GM a Few Months From Extinction

November 13, 2008

Many people call GM’s vehicles dinosaurs, which could be weirdly prescient in that analysts say that GM will become extinct in early 2009 unless it receives billions from the government.  Just last year of course the authomobile industry required $25 billion of loan guaranties from the government.  Now GM needs about that amount in cash.

Like Thomas Friedman, I am sick and tired of the automobile industry thinking that it can susrvive by paying money to lobbyists, blocking environmental laws, and disregarding the needs and concerns of consumers.  American auto manufacturers used to plan the obsolescence of the cars they manufactured in the interest of causing people to need new ones.  Their utter disregard of consumers is tantamount to planning their own obsolescence.

There is no way taxpayer should support the disreputable and irrational behavior of the American auto industry, at least not without some serious concessions.  The government ought to get whatever equity there is held by the stockholders and the officers and directors should be held accountable.  That means fire them without a parachute of any sort.  The salaries of their successors, considering what these companies have done to their industry and to the country, should be dramatically reduced.

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Selling and Financing Real Estate

November 13, 2008

On November 8, the Washington Post wrote this about the real estate market:

In soft and declining housing markets, lenders are making a big deal of “comps,” the comparable sales of properties used as benchmarks in home real estate appraisals. Some sellers are forced to renegotiate lower prices with buyers, even after they have a signed contract. Rather than accepting sales of similar properties that closed as much as six to 12 months ago, lenders and mortgage investors are demanding that appraisers include only the freshest comps, ideally those closed within the previous 90 days, to support their valuations. In Richmond, appraiser Perry Turner of P.E. Turner & Co. said his firm has seen numerous cases where using newly mandated 90-day or more recent comps, as opposed to those six months or older, has contributed to valuations lower than the price on the sales contract. Turner said that in 95% of those cases, the listing and selling agents have gotten together and renegotiated the contract rather than lose the deal

Both buyers and sellers should be wary of prices based on comparable sales more than 90 days prior to the appraisal or “market survey.” Sellers need to be wary because a listing based on even six month old sales might be artificially high so that even if a buyer is found, financing may not be available.

In this eroding market, it behooves buyers to be sure that there is a good contingency for financing and to put little down as a deposit. Sellers on the other hand are motivated to get a large deposit. Financing contingencies are sometimes rather unclearly written, so both sides should be quite clear about the meaning of this part of the agreement.


School Children Chant of Assassination.

November 13, 2008

All that campaign talk about Obama being a terrorist and somehow un-American translates into frightful activity on the ground.  People actually believe that stuff, including dangerous people.  To get an idea of the effect of this sort of campaigning consider a bus load of elementary children chanting “assassinate Obama” on the bus.  Some of the kids did not even know what “assassinate ” meant.

This was reported by a Rexberg Idaho television station.  Rexberg is a small town dominated by a Mormon university.  Mormons of course campaigned fiercely against gay marriage in California, spending tens of millions of dollars.  I hope this very usual occurrence does not indicate that there is a radical — even violent — branch of the faith.


Criminal Restitution

November 13, 2008

Last week the Washington State Supreme Court published State v. Griffith a criminal case of interest to people who have had property taken from them. The criminal courts offer an alternative to an expensive and time-consuming lawsuit against the person who took the property. You have to bear in mind that conviction of a crime requires a very high standard of proof, but if you have such proof of guilt, then consider going to the prosecutor instead of suing.

If a person is convicted of taking money or property, or a related offense, the judge can require them to make restitution, that is to pay back the victim. Such an order, as a part of sentencing, is more likely to be paid than a conventional civil judgment.

The facts of this case also remind us to avoid cut rate purchases under circumstances suggesting foul play. Ms. Griffith purchased jewelry in a parking lot at a cheap price, then sold it to a pawn shop. She was later identified by the pawn shop owner and packed off to jail.