The speed alone with which this is being shoved through is alarming.
reuters.com/article/topNews/ … me=topNews
This is a heart rending letter from an affected dealer. If this is true, particularly the uncompensated confiscation of his inventory, we are in much worse trouble than I thought.:
Firstly, if he owned this dealership without incorporating, he’s an idiot. There is no reason why his family should go bankrupt.
Should that matter in this case? Chrysler doesn’t own the dealership, his family does. I do question how they’re confiscating it and giving it to someone else without even any compensation. If that’s what’s happening I feel sure it will leak out in other sources. It would be that final step in the abolition of private property.
Irregardless, it’s an absurd situation.
It’s a franchise. There’s probably more to the story than this, though. I’m not sure that this one case constitutes the end of private property. I am sure that it’s not Obama’s fault.
i agree that chrysler is a pathetic waste of financial garbage at this point, thanks to its complicit attitude to government economic manipulation of vehicle specs as well as to the UAW. chrysler has this coming, 100%.
yes, it sucks that others down the line are affected by this corruption. however, chrysler owns its own inventory. chrysler contracts with private dealerships to allow its lot of cars to be stored there where they can be viewed for sale. however, while the cars are on the lot and not-yet sold, they are technically the property of chrysler. its a tricky situation because the dealer takes our financial loans from chrysler financial in order to secure the cars to be stored on his lot, and in his possession, but he has the cars ON LOAN FROM CHRYSLER, they are not bought and paid for.
i do not know the specifics of the contracts, but chrysler (assuming that in doing so it is not violating a prior contractual stipulation) can simply take its inventory back, as long as it forgives the millions of loans that the dealer has accrued in order to store and maintain said inventory. its a crappy situation, but since technically those cars are the property of chrysler, they can take them back without offering the dealer any money other than the forgiveness or cancellation of outstanding financial loans on those cars.
of course, im not a lawyer, and it is certainly possible (and maybe even likely given what we know of this BS company) that in doing so, chrysler is violating either state or federal law or a prior contractual agreement. i dont know about that, either way-- but if that is the case, then the dealer has the right to sue chrysler for breach of contract, and to collect damages.
Well, that was my understanding - it was the case when I worked in the industry - that the inventory was owned by the auto company. The clip seems to tell a different story. If this is indeed the case, then Chrysler can do what it wants with those cars. Specifically, the dealer pays interest only on the cars, and never pays the actual price until the cars are sold. This is known as the “floor plan” - the interest paid. My guess is that the dealer to whom the cars go will pay the floor plan. That’s the usual case. In fact, I’m not sure the floor plan is paid up front, but might be. Don’t remember.
Whether he initiated it or not, if he doesn’t stop it, it’s his fault–at the end of a series of faults–whether he knows it or not. I suspect he didn’t know and doesn’t want to.
The end of private property starts with the first confiscation. But this isn’t really the first. Just look at asset forfeiture alone. And eminent domain is more often than not at least partial confiscation when it’s without just compensation.
The issue is apparently not the inventory, but the franchise. Yes, if Chrysler folds and the franchise disappears, that’s one thing and the risk of doing private business. But then to give/sell it to someone else as a New Chrysler franchise under the government’s direction, is nothing short of government theft.
But Chrysler, like GM (and especially GM) should have done this in the first place. That they didn’t is one of the reasons we are having this conversation now.
But, given eminent domain, the “confiscation” of private property has a long history in the country - and eminent domain is not the only example.
the united states has never had good private property laws. it is one of the huge faults of the original Constitution and Founders, that they did not write into law explicit legal guarantees to ones ownership of wealth. they pretty much left this one wide open, and as a consequence progressively we have lost more and more of this ‘right’ with time. eminent domain is a glaring example, yes, where government clearly violates an expectation of property ownership, even when they do compensate fairly. a free society would never allow government to TAKE property from an individual-- at best, government could make a very good offer to the individual, and the individual would have the option to take it or not.
chrysler is just a logical continuation of the thinking involved in america. the underlying assumption, going back even to the 1800s, is that individuals retain private property at the implicit guarantee of government; that the existence of all individual wealth at all is predicated upon government’s protection and continued functioning, and therefore government is the primary entity which has a RIGHT to all property, and it CHOOSES to grant to the individual the status of ownership of his or her wealth-- until, of course, government decides it wants what you have.
