Wednesday, December 31, 2008

Lifelesstime Kia and the Tale of the Bailout

Lifetime Kia of Morristown, the South's largest Kia dealership, announced yesterday that they were ceasing operations, effective immediately. Not only did the announcement leave about 50 local folks without a job, but it effectively voided the lifetime powertrain warranty and lifetime oil change agreements that the dealership made with everyone who bought an automobile at the massive showroom sans community center (complete with movie theater).

One really can't blame the folks who run the dealership if what Lifetime Kia CEO George Edrington told the Morristown Citizen Tribune is true-and I think it very likely reflects reality:

“The banks have withdrawn consumer lending,” he said. “We’re in the car business, and when consumers can’t buy cars, we’re out of business. I’ve talked to bank executives who admit they have received millions of dollars from the federal governments but they will not loan it — they are saving it to cover future losses. They are under no restrictions from the government. They were handed the money with no strings attached.

“The government did nothing to help the main street guys.”

Edrington had cautionary words for the economic future of the region. “We’re not going to be the only ones affected by this in 2009,” he said. “Unless we can get some help for main street."

“I’ve been in the business for 30 years. I’ve been through three recessions, and I’ve seen nothing this critical. They kept lending money in the previous recessions – now
they’re not even lending money. (When faced with this kind of situation), the
consumer is going to foreclose on his house, let his car go back and go upside
down on his credit cards.”

Among the many problems with the bailout of our banking system is that the federal Treasury has effectively handed American banks billions of dollars to loan, thereby stimulating the economy, but did not place a restriction on when, how, or for what purposes this money was to be loaned. The banks cannot be blamed for doing what they should have been doing all along, but failed to do-lend with caution and prudence the way that banks did years ago. Because banks discovered fiscal responsibility entirely too late to avert what amounts to a small-scale economic collapse, their refusal to lend money to everyone and the neighbor's dog could shut down many businesses dependent on lending and bring our rediculous spendthrift economy to a halt.

One wants to believe that things will get better, and eventually I am sure that they will, we just don't know when this turn toward improvement will truely begin.

Poor old 2008. We should all be glad of its final departure, were it not for the reality that 2009 is not likely to be terribly much better.

But we shall pray for it...

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At Wednesday, December 31, 2008 7:31:00 AM, Anonymous Clay said...

2009 and the possibility of increased taxes that will affect investors is horribly scary. I'm hanging on to 2008 as long as possible. Dang, less than 18 hours left.


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