Day: September 25, 2008

As we’re on the brink of the biggest nationalisation in world history with the US preparing is $700Bn bailout of many of its major financial institutions in return for equity and tighter regulation it’s probably a good time to consider whether it needed to be this bad.
Here are a few suggestions that could have capped the “irrational exuberance”

• Maintain a full record of stock and commodity market short positions as is maintained for longs
• Either ban the practice of naked shorting or impose reasonable and proportionate fines on the fauilure to execute the “puts” in the event the stock rises. Without fines in reasonable proportion to the “naked” position then the risk to hedge funds is simply not great enough and mayhem will reign
• The ECB should raise and enforce requirements for bad debt provisions by banks based on their balance sheet.
• No unsecured bailouts for banks. When a bank is bailed out due to what is impolitely described as reckless lending the government providing the rescue package should take a reasonable stake. It seems highly unfair to the rest of the economy that some financial services companies should be immune to the consequences of their actions.
• Require banks to purchase government bonds to support the deposit guarantees (now 100k in Ireland)

I’ve posted before about the Revenue’s Open Market Selling Price (OMSP) which I and many others feel is complete nonsense. With the economy faltering, many dealers are selling used cars for cost or little margin. As the time to clear a lot for new stock and, hopefully, profit increases with every passing month a strange situation has been created. The OMSP’s for larger-engined used cars are in many cases substantially above the estimates of the finance companies. My personal experience is that a well known finance company has refused to offer finance on 2 cars priced 20% (and more) less than the OMSP as they felt “the prices were way too high based on their adjusted forecourt valuations”. I’d rather not give the details of each car but suffice to say they hadn’t been crashed or clocked according to cartell.ie
My experience has been backed up by anecdotal comments by the country’s best known car salesman, Bill Cullen who has acknowledged that finance companies are now very concerned that the luxury cars on their books will be nearly worthless after a few years.
So why, in the face of this undeniable recession, have the Revenue Commissioners not adjusted their OMSP’s? Also, the “forecourt valuations” used by the finance companies to decide the maximum permissible HP or lease on a vehicle should be published. How is the consumer supposed to magically figure this out when there’s such a spread of second hand prices, few sales and official revenue OMSP’s which are lies misleading.
As it stands, it’s a waste of the consumer’s time and money.