Hundreds of junior employees from Treasury may be asked to don cheap suits and take up residence at car dealers all over America. They can put "sale" signs on windshields and run streamers across huge parking lots. There are enough enough dealers who have closed shop that the real estate is readily available.
Detroit needs help. If it can’t get a direct infusion from the government, it would like Congress and Treasury to help it sell cars by reaching out to consumers with cheap money.
According to The Wall Street Journal, "On Monday, Sen. Charles Schumer (D., N.Y.) plans to send a letter urging the Federal Reserve to make financing available for the auto companies’ lending arms, which would allow them to offer more auto loans." If the government can’t fix the car companies themselves, perhaps it can fix their customers.
The move could set a ridiculous precedent by putting pressure on the demand side of the consumer segment of the economy. The government could begin to offer to give 20% down payments to people who want to buy new homes. It may as well do the same for appliances, clothing, and home improvement products.
Schumer’s plan is a clever dodge which tries to save a part of the economy while failing to force the car industry to work to solve its root causes, a structure which is overwhelmed by the cost of debt and labor.
But, it would be nice to own a new Cadillac for 50% of the sticker price.
Douglas A. McIntyre