the Constitution should have read “Life, Liberty, Property and the Pursuit of Happiness”, but it does not. i consider this oversight so massive that it is one of the chief reasons why the american experiment has failed. a lack of public awareness of the premises necessary for sustained economic growth and free market efficiency is also to be blamed on State educational systems, which do not address these issues at all.
once it is assumed as given that our wealth and property only belong to us by government gift or favor, which is the case now, technically we are no longer even a capitalist or free state; implicit government ownership of private property is a fundamental pillar of collectivist economic systems, not free ones.
chrysler should come as no shock to anyone. that so-called conservatives wail and scream and are so surprised by this is just another example of how conservative ideology and thinking is the real reason behind the modern failures of america. conservatives want the effects without understanding the causes-- they want a free economy and all the benefits that come with it, without seeing or advocating for that which is PREREQUISITE to any free markets at all… “liberal” (statist) ideology is far more honest than conservative ideology is; at least statists are consistent, you KNOW what they believe and what they want, even when they pretend otherwise. conservatives, on the other hand, have long ago given up on anything consistent in their beliefs, they have no idea what they believe or why they believe it, even when they think they do.
liberals and conservatives are both guilty of the same thing: trying to mix freedom and slavery. they both want the same mix of statism and capitalism-- they want government services and guarantees and economic protections and bailouts etc etc, while at the same time trying to maintain a free economy that somehow continued to operate naturally under this burden of beaurocracy… they merely argue over how to divide up the freedoms and slaveries, but theyre preceeding from the same premises.
trust me, were bound to see far more chryslers coming, and much larger at that. card check, cap and trade, environmental regs on cars, government healthcare… most people have no idea whats coming. and thats all even without the inflation thats on the way. once the markets get wind that china is beginning to sell of its US treasury assets and trade them for gold, its all over. at least the inflation will wipe out a lot of our debt, however, even as it sends our economy into the toilet.
Should have done what in the first place?
Yes, or just left “the pursuit of happiness” off and quoted Locke directly. (The issue of slavery was why “property” was not used, which is somewhat understandable.)
They both have waaaay too many dealerships.
Immaterial. A different issue, and one of business judgement.
Yeah,. and it’s that judgment the government has to use if they’re going to bail that company out.
And that’s the issue. They (WE) shouldn’t be bailing companies out for their mistakes, except of course if the mistake is the government’s (ours). In this case its both–government (our) meddling mandates and the companies debilitating union contracts. The latter is probably the worst of it. The foreign (non-Detroit) manufacturers are still doing ok since they don’t have the union bs (and the workers are doing just fine, especially now compared to Detroit).
Yeah, and that’s another huge mistake Detroit made. The foreign companies are by and large in right-to-work states.
I agree that we shouldn’t be bailing them out. It’s just a political exigency. Unemployment is already a little too high. I don’t like any of these bailouts. But bailing out some of these companies does make for a quicker recovery. It’s a bandaid.
A quicker short term recovery.
Agreed. Nothing we are doing right now changes the fundamentals of our economy - which is why I don’t think it’s time for conservatives to panic.
Maybe one thing - the credit card reform bill. If this is followed up by effective anti-trust laws that prohibit another scenario wherein we have financial institutions that are “too big to fail”, we might engender a bit more responsibility in the credit markets. But if we do, and it works, the good times return, and we will once again forget all the lessons we have learned.
I’m not sure how it works in the auto industry. I remember when I was eighteen, I worked selling boats and boat accessories at a boat shop over one summer. Anyway, how it worked there was the shop would get billed at the end of every month for the interest on the inventory that they carried (but did not sell) over the course of that month. I think that the interest was based upon the Mean dollar amount for all of the days of that month.
Anyway, they could pretty much sell the boats at whatever price they wanted to, and then they would call in and report the sale and the boat would no longer be factored into inventory interest. At the end of the month, the shop would pay the interest and then pay for whatever boats were sold.
An alternative option was to just buy the boats outright, but they never did that. I believe that the reason was because the warranty coverage begins automatically if the boat doesn’t get sold by the shop within thirty days. I could be wrong about that last part.
Yeah, I think you’re right. They do pay the floor plan monthly.