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JAPAN NEWS AND DISCUSSION

Tight credit, financial chaos slam auto sales

Business Oct. 02, 2008 - 06:24AM JST ( 5 )

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5 Comments

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electric2004Oct. 02, 2008 - 12:54PM JST

Sales result in one month are forgotten next year. Who cares?
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bebertOct. 02, 2008 - 01:17PM JST

Sales result in one month are forgotten next year. Who cares?

Uh, bankers and other lenders. Ford and GM were unprofitable before the most recent downturn in sales. They'll need to borrow more money at higher interest rates just to stay out of bankruptcy.
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some14someOct. 02, 2008 - 02:18PM JST

No credit crunch for petty purchases, it is more due to high fuel prices and now since the fuel prices have gone down let us hope auto sales will pick-up in coming months (provided price difference is passed on to the customers)
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ca1ic0catOct. 02, 2008 - 09:04PM JST

"Tight credit" has become code for "only lending money to people we know can pay it back." During the 1990s and later the credit tests had to be lowered because so many Americans (and maybe some of the Euro crowd) had borrowed so much already that they wouldn't be able to get credit.

If the "consumers" couldn't get loans to continue the buying binge the economy would slow down.

By loosening credit the banks (with government pressure?)found they could keep the profits rolling in (and the economy going). The poor sap consumers mortgaged everything to keep their addiction satisfied. Of course this is kind of like heroin addiction: the longer you use the more you need to get high. Once house prices started to drop there was nothing left to pay the pushers (e.g. the banks) to get more.

What we're seeing now is the result of a massive overdose of easy credit. It's going to take a while before the economy gets back to "normal." And by normal I mean that the party is over.

The only question now is "do we have to put the patient on life support to get him through the withdrawl symptoms?" This is what is being debated now as the $700B bailout package.

But it's never going back to the way it was. That economic model is unsustainable. I won't predict where it will settle out but the standard of living, or the "standard of consuming" in the United States is going down.
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BadseyOct. 02, 2008 - 09:43PM JST

many businesses use credit: -Auto dealers typically have the autos on loan. Auto manufactures use credit to buy parts or even pay wages.

Some businesses with a 20yr credit history with 1 bank find themselves not being able to borrow from the bank they have a 20yr history with. =If Gov. Doesn't fix the problem immediately this whole country could shut down.

-Many people may not get a paycheck this week or the next. Businesses can't pay other businesses.

+oil prices are lower due to less speculation.