By on January 29, 2009

What’s the opposite of reductio ad absurdum? Whatever it is, that’s what we’re looking at, as Bailout Nation (hat tip to Daniel Howes) continues to expand. The Wall Street Journal reports that the rental car giants are putting in their bid to dine at the multi-billion dollar bailout buffet. “Avis Budget Group Inc., Hertz Global Holdings Inc. and other rental-car companies are lobbying Congress to allow them to use Troubled Asset Relief Program funds to finance new auto purchases. The House of Representatives included a clause in a TARP reform bill that it passed last week to give the government authority to back loans to rental-car companies and other fleet purchasers. The bill has now moved on to the Senate.” So rental car companies AND fleet purchasers get low-interest federal loans (a.k.a. free money)? Hey, I own two cars! Is that a fleet? Trust me: they’re deeply troubled assets. Where’s my bailout? I know! Let’s ask Barney Frank!

“If our desire is to get car buying and credit flowing again, enabling people who buy hundreds of cars at a time is a good way to do it,” said Steven Adamske, a spokesman for Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee.

Damn! Hundreds! Oh well. OK then, what the Hell will making it easier for rental car companies to buy cars do to get more people renting cars? I mean, that IS where their revenue comes from, yes? Yes. But that’s besides the point, apparently.

“Still, the companies say it would bring significant relief. Access to fresh capital would help grease overall auto sales and purchases, they contend. ‘The whole system needs to get moving again,’ says Pat Farrell, a spokesman for privately held Enterprise Rent-A-Car Co., which also operates the National and Alamo brands.”

At the risk of over-simplifying this situation, it’s bat shit crazy.

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22 Comments on “Bailout Watch 366: Hertz, Avis, Dollar Thrifty Line Up For Bailout Billions...”


  • avatar
    guyincognito

    This is a great plan because Ford, GM, and Chrysler have been working for years to reduce their fleet sales to improve residual values of their vehicles and thus improve sales, which has resulted in decreased revenues. Now more than ever they need to sell their unwanted vehicles to fleet customers to recover that revenue and support their long term business plans.

    Also, the batshit craziness has only just begun.

  • avatar
    Jerome10

    My god. What sort of mess did our government get us into? It will never end. We just reward the morons, while the people who don’t ask for anything, or aren’t too big to fail, or have a great idea but can’t break into the market, are all pushed aside to favor failing business and then are the ones to make the payments.

    And its only getting worse. Much worse. I can’t help but feel this just delays the inevitable, and when it does hit, we’ll be trillions poorer and whatever happens will be magnified further.

    This goes for everyone, and especially our “leaders”. I wouldn’t be shocked if revolution ends up a result of all this.

  • avatar

    guyincognito:

    Isn’t it true, Mr. Guyincognito, that fleet sales were more than partially responsible for the new car “bubble” that burst, bankrupting Chrysler and GM (even if they haven’t officially declared bankruptcy)?

    Isn’t it true that domestic fleet sales made Detroit metal more prone to depreciation, as ex-fleet models flooded the used car market?

    Isn’t it true that this depreciation punished private owners, which reduced the appeal of the vehicles “dumped” into fleets?

    Isn’t it true that the “good enough for rental work” production standards dragged down Detroit’s vehicular quality and destroyed brand equity?

    Isn’t it true that this paradigm is just as valid today as it was two years ago, or a year ago, when Detroit was busy trumpeting its reduced fleet sales as a sign of their renewed commitment to their retail customers?

    In light of these facts, Mr, Guyincognito, how is it possible that a return to large scale, low-profit rental sales will help ensure the long-term viability of Chrysler and GM?

  • avatar
    TEW

    I have been in situations where because of my age I could not take some jobs. I work as a contractor and could have had a lot of free hotels, gifts, and high pay given to me but I could not take them because I can’t rent a car (18 years old). If they are so desperate for money they could lower the ridicules 25 years old requirement and I would rent a car for at least two weeks every year from them. But why change your policies when you could be bailed out by people who won’t even give you a car to rent.

  • avatar
    ktristan

    This is insane! When is this going to end?
    Even Larry Flint showed up and asked for $5 billions at the beginning of January.

    “Operation Socialize Losses” continues…

  • avatar
    PeteMoran

    Come’on RF, you can see they need the money, that early 1970s 737-200 ain’t gonna’ fly much longer.

    (Does that describe the whole biz?)

  • avatar

    Personally I would rather fund Larry Flint than Avis and the rest of the Car Rental Gang. Do we have to continue the incentive to the big 3 to build cr*p for us hapless travelers to be ‘upgraded’ too?

    One wonders what would have happened if the US automakers did not have the Fleet Sales as plan B in their sales plan. Would they have aimed higher?

  • avatar
    probert

    You’re blaming Barney Frank. Do you ever wonder where the money went?

    Here’s a stat for you:

    former Rep. David Bonior put it on Meet the Press on January 11:

    “over the last 20 years, the top 10 percent took 90 percent of the income gains in this — in the country. And the top 1 percent took roughly 60 percent. And the top 1/10th of 1 percent took 35 percent of that. I mean, it’s skewed the wrong way.”

    So after 8 years of a criminally misguided ruling party the best you can come up with is Barney Frank? Or if you’re feeling your oats, maybe Nancy Pelosi?

    We’re in a real mess create by the republican policy – and no one knows the answer as to how to get out – but the least we can do is give it 2 minutes of thought Have we learned nothing?

    see you at the bottom.

