"Black Hole" in US Economy (UPDATE) -- FTC Complaint Filed

Fancy Racketeering Cycle Discovered

PRESS RELEASE
Citizens for Corporate Accountability
-Price-setting and racketeering cycle by auto corp. finance arms
-Cars prices reported as "falling" in CPI, even though big car cos. inflating through financing

Contact: Dan Spillane DanSLegal at aol.com
Citizens for Corporate Accountability
410 Denny Way #229 Seattle, WA 98122 (206) 860-2858

(UPDATE 1)

(SEATTLE) 01/27/04 A complaint has been filed with the US Federal Trade Commission (FTC) regarding a newly uncovered cycle of price-fixing, racketeering, and credit profiteering by major US auto manufacturers. Because of the nature of the price fixing, this cycle affects areas far beyond just cars.

This problem was identified by examining details from official US BLS tables, and comparing long term trends and weightings against independent data and reports.

The scheme involves a gradual and consistent lowering of "reported" auto prices since 2000, by the manufacturing arms of major auto makers such as Ford and General Motors, while at the same time, the manufacturer unfairly increases profits through financing arms of the same("Ford Motor Credit Co.", "General Motors Acceptance Co."). The price fixing trend is clearly recorded in US Bureau of Labor Statistics (BLS)tables, which show a normal trend in prices over many decades for new vehicles-- which was inexplicably reversed in late 2000.

This shift follows a change in 1998, which removes auto finance charges from the US Consumer Price Index CPI.

In addition, for the most recent BLS CPI assignment, the weighting of the vehicle figures in the CPI has been increased(which increases the effect of negative inflation). This is unexplainable based on normal economic trends, and mathematics--and has the effect of artificially lowering the overal CPI, which is used as the basis for many payments, such as social security and welfare. In addition, such an artificial lowering of inflation figures has the effect of increasing loan demand for the auto financing arms.

This finding is significant In conjunction with the new "Hidden Finance Charges" report (01/26/04, Consumer Federation of America)--which provides extensive evidence of credit markups by auto credit companies, which inflate the actual and total cost of vehicles.

Specifically, the artificial lowering of figures reported to the BLS by the monopolies has the effect of an enticement on false terms, as the BLS statistics are systematically used to calculate the CPI--which in turn, serves as a loan basis, and when lowered, is an enticement and provides a "supposed" rate for auto loans. However, as reported by CFA, the supposed rate is indeed not applied when auto deals are closed-- instead, significant markups are hidden in the credit terms of the finance contract. So by lowering the base prices of vehicles at one end of the monopoly, the buyer is enticed, and ends up paying for it at the other end.

These discoveries therefore show a manipulation of prices by the auto companies, with a false enticement. Further, they show a manipulation of the US Consumer Price Index for private gain, as the CPI has a significant weighting for new vehicles (a component which has been reported as negative recently, and has thus caused the overall inflation number to be falsely reported as low).

It follows that the auto companies are liable for this manipulation as it impacts creditors--as well as to any and all consumers who lost benefits indexed against the US CPI, which would otherwise be higher, were it not for the monopolistic actions of these corporations.

This cycle was uncovered as a result of a recent study by Citizens for Corporate Accountability, concerning trends in the US Consumer Price Index CPI, which was reported in a previous news release.


(see the link below for full story, and preceeding story)

but dropping finance charges from the CPI was not something I recall (but then I have more senior moments every day! :-) )

The effect is that SS benefits are reduced.

And then the bargain rate is hit with up front one time charges!

very neat!

It took me a bit to go through all the tables.

Fortunately, this is one I can file with the FTC.

The finance cos have taken over the financing of their own vehicles, that is why this is happening.

They probably also win favors from the government for this.

The BLS is probably dimly aware something is amiss--I saw a report suggesting they were wondering.

Dan

it says the finance charges were dropped in 1998

I talked to the guy at the CFA, and he thought they were not! That makes me the expert.

Interesting, once bushie got into office in 2000, the prices started to backpedal!!! It's really uncanny.

Turns out, most of the GDP growth recently is due to the cycle of vehicle buying which was induced. Look at those numbers.

So see--things make sense!

LOW INFLATION=LOTS OF NEW SUVS WHICH EAT OIL

minor correction

"It follows that the auto companies are liable for this manipulation as it impacts creditors"

should be

"It follows that the auto companies are liable for this manipulation as it impacts borrowers and other creditors"

if i get my loan online from, oh, any place other than the dealer, don't i get a cheaper car and also cheaper financing?

or is this scam only for the suckers who give the dealer TWO opportunities to rip them off? actually, most likely THREE, as most people trade-in their klunker for at least $2,000 less than blue book....

Basically, you missed out on one point.

You don't get a big incentive cash back or other incentive if you go with another finance company (i.e., other than Ford, GMAC).

...in this economy many people are taking the cash back and then the rate gets jacked up on the loan

I guess this explains the growth of this type of financing...

"Light bulb goes on"

The credit bubble economy, apparently.