's inventory.

Jalopnik.com has an good article with interesting pictures about the current status of the dealership in Sugarland, Texas. That's where this picture comes from. The employees didn't even get the chance to javascript:void(0)take their family photos home.

Don't worry too much about old Billy boy, he and his wife bought a $18 million, 28,000 square foot house in Columbus, Georgia. Ain't homestead exemptions great?

This Stock Market Crash Brought to You by Reliable Investments

Aren't they managing our 401(k) funds?

The Enhanced John McCain

What ELSE can we do with $700 Billion?


The Vanity Fair website has a list of things that could be done with the mortgage bailout money. According to Vanity Fair, we could prevent 200 million foreclosures, provide healthcare to all Americans, triple the income of the billion people who earn less than a dollar a day, or buy 10,000 lbs. of LSD.

From something I saw in Popular Science, there's something else cool that we could do with the money. We could build 100 elevators to space, at about $7 billion each.

Doh! Moment of the day:
Stand Up Chuck Graham

Joe Biden introduces Missouri senator Chuck Graham and asks him to stand. The trouble is that Chuck Graham is paralyzed. Maybe Joe thought he was a faith healer for just a minute. You've got to admit, that if it would have worked, it would have really been impressive.



Maybe Jim Lehrer, the moderator of tonight's presidential debate at the University of Mississippi can ask Obama and McCain, "Everyone who wants to be president, raise your hand."

John Stewart and Bush and Bush

John Stewart was in rare form criticizing President Bush last night, comparing his economic meltdown speech to the one that got us into war in Iraq.

Man flies Jetwing Across English Channel
Flying? or "Falling with Style"

Daredevil Yves Rossy a/k/a "Fusionman" flew his human wing across the English Channel. How do you get your wife to agree to let you do this kind of thing?

Wells Fargo Wagon Rolls ove Subprime Borrower
Attorney Hits Back with $1.25 million Judgment.

Last month, I ran across this item, 28 year-old attorney Brian Maul won a $1.25 million jury verdict against Wells Fargo for falsifying his client's mortgage documents. Punitive damages of $1 million made up the majority of the verdict amount. According to the article, the Wells Fargo loan officer inflated Kimberly Thomas's savings by a factor of ten and almost doubled her stated income so she would qualify for mortgage. When Ms. Thomas got to the closing table, she was surprised to say the loan would cost her $4,700 per month rather than the $3,000 per month she anticipated. Now the house is worth $90,000 less than what Thomas paid for it.

I congratulate Ms. Thomas and attorney Maul on the courtroom victory, but most consumers aren't going to find such able representation. They're just going to give up.

This loan is the type of crap that our lawmakers are lining up to pay $700 billion for. No, actually that's not even correct, the most toxic assets are the tranches, or slices of multiple nonperforming loans that have been securitized. In many cases, its not clear who has the right to foreclose on the loans.

That's why it's crucial that bankruptcy relief be in the bail out legislation. As it stands now, if a homeowner wants to stay in the house that is mortgaged over its value, the homeowner has to pay the whole principal and interest of the debt, even if the loan terms are predatory. This is a recipe for foreclosures and vacant properties blighting neighborhoods. Other than home loans, most other loans can be written down in bankruptcy to the value of the collateral. Nevertheless, banking industry lobbiests still seem to have clout, and it is doubtful whether bankruptcy relief will be part of the bill to be passed. Some Democrats, including Barack Obama, are willing to give in on the bankruptcy provision to get the bill passed. That's a mistake. They will never have better bargaining power on this issue than they have right now.

Even Better Quality
- No Extra Charge



I had a deep, erudite essay to post about the crisis on Wall Street. Then proofread it. Big mistake. No I got nothing. (Proofreading, I've got to learn to stop doing that.) Anyway, I thought I'd dig into my mailbag. (I probably don't get one email a month, probably because I carefully removed my email address from the blog.) One slipped through, so here it is.

Steve

There's got to be something that you can do to improve the quality of your blog. I mean, come on, show a little effort here.

