Government to offer loans to buy cars

Generali

Sir_Humphrey wrote: »

The problem is a lack of demand. If you just wait for people's finances to recover, they never will. The reason being of course a cut in income or unemployment, leading to a downward spiral of lower demand and further cuts in income. You need to have an income in order to save. You have to break the spiral somehow, and only the government can do it.

Another way to look at things is that inefficient companies go bust and the efficient that remain face less competition so can increase prices a little and employ more people.

A recession is just a shake out of the inefficient companies. The more Governments try to prevent recessions the bigger the ones that remain are.

Wookster

Generali wrote: »

A recession is just a shake out of the inefficient companies. The more Governments try to prevent recessions the bigger the ones that remain are.

Exactly - that is why this one will be so bad - the banking system is working out 16 years of excesses, and 16 years of industries built up around excessive consumption, fueled by debt, are being squeezed.

Sir_Humphrey

Generali wrote: »

Another way to look at things is that inefficient companies go bust and the efficient that remain face less competition so can increase prices a little and employ more people. A recession is just a shake out of the inefficient companies. The more Governments try to prevent recessions the bigger the ones that remain are.

This damages all companies, efficient or not. Just look at the Nissan Sunderland plant for an example. Recessions are not moral, God-like beings that only punish the wicked. The inefficient companies that have been done for in this recession are the banks, which have have had knock on effects to the rest of the economy. Given your banking background, you must realise the systemic importance of the banking system. It does not matter how efficient a company is, if there is no demand for the product. If that lack of demand is due to another sector wrecking the economy, then support is appropriate. I sometimes wonder if right-wingers want Capitalism to survive.

WTF?_2

Sir_Humphrey wrote: »

This damages all companies, efficient or not. Just look at the Nissan Sunderland plant for an example. Recessions are not moral, God-like beings that only punish the wicked. The inefficient companies that have been done for in this recession are the banks, which have have had knock on effects to the rest of the economy. Given your banking background, you must realise the systemic importance of the banking system. It does not matter how efficient a company is, if there is no demand for the product. If that lack of demand is due to another sector wrecking the economy, then support is appropriate. I sometimes wonder if right-wingers want Capitalism to survive.

So the plan is to keep paying companies to make stuff that no-one wants?

If this crisis was going to be over 2-3 months down the line, I'd certainly support short-term bailouts of industry.

But it's not. Thanks to the credit boom there was a lot of fluff in the economy which will need to be blown off. Just because a company was successful in that turbo-boosted environment and is now suffering doesn't mean that it's basically a viable business that just needs a bit of help to weather a blip. Businesses need to readjust to a world without cheap and easy credit.

Unless of course you still harbour dreams of a centrally planned economy. I'm sure you'll have 'tractor production at an all time high' given half the chance comrade.

purch

...it is all down to the local education authority and their available finances.

LEA's have a statutory duty to transport children with special needs.

Can you not appeal to a higher authority.

Sir_Humphrey

!!!!!!? wrote: »

So the plan is to keep paying companies to make stuff that no-one wants?

Making stuff that no-one needs is called Capitalism, my dear old thing. If you do nothing, then having a long running recession/depression becomes a self-fulfilling prophesy, with all the problems that causes. There is a choice: the recession cannot be avoided now but it can be ameliorated. EDIT: I don't think people have stopped wanting cars, the lack of demand is due to the credit crunch. You need to look strategically at these issues, and not just follow market fundamentalism.

Wookster

Sir_Humphrey wrote: »

Making stuff that no-one needs is called Capitalism, my dear old thing. If you do nothing, then having a long running recession/depression becomes a self-fulfilling prophesy, with all the problems that causes. There is a choice: the recession cannot be avoided now but it can be ameliorated. EDIT: I don't think people have stopped wanting cars, the laxk of demand is due to the credit crunch. You need to look strategically at these issues, and not just follow market fundamentalism.

Still not getting it Humphrey.

People always want cars, people always want the nicest watches, the best clothes, the coolest holidays.

They never had the money to pay for them until the credit boom of the last 10 years.

Now we are finding out that actually, they couldn't afford those things.

In a world of cheap, easy, convenant lite credit people buy willy nilly but it doesn't mean that the businesses they buy from are viable in normal trading conditions.

Or is that concept lost on you?

purch

I don't think people have stopped wanting cars, the lack of demand is due to the credit crunch.

The speed with which the car manufacturers have all jumped onto the bandwagon to shut down production, makes me think that there was/is far more wrong with the the Industry than just a drop off in demand caused by a few consumers being unable to get 0% financing.

Any

!!!!!!? wrote: »

We got into this current mess through people doing stupid stuff like borrowing to buy luxuries and pursue a lifestyle they couldn't afford - now it looks like government policy to make us and future generations pay in order that this senseless behaviour can continue.

As long as they borrow only to people who can afford it - this might work.
Currently the bank will lend you no money and only few people have £8-13k in cash to buy in cash.
For example I am willing to borrow in this scheme - I dreamt of a new car forever, I have £700 A MONTH left over after paying bills after latest payrise, but I wasn't willing to pay 9.9% APR for car finance.. Now when the prices of cars are down and they will start applying reasonable rates, then I am going into it.

Otherwise if I will wait for 13 mths to save up for it, the prices might be up again.. And also I don't think my car will survive the 13 mths... so then I have to get another second hand one, sell it with loss... suddenly the 13 mths is 15 mths...

And if it gets car manufactures going a bit again, people will keep their job... therefore have money to spend in high street... so high street shop personnel will keep their job... they can go and spend... We need to get out of this circle!!!

Sir_Humphrey

Wookster wrote: »

Still not getting it Humphrey

With respect, I do get it. Market fundamentalism led to a debt bubble that eventually led to the Credit Crunch. Market fundamentalists would then compound the damage by failing to ameliorate the fallout from the credit crunch. Having too much and then too little credit is a result of allowing markets too free a rein. It is just a different side of the same coin, laissez faire.