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Not debt free any more

Discussion in 'Mopar News' started by Beentherebefore, Apr 22, 2020.

  1. Beentherebefore

    Level III Supporter

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  2. LordHobbit

    LordHobbit Active Member

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    Yes unfortunately, but at least they don't have any debt before the pandemic hanging over their heads as well.
     
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  3. valiant67

    valiant67 ...

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    Correction: FCA was never "debt free".
    FCA was net debt 0, where assets were > or = debt.
     
  4. 77 Monaco Brougham

    77 Monaco Brougham Active Member

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    Thanks for pointing out that FCA is still in debt (I forget exactly how much), but it is in the tens of billions of € / $.

    I pray God that the merger process can somehow be expedited. Now, it's a matter of SURVIVAL.
     
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  5. Adventurer55

    Adventurer55 Well-Known Member

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    The wheels are in motion to speed the merger up. PSA is trying to expedite it so the French government doesn't get involved.
     
  6. Dave Z

    Dave Z It's me, Dave
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    The whole point of going net-debt-zero was to be able to borrow during the next recession, which Sergio thought would be... now-ish.

    Even without the pandemic, the market was bubbly. Heck, it still is bubbly. The trading multiples are insane. The housing market is starting to fall to rational levels, though.

    It's almost like we had runaway inflation for some things but not others... and insane levels of debt (which will be an even bigger problem). Companies kept borrowing money and spending it on stock buybacks and lavish incentives. That can't go on forever. Sergio figured it would collapse. He didn't predict this, but other than WHO in November, who did?
     
  7. 77 Monaco Brougham

    77 Monaco Brougham Active Member

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    If you compare the FCA / PSA combination as a marriage......

    Does this make the French Republic the loud, obnoxious Mother-in-Law?:D
     
  8. aldo90731

    Staff Member Level III Supporter

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    More than inflation, I think we were (are?) in an asset bubble. With interest rates so low, there just isn’t anywhere to put your money but the stock market, real estate, cars, “collectables” and what not.

    This “asset addiction” started when Alan Greenspan drove interest rates down to zero and has resulted in a series of bubbles ever since.

    During the greatest economic expansion in modern times, the Fed, under chairman Powell, had the political fortitude to drive up interest rates against populist meddling. Unfortunately, we are now back to zero.
     
  9. Bob Lincoln

    Bob Lincoln "CHECK FAULT CODES"
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    Credit-card debt is at an all-time high, and savings at an all-time low, which is why we now see the soft underbelly of the economy that has long been there.
    Raising interest rates will be disastrous for the many people carrying credit card debt that is unsustainable, especially if they lose their jobs.
     
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  10. hmk123

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    I remember in the eighties in Germany they used to call Siemens a bank with an appliance division. It was easier to make money by letting it sit than reinvest. But then is an economical model where everything seems to be based on endless consumption fueled by cheap money sustainable? I actually think it might if we just stopped cheating and not applying the right price onto things we assume nature keeps giving us for free. Since forever we try to want to keep our cake and eat it, too.
     
  11. AlfaCuda

    AlfaCuda Well-Known Member

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    Cash is/will be king for the foreseeable future. Getting to net debt zero enabled FCA to borrow and have cash in their pockets at not to high a cost
     
  12. aldo90731

    Staff Member Level III Supporter

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    Of the Big 3, Ford was in the weakest financial position going into this. Two weeks ago Ford debt was downgraded to junk. There are reports of numerous restructuring and asset liquidation plans to secure liquidity.
     
  13. turbonetic

    turbonetic Active Member

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    The other rumor is office furniture guy is getting the boot and if so I hope he's replaced by an experienced outsider, that alone would likely double their stock price.
     
  14. hmk123

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    Don’t they have an insider that wants that job? :) Jim...
     
    #14 hmk123, Apr 23, 2020
    Last edited: Apr 23, 2020
  15. Doug D

    Doug D Virginia Gentleman

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    I'll have all my credit cards paid off in about two more years. I've been paying more than the minimum payment and it's starting to show. Also trying to set aside as much money as I can in my savings and credit union. Every credit card offer gets trashed.

    I really feel for those that have been laid off. Even with the additional $600/week from the feds it still stings as that is only for a limited period of time. Who knows how long it will take them to get a job once the economy starts to recover.

    I don't see interest rates rising. At least not in the short term. From what I have read it is a good time to refinance if you can.
     
  16. 77 Monaco Brougham

    77 Monaco Brougham Active Member

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    If asked, I would give FMC only this one piece of sage advice:

    Beware of strangers from Wolfsburg bearing gifts.:eek::D
     
  17. hmk123

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    Regarding refinancing: One has to be careful to not just look at the monthly payment but also the total interest payment if one resets the length of the loan. Of course, if one shortens the loan length then it is usually a win...
     
  18. Doug D

    Doug D Virginia Gentleman

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    Agreed. I want to refinance our mortgage, but as you say I'll be looking at the interest rate. If the interest rate is low enough we could refinance for 15 or 20 years and still have a lower payment. Sometimes the shorter length loans have a better interest rate than the 30 year conventional fixed.
     
  19. codypet

    codypet Well-Known Member

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    I tried that last month when rates were in the high twos, but the banks were quoting our credit scores that were 150 points lower than what my FICO shows for both myself and my wife. We both track our scores religiously. When asked for an explanation, they said the FICO score isn't the real score, that the banks make up their own score. I was so soured by that statement that I just gave up. What's the point of having a credit report and score system if the banks are going to make up their own?
     
    Doug D likes this.
  20. aldo90731

    Staff Member Level III Supporter

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    Never heard of such thing, albeit little surprises me these days...
     
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