Lisa

Well, Lisa

I gave it a lot of thought, and I decided that I can do better and I will. So I'm making a long distance dedication of this next video to you.

The "Other" Palin for President

The 419 on the Mortgage Bailout

This e-mail has been going around. If I can find out the original source, I will give appropriate credit.

Dear American Taxpayer:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had a crisis that has caused the need for a large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gramm, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s.

Let me assure you that this transaction is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of friend so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully

Henry "Hank" Paulson

Minister of Treasury

Chrysler Unveils Electric Vehicle(s)
. . . Sort of

According to Autoblog.com, at a press conference today, Chrysler will unveil its own electric powered vehicle, with an all-electric operating range of 150-200 miles, up to 5 times the electric range of the Chevrolet Volt. (The volt has a gasoline engine as well.) The catch: it's not a Chrysler-developed vehicle, it's an electrified Lotus Europa sportscar. This vehicle rides on the same platform as the Tesla sportscar.

Perhaps more significantly, Chrysler will unveil prototypes of "range-extended EV" versions of its Chrysler Town & Country minivan and Jeep Wrangler. According to Chrysler "at least one" of these vehicles will be available before the end of 2010. By 2010 the market will be very different that what it is today. There will likely be other hybrid minivan competition.

I have long thought that a "30/30" minivan (30 mpg city/30 highway) minivan hybrid would be hugely successful. Both Honda and Chrysler already have space that can be used for the battery and hybrid components without taking up precious cabin room. Each of those vehicles has underfloor storage that could be dedicated to battery room. In the case of the Toyota Sienna, the space taken by the drivetrain for the all-wheel-drive version could be allocated to hybrid components. Toyota has indicated that all of its major lines would have hybrid options in the future. Honda and Toyota minivans will be due for a redesign by 2010 anyway. The Chrysler van had a major revision in 2008, so it would ordinarily not receive a major redo until at least 2012. As an alternative to hybrids, Honda may achieve 30 mpg highway with a diesel Odyssey.

Henry Paulson - The Biography

Because a trillion dollars is at stake, and Treasury Secretary Henry Paulson Jr. wants unfettered discretion in spending a trillion dollars, I thought it would be good to find out more about Mr. Paulson.

I initially asked our searching superhero, The GOOGLETEER, to search for a biographical video for me, but wouldn't you know it, the G-man was going on vacation. He recommended his sidekick, Boutright Boy. Boutright Boy found this video. I'm not sure this is Henry Paulson, but he assured me it is.

From the Go Fitch file:
General Motors Becomes CCC Rider

Yesterday, the Fitch credit rating agency downgraded GM's credit rating to CCC, down from a previous rating of B-. Both are considered to be "junk" ratings. General Motor's main problem may not be the cost of credit, but the inability to get credit at all. Many of the banks and investment bankers that GM has dealt with are more more dire peril than GM itself. GM recently drew down its last $3.5 billion in its major credit line; most likely as a strategic move to avoid problems in the banking industry making that line unavailable later. Given GM's credit rating and the difficulties in the financial markets, GM may find it extremely difficult to get new capital, at least until next year. Even if Congress approves the release of $25 billion in auto industry loans previously authorized, GM (and the others) will not be able to get to the money until regulations are promulgated regarding the details of the lending program. That would not happen until sometime next year at the earliest.

McCain vs. Streisand

Barbra Streisand has been raising millions of dollars on behalf of Barack Obama. Vengeance against John McCain? You be the judge. Thanks to reader Steve A. for the link.

Salvation, thy name be Volt?
GM unveils production Chevrolet Volt

Here it is, the production version of the Chevrolet Volt.



I'm not so keen on the Chevrolet corporate grill, and on this car it adds a level of fussiness to a design that is otherwise elegantly functional. Overall, it seems more practical than the concept car from a couple years ago.

