Tag: auto loan bubble

SOMETHING WICKED THIS WAY COMES

I stopped trying to predict markets back in 2008 when the Federal Reserve, Treasury Department, Wall Street bankers, and their propaganda peddling media mouthpieces colluded to rig the markets to benefit the elite establishment players while screwing average Americans. I haven’t owned any stocks to speak of since 2006. I missed the the final blow-off, the 50% crash, and the subsequent engineered new bubble. But that doesn’t stop me from assessing our true economic situation, market valuations, and historical comparisons in order to prove the irrationality and idiocy of the current narrative.

The proof of this market being rigged and not based upon valuations, corporate earnings, discounted cash flows, or anything related to free market capitalism, was the reaction to Trump’s upset victory. The narrative was status quo Hillary was good for markets and Trump’s anti-establishment rhetoric would unnerve the markets. When the Dow futures plummeted by 800 points on election night, left wingers like Krugman cackled and predicted imminent collapse. The collapse lasted about 30 minutes, as the Dow recovered all 800 points and has subsequently advanced another 1,500 points since election day. Krugman’s predictive abilities proven stellar once again.

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GREY CHAMPION ASSUMES COMMAND (PART TWO)

In Part One of this article I discussed the arrival of Grey Champions in previous Fourth Turnings; their attributes, deficiencies, and leadership skills; and why Donald Trump is the Grey Champion of this Fourth Turning – whether you like it or not. Now I will try to make sense of what could happen next.

“Our movement is about replacing a failed and corrupt political establishment with a new government controlled by you, the American people. The establishment has trillions of dollars at stake in this election. For those who control the levers of power in Washington and for the global special interests, they partner with these people that don’t have your good in mind. The political establishment that is trying to stop us is the same group responsible for our disastrous trade deals, massive illegal immigration and economic and foreign policies that have bled our country dry.

It’s a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities. The only thing that can stop this corrupt machine is you. The only force strong enough to save our country is us. The only people brave enough to vote out this corrupt establishment is you, the American people.” – Donald Trump

Seventy year old Donald Trump has assumed the Grey Champion flagstaff. In an increasingly chaotic world, normal working class Americans in flyover country were seeking a leader who could bring order, defeat the corrupt establishment, make tough decisions, and capture the zeitgeist of this moment in history. The ruling elite oligarchs and their fawning minions, occupying their strongholds in New York, California, Illinois, and D.C., are infuriated the peasants have dared to resist. In their secretive secure spaces, the elites are plotting with one purpose in mind – this uprising must be quelled.

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Another Bubble… On The Verge of Popping

Guest Post by Eric Peters

Termites start low and work their way up. By the time you notice them, it’s often already too late to save the place. All you can do is rebuild, start over.debt lead

This analogy may be useful in terms of understanding what’s going on in the car business… on the lower end of that business. And what that could portend for the rest of the business – ostensibly “doing gangbusters,” according to mainstream media accounts.

You know … like the housing market was “doing gangbusters” a few years back.

Until, of course, it wasn’t.

Well, check this:

The number of “subprime” car loans being sold is increasing – and so is the number of delinquencies on those loans. They are up to 5.16 percent, the highest level in 20 years.

Consider what this means.debt graphic

First, a growing number of people cannot get traditional loans for new cars. They lack the verifiable income to qualify – or their credit scores suck. But financial flimflam outfits are loaning them money – often, at exorbitant interest – nonetheless.

Sound familiar?

It does to Comptroller of the Currency Thomas Curry, who recently said “… what’s happening in the auto loan market reminds me of what happened in mortgage-backed securities in the run-up to the (housing) crisis.”

Second – and not surprisingly – these loans are being defaulted on in growing numbers. Apparently, people who can’t swing a mainline loan at 3 or 4 percent interest are having trouble keeping up with loans that have interest rates twice as high.

Who’d a thunk it?sale image

Now, are talking about $25 billion in subprime auto loans. Will Uncle step in – once again – and bail out the shysters issuing these loans with more of our money?

Of course he will.

Spending other people’s money is not only what Uncle does best – it’s all that Uncle does. He hasn’t got a penny of money that’s not been taken from others first. Why not be generous? There’s always more where that came from.

But this rant is not primarily about Uncle and his bottomless generosity with other people’s money.

It’s about what the bubbling trouble in the subprime auto loan mark says – canary in the coal mine-wise – about the health of the car industry generally.

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Auto Loan Madness Continues As US Car Buyers Take On Record Debt, Lunatic Financing Terms

Tyler Durden's picture

Submitted by Tyler Durden on 12/03/2015 23:10 -0500

Way back in June, we noted that auto sales had reached 10-year highs on record credit, record loan terms, and record ignorance. We based that assessment on the following set of Q1 data from Experian:

  • Average loan term for new cars is now 67 months — a record.
  • Average loan term for used cars is now 62 months — a record.
  • Loans with terms from 74 to 84 months made up 30%  of all new vehicle financing — a record.
  • Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
  • The average amount financed for a new vehicle was $28,711 — a record.
  • The average payment for new vehicles was $488 — a record.
  • The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.

In short, the “renaissance” in US auto sales is being driven (no pun intended) by increasingly risky underwriting practices and this is leading directly to the securitization of shoddier and shoddier collateral pools in a return to the “originate to sell” model that drove the housing bubble over a cliff in 2008.

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