By: Bob Steinburg
“Dandy” Don Meredith, a former Dallas Cowboy quarterback and retired analyst from Monday Night Football, used to say: “If ‘ifs’ and ‘buts’ were candy and nuts wouldn’t it be a Merry Christmas?” I used that quote last week during a conversation with employees of the dealership servicing my car.
As is my custom, I use the waiting time to visit the showroom and talk to shoppers, sales personnel and management. My kids often joke I’d talk to an open mail box. On this day, I was the only customer. In fact, I noticed but a few employees.
“How’s business?” didn’t seem to be an appropriate ice breaker. I might have surmised everyone was out for lunch or that this was but a momentary lull. Given the time of day and our country’s economic morass, I knew better.
This is a very large Big Three automobile manufacturer’s dealership. I asked the general manager if the $3 billion federal “Cash for Clunkers” had been a success for him. He said the program was probably unnecessary at best and a bad idea at worst. He cited gas guzzling pickup trucks and SUV’s being traded in for newer models that increased mileage by only 1-3 miles per gallon; this in spite of a program that was not only to stimulate sales but to get the gas hogs off the road.
The manager discussed other negatives. Similar to the mortgage crisis where home buyers were “qualified” to purchase homes they couldn’t afford, some car buyers are finding themselves in the same boat. “What was I thinking of,” is a frequent comment. “I can’t afford these payments,” is another. What does that mean for economy down the road?
Many auto dealers now have to send their banks all of their financial information every day. Banks who floor plan (finance) dealer inventory used to visit the lots three to four times a year to count their cars. Some are now showing up three times a week. If the economy is beginning to turn around, this is hardly a sign of banker confidence.
With all of the so-called programs to loosen credit, it isn’t happening. I was told about an 80-year-old customer who had financed many cars through this dealership. Now she was unable to secure financing for her new car. Her credit score was exemplary (800 plus). She owned her own home. Her credit report didn’t have a blemish. Because she was not employed the bank required a 50 percent down payment before they would approve her loan. This isn’t only tough on the customer, but the dealer who is trying to survive.
Many attempting to refinance their home are trying to overcome similar hurdles. A friend with a credit score of 740 (very good) was unable to secure refinancing. “The banks didn’t even want to talk with me,” she said, “and I have a good job.”
Responsible taxpayers, both individual and corporate, many with good credit, had their tax dollars go toward bank bailouts. Yet now some of those individuals find the bank doors being slammed in their face. Either the banks have calculated that things are much worse than we’ve been told, or they are scrambling to pay back bailout money to escape further government scrutiny.
It’s not just the folks who are uneasy. The business community is equally anxious. Passage of the pending Healthcare Reform Bill and the looming Cap and Trade legislation can only further exacerbate a situation that has many businesses already wheezing from over taxation and regulation. Those struggling to retain old jobs and hopeful of creating new ones will only be further hampered by these two additional burdens, perhaps making both business objectives little more than an opium pipe dream.
As we reflect on Christmas past, we as a nation have experienced great abundance. While not all have shared equally in our national bounty, the lives and welfare of most Americans have improved with each succeeding generation. In my view, it’s a mistake for our leaders to risk all by further emasculating our capitalistic engine.
As a child, I awoke one Christmas to find a “Tinkertoy Construction Set”. This plaything was designed to inspire children to use their imaginations by taking their basic knowledge and common sense one step further. Dad said, “Son, you always start with what you know and then begin to build or rebuild from there.”
America’s done a pretty good job of adapting to that principle. In the process we created a template for commerce that has served us well. It’s only broken now because members of both parties of Congress haven’t always played by the rules. Yet instead of getting back on track, liberal and progressive Democrats are curiously abandoning the concept of individual and corporate freedoms, liberty and economic opportunity in exchange for conditioning citizens to become followers instead of leaders and in the process making us more dependent on the state instead of less.
We can “if” and “but” and try various purported spending cures for our malaise until the cows come home, when in fact the cure for what ails us is as obvious as the nose on our face. Freeze spending immediately which will axe any spending initiatives that are not fully capable of being self supportive from day one. We must address the debt that continues to chaff at the loins of our independence. China alone holds $1 trillion of our national debt and another trillion in dollar reserves. They already have us in a chokehold and if we continue to borrow, we’ll eventually fiscally blackout.
Unless we immediately begin acting as if our sovereignty and freedom depend on our financial independence, we will not only risk becoming wards of our state, but perhaps worse, wards of China.