Out of Gas?

Once the camel’s nose is inside the tent, the rest of the camel soon follows.

After the bank rescue package, every troubled industry is lining up for Federal money. This time it’s the auto makers. The car companies have been in trouble for years. Over the summer, consumers stopped buying gas-eating trucks in favor of less-profitable cars. But since the credit crisis hit this fall, all sales have declined.

The credit crisis matters, because almost no one buys a car with cash. If consumers can’t finance their purchases, those purchases don’t happen. If consumers don’t buy, Detroit can’t build, and can’t be profitable.

The best way to effect aid would be for the Fed to help get the auto-credit market flowing again, probably through some sort of guarantee program, like the FDIC is doing for bank debt. That would keep the market working, without just throwing money at the Big Three.

Here’s hoping that with a little help Detroit can stay on the road. Because in this crisis, we’ll all need to stand together.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-04T14:41:08+00:00 November 13th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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