This Weekend’s Unanswered Questions (TWUQs for 043005)

Another installment in an irregular series of mysteries and pseudo-mysteries this inquiring mind would like to have answers for:

• If individuals and families aren’t taking on significantly more debt compared to income than they have in the past (a central claim of the “see no evil problem” proponents of laissez faire non-regulation of lenders combined with means-tested bankruptcy “reform”), why is the average length of a car loan over 5 years (vs. 53 months in 2001), and why are one-third of new-car buyers (link requires free registration) “upside down” on their current loans (i.e., they owe more on the vehicle than it is worth) when they go to buy their next car? I realize that zero-rate loans, incentives, and pure financial foolishness and are all factors, but don’t tell me financial stress isn’t relevant. Heaven help Detroit (see GM item below), and for that matter the other car producers, if all such borrowers unilaterally and universally decide to keep their cars a year or two longer.
• Why won’t the supporters of Social Security privatization say more about Chile? A New York Times (!) writer (link requires free registration) went there and found that if he had invested his Social Security money in the privatized social pension system (reflecting real results in real mutual funds since 1981’s privatization there), he would be able to retire with benefits nearly triple that of what he’ll get from the US Social Security system. Chile has had problems with participation by self-employed people and day-laborer types, but the fact is that it has undeniably worked out marvelously for those who are in it. I personally feel robbed by Alan Greenspan, who, though a supporter of private accounts, did not push for them when Social Security was fixed band-aided in the early 1980s.
• When, oh when, is General Motors (blogpost from a few days ago is here) going to realize that it’s in an honest-to-goodness serious crisis? A Fortune article tease (link to full article requires subscription, and I don’t have one) indicates that:
  

  “…while (CEO Rick Wagoner) is throwing himself into the job with gusto, there’s no sign so far that truly radical change is on his agenda.

  Memo to GM–Your competitors are eating you alive, and the car-buying climate in general appears to be deteriorating (see first item above). What does it take for you guys, and your union, to get radical? Serious investors and bondholders appear to have no choice but to conclude that this is not a serious company.

UPDATE: As if on cue, I go to the mailbox and what do I see but Biz Weak’s Cover: “Why GM’s Plan Won’t Work–and the Ugly Road Ahead” (link is free for the time being). The first sentence says it all: “If General Motors Corp. were any other company, its problems would have sorted themselves out a long time ago.”