The Volt is the extended range electric (none dare call it a hybrid) car that GM says will be able to go 40 miles on electric power alone. GM promises-plans-hopes-aspires-whatever to have it available before the end of 2010. It was originally supposed to cost less than $30,000; however that pricing target will not be met. The actual cost is to be determined. The latest word that I've seen is that according to Bob Lutz, the unsubsidized price of the car would be around $48,000 but if GM gave up profot on the vehicle, they could come in at around $40,000. For a car that's supposed to be GM's knight in shining armor, they aren't planning on making very many of them, only 10,000 the first year and ramping up to 60,000 in year two. To put this production in perspective, the 1964 Ford Mustang is credited with saving Ford. Ford sold over 100,000 of the 1964 model, and over 600,000 of the 1965 model. No passenger car model in 2007 sold as many units as the 1965 Ford Mustang.

Happy 100th Birthday General Motors

I've got to say, you're looking at least average for a 100 year-old.

Gloom, Dispair and Agony on Me . . .
Financial Industry Woes Bode Ill for Auto Market


The implosion of many parts of the financial markets, from Fannie Mae to Lehman Brothers, bodes ill for any short term revival of the auto markets. It also means that GM, Ford and Chrysler will have to get in line at the financial aid troth in Washington. With just a few weeks before the Capitol shuts down for the fall elections and the birth of a new Congress, not to mention a new (Yeah!) president. I'd have to say the chances of any significant new loan package finding its way to Detroit are less than 1 in 10.

What a bummer, let's not think about it. Why don't you watch Hee Haw instead?

Carlin on Baseball & Football

When George Carlin died this summer I was out of town and not able to post. Now, with baseball and football season both in full swing, I think it's appropriate to post one of George's classic bits, Baseball-Football.

Another "C-Student" President?

George W. Bush is what you get when you "elect" a c-student as President of the United States. From "nuculer" to "strategery", to "My Pet Goat", to "You're doin' a heck of a job, Mikey", to waterboarding not being torture, we have found out that when you mix lack of curiosity with lack of empathy, you get a mess of a chief executive.

I mention this because the latest polls list McCain-Palin as being statistically even to slightly ahead of Obama-Biden. If the Republicans win, we're looking at another C-student President.

McCain was 894th out of 899 in his class at the Naval Academy. (John McCain also wrecked 4 aircraft prior to being captured. His captivity is probably the only thing that kept him from becoming a North Vietnamese ace.)

Sara Palin went to 5 colleges in 6 years before apparently graduating with a degree in communications from the University of Idaho.

In contrast, Barack Obama was elected head of Harvard Law Review, and Professor Lawrence Tribe called him "the best student I ever had." Does that mean that there's no chance in hell that he'll ever be President?

Chris Rock knows all about C-students - here's his take on the matter. Language NSFW

Who DOES Sarah Palin look like?

My first thought was Peggy Hill. An observant youtuber, Katavideo, noticed that not only does Palin look like Peggy Hill; McCain looks like Cotton. He's right.


TMZ has a gallery of several contenders.



More Sarah Palin in Video


Here's the video of Sarah Palin's welcome and good luck video greetings for the Alaska Independence party.





Yes, indeed, this party's basic premise is that Alaska should secede from the union. Governor Palin's husband was a member of the party until 2002. Whether Governor Palin was a member is a matter of controversy.


Finally, 80's hair & all, here's the VP-wannabe fresh out of college as a sportscaster.




Do I have a grudge against her? Well, kind of. She pronounces Purdue's arena "Mac-KAY" arena. Hey sister, it's Mack-ie arena, and don't forget it. How many astronauts went to the University of Idaho, anyway?

What's the deal with the Seinfeld/Gates Microsoft Commercial?

Microsoft hired Jerry Seinfeld to help the company get its edge back and to appeal to the young crowd.


In the commercial Seinfeld is walking through the mall eating a churro, and he runs into Bill Gates in a "Shoe Circus" store (aka Shoe Carnival, clever huh?) They babble incoherently and walk off into the sunset or something like that. What is striking is that in the Commercial, Bill Gates looks like the grandfather of Bill Gates the teenaged whiz kid, and Seinfeld is hip. Does it matter that Seinfeld is a year older than Gates? Seinfeld was born in 1954, and Gates in 1955. At age 54, Jerry Seinfeld is older than about 80% of the population of the United States.

