Look out below. Auto sales in March came in far below the lowest prediction by the “experts”. This is going to be fun. Get out the popcorn.
INTO THE ABYSS
Look out below. Auto sales in March came in far below the lowest prediction by the “experts”. This is going to be fun. Get out the popcorn.
I love the smell of “Doom Porn” in the morning………it smells like victory…….oh wait!
Unfortunately, Trump’s people are NOT in control of the Fed or the national financial bureaucracy. Until then, we are at the “mercy” of the Lib-Progs. SCARY!
I’ve got a 2000 Volvo, a 2004 Mitsubishi and haven’t had to make a car payment in 9 years.
Life is good.
I have an 800+ credit score….and zero need to borrow money.
Quite the inversion from 32 years ago when I had “young person credit” two car loans at 16% interest and an adjustable rate mortgage at 14%.
Recency bias makes people think interest rates are normally between 0-4%. This is exactly wrong. Until 2008, short term (13-week) T-bills never yielded less than 4%.
This, among other things, is why pension systems are doomed.
I have a 2009 ford, a 2006 Toyota, and a 2012 Dodge. All paid for. Paid for the Toyota and Dodge with cash, paid off the Ford that’s my wife’s once we got married. Car loans are for suckers. I will never have one again in my life.
We’ve got an ’02 Ford Windstar rust bucket, a handy ’02 Saturn Wagon, and an ’05 Saturn Vue with a moon roof—love that car. We really wish they/Trump would bring the Saturn back. Great cars.
Lower prices for used cars.
Lower prices for gasoline.
Lower prices for….what’s next?
Sooner or later, rising interest rates will choke off the credit bubble after 36 years of exponential growth. When that time finally arrives and the wave rolls over in earnest, lower prices will be THE trend for everything.
Sadly, that’s a prospect for going from the frying pan into the fire.
Barnum raises the possibility that deflation could win out after all. I suspect that the coming recession will give us all a big deflation scare before a new era of climbing inflation…
Remember when that was the main doomer script?
It’s always been the doomer script, because it has been the “other shoe” left to fall ever since we engaged in this (for me) lifelong game of inflation-credit-debt-fantasy.
If wealth is debt and debt is wealth, what happens to wealth when rates rise? It has to be destroyed, right?
I see no way to have “inflation” from here without first having the MOTHER of all deflationary credit collapses.
I reiterate my expectations:
1. Inflation continues until it doesn’t. It’s a mixed bag, with some commodities down already, but most stuff is still high.
2. Bond prices top. (This may have happened last summer.)
3. Stocks go up some more (they are.)
4. Stocks top (not yet, by most appearances, but we won’t know until the monthly trend turns down, which is at LEAST 4-6 months away even if the All Time High in stocks is behind us—which I doubt is the case.)
5. Stocks, bonds, real estate, commodities and metals all enter historic declines.
6. Banks eventually get into serious problems.
7. Economic activity for everything but necessities goes into freefall.
8. Federal and state governments become less able and less willing to borrow. People whose jobs depend on government spending disappear (e.g., medical services, higher ed, welfare administration, etc.)
9. Extensions of credit to consumers dry up.
10. Panic ensues due to a “shortage of money.” (This is akin to the panic in the 1930’s about “low prices.” It was stupid, but that’s what happens.)
11. After stocks collapse (way more than 50%, try more like 95%) and bond prices reflect 8%, 10%, 15% even 20% interest rates (destroying 80-95% of existing bond values), and gasoline gets back to late 1960’s prices in nominal terms,
12. The Fed gets nationalized and Congress (or the President, or a Military Junta in charge) orders the reflation of the economy with banknotes.
13. They reflate the economy, but find that spending money they print so addictive that they print mountains of it, in ever increasing denominations, and we’re off the the Hyperinflation Races.
From number 5 to 12, cash is king. Whoever has the cash will be buying up stocks, bonds, real estate, commodites, gold, silver, etc., etc. at fire sale prices.
“What’s in your wallet?”
Checks won’t clear.
Plastic cards won’t be electronically approved.
Gold and silver may well be going down in dollar price, too, as people with gold and silver (but no cash) are forced to liquidate in order to keep buying food, fuel, etc.
During the 1930’s, an oz of gold and $35 were one and the same by government edict. This is why gold didn’t decline along with the prices for everything else. This time around, gold isn’t fixed to the dollar (part of why the bubble grew to such vast proportion.) I think the odds favor it declining, although I think in the short term it is in a bear market rally.
If “inflation” got going big time, could interest rates remain anywhere near this low?
Impossible.
If interest rates rise, there is so much existing debt in the world, debt whose value would erode massively as rates rise, the amount of wealth destroyed would far exceed the amount of monetary increase in an inflation.
We’ve HAD our inflation. It was a monster. It took total dollar credit/debt from a few trillion to hundreds and hundreds, if not a quadrillion dollars. It didn’t flow into food, fuel or wages (which were kept down by globalism trade and wage arbitrage), it flowed into IOU’s, stocks, commodities and capital misallocation on a scale we can’t imagine.
I figure 80% of medical services are waste or harmful, for hypochondriacs and Munchausen’s Syndrome sufferers like alcohol is to alcoholics. What happens to all the human capital (MD’s, RN’s, PT’s, Imagine Techs, etc.) and all the buildings and services, etc. if Uncle Sammy can’t borrow to pay for all that crap any more?
Mothballs? You can’t mothball a human being.
It’s total SHTF for people. And their banks. And their service providers. And their neighbors.
And that’s just ONE industry, among the many addicted to Uncle Sammy running the National Mastercard.
BARNUM BAILEY
‘THE GREATEST SHOW ON EARTH’ (you talk way too fucking much)
Its not that Barnum talks too much, its that what he says is peddled by snake oil salesmen to the rubes.
They wrote this song for Barney –
https://youtu.be/bw4pnQNbBxE
Of course, I also like this one –