Most Absurd Price Ever Quoted

[Brian Degulis]

This has nothing to do with my or anyone else's car. We're talking about the current economy in general including unemployment, or the threat of it, falling home equities, and the availability of credit despite your thinking the majority of Americans pay cash for everything except their homes. Methinks you may need a little dose of real world reality where people don't grow up sucking on silver spoons.

Now as for new vehicles being sold at half price, I agree that people would not be lining up to purchase these for the very reasons already discussed. Dodge, for example, has already tried such an approach to rid themselves of huge inventories of new trucks. All other automakers are deeply discounting new cars, so it only stands to reason that this is resulting in lower values for used cars as well.

Sure, if someone is desperate and needs cash fast, their options are limited. It's great to be sitting on a stash of cash right now as you can pick up most anything you want for much less than it's true value. But let's say you've crashed your private plane en route to purchase a bristol, 98' Broward for $50K.

You find yourself on a desert island with only that briefcase full of cash. After three days of no food or water, you run across the only other person on that island who met the same fate as you did, six months earlier. Difference is, he's got three gallons of water, and a case of Beanie Weenies. I'm betting he wouldn't take the entire $50K for even one gallon of water. I'm no economist either, but seems to me we've just established an ACV on a gallon of water at north of $50K.

Now then, I'd already said 'nuff said, but you had to go and make me say more.

That's exactly right at that time on that island a gallon of water is worth over 50K. Not everywhere and not all the time just there and now. Something anything is worth what you can sell it for in a reasonable amount of time with proper exposure to potential buyers and if geography effects supply and demand then that plays into it also.

Brian

[nyrussell]

hmmmm Krush took the post to an unclean state. And he is wrong too, But then again, we have one of him in the marina too. A dear friend too!!! Pulled the wife and kid off the boat in only pajama bottom's .

But then again, maybe he also remembers the reason for unios coming into existence. And what is the affliction with the F word today? Too much trouble to learn from the Bard how to cuss or Byron for examples....

But since all my books are in Florida and I have not the time to quote chapter and verse... I will let his errors stay with him. Me, I have Insurance companies to deal with, but I do suggest he rereads the post with an open mind, and try to learn that neither end is good.

[jim rosenthal]

I don't think anyone here has a monopoly on being either right or wrong. The point I was trying to make is that one of the things that is keeping people from buying things is a lack of money, and since most consumer goods are bought on credit, either long or short term, what this means in actual fact is that banks aren't lending. They have money to lend. They just don't trust anyone with it. They don't even trust each other.

One of my friends who is a yacht broker commented today that he has buyers for boats, maybe not at stellar prices, but definitely at prices that sellers would accept. The problem is that the buyers can't get boat loans.

I haven't tried to borrow money lately. Thank God, I have not needed to. But I suspect that a lot of folks who have excellent credit histories, good jobs, and sterling records of NOT taking on debt they can't repay cannot get financing for reasonable purchases. I also suspect that most automobiles that are being sold new right now are going out the door with dealer financing- for one thing, the rates and terms are as good as I've ever seen- not bank loans. I'll bet that bank credit is very hard to get. Unless, as the old saying goes, you have so much money you don't need it.

This is not a situation that I recall ever happening before, not during my lifetime. This is something new. I don't quarrel with the idea that supply and demand goes a long way towards setting the price for which an item sells- no question. But in order to have a transaction occur, you have to have four things: an item to change hands, a seller, a buyer, and a medium of exchange, whatever that may be. What seems to be missing here a lot of the time is the medium of exchange. It's dried up.

It isn't just credit, if you think about it. In a declining economy, people are going to hoard their cash, which takes it out of circulation. They would rather spend borrowed funds, I believe, because it leaves their cash intact for the rainy days which are now occurring. So their own cash, which might be used in a "normal" economy to buy consumer goods, stays home. And if borrowed cash is not available, nothing (or less anyway) gets bought.

The supply-and-demand folks are right, too, in this scenario. As less exchange of goods occurs, the backlog of unsold goods gets larger and larger, and further devalues everything in it. It's an ugly feedback loop, if you ask me. The demand drops, the value goes with it.

It's sort of like religion, if you don't mind a far-fetched analogy. Money is a belief system- it works as a medium of exchange because people put their faith in it. Well, everyone still believes in money, at least for the foreseeable future, but there isn't enough of it around. We need a lot of things to happen in the near future, no question, but it seems to me that one of the bigger things is for credit to loosen up and permit people to buy things again. I'm not suggesting a return to the ways of a year or two ago, but things are far too tight now.

[Brian Degulis]

I recently placed a bid on a re posessed boat. The company handling the sale has had 4 bids accepted then survey and sea trial. It has not sold because all of the potential buyers were not able to get a loan. So this situation is causing the bank to consider my very low cash offer.

Brian