"Mr. Mortgage" and Rounds 2 and 3 of the Mortgage Crisis

I really don't know who Mr. Mortgage is, but he's somehow related to the Implode-o-meter website, a website that has been ahead of the curve on the mortgage mess for about 2 years now, and he sure writes a lot (and videopodcasts).

Here he throws some numbers around from Fitch suggesting the industry is due for a second round of mortgage defaults. The first round was largely due to subprime loans going bad. The second round will relate to Option ARM mortgages. (Option ARM loans, sometimes called "pick a payment" loans typically negatively amortize until the loans hit a negative amortization cap, then the loans recast to a payment high enought to pay off the loan on the original schedule. Mr. Mortgage says that the average pay-option buyer will face a mortgage payment INCREASE of $1,053 per month at recast. That's more than my entire mortgage payment. Wachovia Corp. has $122 billion invested in pay option mortgages. If they are already looking at 10%-24% default rate even before these loans hit their recast date, it doesn't take a genius to forcast default rates will double after the payments go up a grand a month.

Note the scope of the problem, Wachovia alone has over $100 billion in crappy ARM loans; and no doubt the taxpayers in some form will be asked to subsidize this bank's awful decisionmaking to the tune of 10s of billions of dollars. I find it hard to draw a moral distinction between bailing out their crappy loans and providing support to automakers (bad decisions & all), especially since the automakers drive the economies of the communities where they have located facilities.

By the way, Mr. Mortgage says ROUND 3 of the Mortgage crises will come from a(prime) jumbo loan implosion about 6 months after the option ARM mess peaks in a year or so. McCain & Obama, are you sure you want to be President?

Youtube Video of the Day

A very creative rant about student loan collection tactics called The Beast That Swallowed Its Young.

Two Celebrities Two Deaths One Cause

The web carried news of two celebrity deaths today. Singer Jerry Reed died of emphysema at age 71, and "the trailer guy", Don LaFontaine, died of a "lung-related illness" at age 68. LaFontaine attributed his illness to 30 years of on and off smoking. Jerry Reed had even made light of his smoking with the song "Another Puff".

Where are the August Sales Numbers?

It's now September 3, the third business day of the month, and the auto industry sales numbers from August have not yet been posted. Perhaps everyone is waiting for Hurricane Hanna to blow its way up the East Coast on Friday and distract everyone from the bad news. Overall, August numbers are likely to be similar to the poor results from June and July. Bloomberg news is publishing analysts' estimates of sales. Overall, the analysts estimate that total industry sales increased to an annual rate of 13 million units per year in August, up from 12.6 million rate in July. The primary instigator of the sales increase was General Motors' Employee Pricing for All promotion. Today GM announced that it would extend the offer for another month and extend it to cover some 2009 models, primarily 2009 models that came out in the first half of 2008, such as the Pontiac Vibe and the Cadillac CTS. (It is discouraging to see high inventory models for these vehicles, especially the highly-regarded Cadillac CTS, because most of GM's fall 2009 models are essentially carry-over. There's nothing new to lead a sales surge.)

Even though GM's sales will be a little better than last month, the analysts predict that GM's sales will be 29% below last year. Chrysler's numbers will be about 34% below last year. Ford will report sales about 21% below 2007. In comparison, Toyota's sales dropped about 11%, and Honda's sales decreased 7.4%.

Speaking of Hurricane Hanna, this storm is on path to deliver a glancing blow to East Coast, from Florida's Gold Coast to Cape Hatteras, North Carolina, with tropical storm level winds extending up the coast all the way to Canada's Maritime Provences. If it takes this route, probably no community will see a disaster on the scale of Hurricane Katrina, but significan damage over a large area could make for huge insurance losses. Some of the insurance money would go to car owners replacing storm-damaged vehicles. No doubt there are some auto executives thinking 'Go Hanna, Go." To track Hanna and other storms, here's a link to the National Hurricane Center.