  • avatar

    probert,

    Imagine that, powerful and wealthy people accumulate more power and wealth. Next thing you’ll be telling us that there’s gambling at Rick’s.

    You’re quoting David Bonier????!!!! He’s such a tool that even Michigan Democrats wouldn’t support him for governor. Just think about it for a second, the guy is too liberal for Michigan Democrats. Or perhaps you prefer “progressive”. Aren’t diseases progressive?

    Bonier has a lot of gall talking about the “top 10 percent” of income earners, as he gets a six figure salary from American Rights At Work, a union funded labor advocacy group. I don’t see him volunteering to give all that money to charity.

    TTAC has criticized Dr. David Cole of the Center for Auto Research because CAR gets some its funding (less than 10%) from auto industry sources. Bonier gets 100% of his funding from organized labor. Before he headed ARAW, he held a union funded professorial chair at Wayne State. I think it’s the same chair once held by “Professor” Doug Fraser, ex president of the UAW.

  • avatar
    Kurt.

    In a micro-economic world, this makes sense. In THEORY, these are loans – not grants. Loans made by banks – just guarenteed by the US taxpayer. Your a co-signer. The money would go to the car makers to reduce their current stock and allow them to produce new vehicles in the catagories dictated by the previous loans provided to the automakers directly. The interest of these loans would be less than if the bank didn’t have the taxpayer co-sign but it is still a profit.

    Of course, we know that the manufacturers will sell the inventory off and use it as an excuse to produce more of the same that no one wants and they cant sell saying “Look, we sold the last batch!”

    [edited to correct punctuation-I\'ll leave the misspelling]

  • avatar
    dejalma

    Considering how in the last couple of years the “foreign” car companies have been upping their share in the rental fleet, I would find it hilarious if most of the cars purchased with a government “loan” were Hyundais and Toyotas.

  • avatar
    threeer

    So, let’s see…the American taxpayer is being asked (well, not really asked. We weren’t given much choice) to bail out the automotive manufacturers, and now we’re being asked to bail out the rental companies that, guess what…buy most of their fleet from the Big 2.8! This is brilliant! This way, GM and Chrysler can trump up more of their “viability” plan from the increase in rental sales that will surely come if Hurtz, et al get more money! At this point, why not have the gov simply buy each household a new GM or Chrysler of their choice and be done with it?

  • avatar
    GS650G

    Steven Adamske, a spokesman for Rep. Barney Frank (D., Mass.),

    This is all you need to see to realize just how corrupt this deal is.

  • avatar
    GS650G

    probert :
    January 30th, 2009 at 1:39 am

    You’re blaming Barney Frank. Do you ever wonder where the money went?

    Here’s a stat for you:

    And here is a stat for you

    The top 1% pay most of the income taxes in this country, the bottom 50% pay no federal adn what ever local and state taxes they are stuck with. The real stat is the federal government confiscated the wealth of the most productive and now is poised to take from the productive and give to the non productive. Including Hertz.

    Where is John Galt?

  • avatar
    Daft Punk

    “Where is John Galt?”

    We inch closer to an Atlas Shrugged society each day.

    http://online.wsj.com/article/SB123146363567166677.html

  • avatar
    Viceroy_Fizzlebottom

    We’re in a real mess create by the republican policy – and no one knows the answer as to how to get out – but the least we can do is give it 2 minutes of thought Have we learned nothing?

    see you at the bottom.

    Wrong. Both Parties are to blame. We’ve had terrible monetary policy in gov’t since before the Great Depression. The whole idea of debt as money is flawed and you don’t need to be an economist to understand that.

  • avatar
    zenith

    The idea of the federal government buying up all of the Chryco/GM unsold inventory and giving away/firesaling the stuff to low-to-lower-middle income people has lots of merit.

    Most people on this board might sneer at PT Cruisers, Sebring/Avengers, Cobalts/G5s etc., but there are plenty of people who are stuck with
    15-20 year-old POS cars, hoping that the 10-15 year-old cars that they’ll upgrade to once their income tax check comes will serve them any better.
    A new car with a warranty would be better than the beater. And if this collapses the market for clapped-out junk and hastens its journey to the crusher, then the measure can justifiably be called “green”.

    In the case of states like Nebraska, which impose sales tax based on MSRP on any car received as a gift, the feds should peg the value at $1000 and warn states that don’t recognize this value and want to use the old MSRP instead that they’ll lose federal highway funds.

    The recipients of the cars should be given special FEDERAL titles to the cars that state that the vehicles cannot be sold, given away (though they could be included in estates), or used as loan collateral for 5 years.

    We’d want people to use these cars, not deal in them, and wouldn’t want finance companies/ payday loansharks ending up with them, either.

  • avatar
    guyincognito

    @ RF,

    Sorry, I forgot the /sarcasm tag.

  • avatar
    k.amm

    This is craziness, I agree.

  • avatar
    50merc

    Everyone deserves a bailout. Especially pornography magnate Larry Flynt. Economists agree on the importance of promoting growth and fighting deflation at a time like this.

  • avatar
    Bunter1

    And President Obamarx signed legislation to “level the playing field” for organized labor today.

    I don’t think he is aware of which side was in the drivers seat.

    God Lenin Bless the USSA!

    Bunter

  • avatar
    Bunter1

    Ooops. Botched the strike Through.

    Lenin bless the USSA!


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