SIGNS OF RECESSION

Charles Hugh Smith with a couple of on the ground observations that we are in recession. I detailed my on the ground observation about the two strip malls near my house going almost completely dark in the last two years. My on the ground observation regarding how the powers that be have been able to disguise this recession is made every morning as I drive through the mean streets of West Philly. I drove past the Mantua Square low income housing mecca this morning and observed four brand new cars with the registration sticker still in the back window parked in front of these $250,000 low income housing units. This is a neigborhood where the average household income is $16,000 and there are brand new $30,000 automobiles parked everywhere. My guess is that 80% of the “INCOME” in this neighborhood is a direct transfer from the taxpayer into the bank accounts of these fine upstanding citizens. How in God’s name can these people afford to buy brand new cars? How in God’s name can an automobile dealer sell these people cars on credit?

This is where Bennie, his printing press, Obama, and Wall Street are colluding to keep the balls in the air for a little while longer. Anyone with an ounce of brains knows these people should not have access to brand new cars bought with credit. Obama is funneling hundreds of billions to these people and Bennie and Wall Street are providing easy credit to people who should never have access to easy credit. The result is an illusion of normalcy, when in reality they are setting the country up for an even greater collapse than 2008. The signs of recession are everywhere. The signs of blatant fraud, manipulation and stupidity require some critical thought and observation.

A final unrelated point regarding Mantua Square – Is it too much to ask that since these people are getting free housing, welfare, free heat, food stamps, and new cars courtesy of the U.S. taxpayer, could they at least pick up the trash and debris that litter their front lawns. You have this beautiful complex amid tremendous squalor and they can’t even walk out their front door and pick up the trash? I’m starting to lose my faith in humanity.

Let’s hear your on the ground examples of recession. 

 
What’s Your Favorite “On the Ground” Recession Indicator?

February 28, 2012    

Beautifully maintained trophy cars are being dumped for cash. What does that say about the “real” economy?

Everybody has their own “on the ground” recession indicators:the mall parking lot, the tony restaurant that used to be packed every weekend, and so on.

I have two favorites: freight trains rumbling south down the main line of the West Coast and “sell your own car” used car lots.

The freight trains are self-explanatory: at the top of the housing bubble, they were loaded with flatcars of lumber. Now? A lot of empty flatcars and container flats. A lot. Yes, the official statistics indicate rising rail traffic, but they must mean one more car has a load in a 100-car train and there’s only 20 empties. The freight trains I see are still running with beaucoup empty cars.

There may be some explanation of why this is so, but I can report that these trains pulled no empties in 2007.

“Sell your own car” lots reflect the “private market” for used cars.If you want to know what people are trading in for new cars, then go look at new car dealers’ used lots. At the local Honda dealer, I saw a number of Lexus SUVs on their used lot; people trading down to save on gasoline?

I’ve sold a few cars myself at the local “sell your own car” lot, so I know it’s reputable and a model that works for buyers and sellers.For a flat fee, you park your car on their lot and price it however you want. Potential buyers get to test-drive it, take it to their mechanic, etc. It’s a big lot, so the selection of cars and prices is suggestive of larger trends–at least to me.

Back in 2009 at the initial depths of the recession, the used Toyotas and Hondas vanished and the lot filled with Volvos and other big-car-payment brands. I took this to reflect people were ditching their car payments and snapping up older reliable cars they could buy for cash and get another 100,000 miles out of.

I hadn’t been by the lot in a while and what I saw astonished me.The lot was packed with “fun” cars and luxury brands: four recent-vintage Cooper-Minis were lined up (none sold in the week I monitored the lot). A cute yellow VW Beetle–another “fun” car– was over by the Mercedes. Yes, Mercedes, and Porsches, all beautfully maintained.

For the first time in the two decades I’ve scanned this lot, it was chockful of luxury cars:a pristine black 2002 Porsche Boxter with low mileage that raised my blood pressure and sorely tempted me because it was “priced to sell”–and for a Scots-Irish-French tightwad, that’s saying something; an equally beautiful Mercedes 500-series two seater, low mileage, brand-new in appearance; a fairly decent Jaguar; another pristine 300-series Mercedes, a classic, unbelievably well-maintained Porsche 911 (1991)– the list goes on.

In the good old days, these “still look new” luxury cars would have been snapped up at these prices. But now they sit here, unsold, day after day.

Another class of “fun” car was also represented–the muscle car: a very clean recent vintage red Trans Am attracted onlookers in one corner of the lot.

Sellers can add comments to the sales tag, and on at least two of the luxury vehicles it was noted that the car had been their father’s, one owner. Others indicated the original owner was selling.

If you know some car buffs, or you are one, then you know what these low-mileage super-clean luxury cars represent: they represent the lifetime achievement car for a guy, or the trophy car the rising exec takes out on the weekend. There is no other explanation for a 10-year old car to have 17,000 miles, or 33,000 miles–they were all garaged and enjoyed as a third or fourth car.

It seems Dad is getting too old to drive, or it’s no longer feasible to ease into the low-slung Porsche, and so he’s given it to one of his kids. And the kid drove it to the lot to turn into cold hard cash.

As for the “fun” cars: maybe they’re still selling big numbers of new vehicles, but the glow of owning a mediocre-mileage car with no room for the dog or kids seems to be fading for existing owners. My sister-in-law spent a fortune having her Mini Cooper fixed last year, and our friend with a cutsy VW Beetle had a repair bill after a few years of ownership that could have bought a decent used car instead.

For whatever reason, “fun” cars that I never saw on the lot before are now there in abundance.

This is all anecdotal, of course, and wide open to interpretation. If you go to the techie-hipster favored neighborhoods in San Francisco, the tony cafes and restaurants are crowded: there’s plenty of Web 2.0 money floating around. If you only look at these concentrations of talent and free-flowing investment capital, the economy looks like it’s booming. Ditto if you try to book a table near the Opera on performance night: there’s plenty of old money around that can spend $100 per dinner, too.

Once again, there were no older Toyotas or Hondas on the lot, only a few 2-year old models asking near-new prices. I interpret this thusly: older reliable cars that will last another five years without major expense are snapped up immediately, and superfluous “fun” cars and luxury trophy vehicles are being turned into cash.

When people are driving their pride and joy cars out of their pampered garages and selling them for cash, not trading them in for a new car or keeping them for pleasure, I think that’s saying something about the “real” economy you won’t find if you hang around Twitter HQ or the bejeweled Opera crowd.

You may intepret it differently, of course. That’s the beauty of “on the ground” recession indicators.