Compounding the Problem -- Credit Bubble Bulletin by Doug Noland

PrudentBear.com ^ | 11/28/03 | Doug Noland

[arete]

November 25 - Dow Jones (Christine Richard): “Large cash-back payments and other incentives have been driving auto sales in the U.S. in recent years, but besides shifting cars out of the showrooms, these deals are also creating riskier auto loans. That’s because incentives aren’t just being used to discount the price of vehicles. Often, they provide a way to bail customers out of old auto loans, freeing them up to finance new purchases. ‘Dealers are very creative,’ said Bob Kurilko, vice president of marketing at Edmunds.com, which provides research and information on buying vehicles. ‘They do what they have to do to get the deal done.’ Sometimes that means giving a hand to buyers who owe more on their current auto loan than the auto’s trade-in value - otherwise known as being ‘underwater’ on a loan. It’s a surprisingly common problem. According to the latest data from Edmunds, during August, 29% of all trade-ins in the U.S. were underwater, with the average shortfall between the loan amount and the trade-in value standing at $3,700. That’s up from August 2002, when 26% of trade-ins were underwater by an average of $3,280… In California, Texas and Alabama, 40% of all trade-ins were underwater in August. In California, the average shortfall on trade-ins was $4,700, said Kurilko.”

So I would think that many new car owners are driving off the lot with increasing debt on a faster depreciating set of wheels. What happens when they go underwater for the third time? Class?

Richard W.

[arete]

FYI

Comments and opinions welcome.

Richard W.

[sarcasm]

October saw a total of 333,429 empty outbound containers, a new record and 56% of the month’s total inbound containers

[palmer]

333,429 empty outbound containers

Were it not for banking by wire, those containers would be filled with paper dollars.

[imawit]

Class?

TEACHER !! There won't be a 3rd time. Cars are going to get tooooo expensive with the reflating inflation.

Gotta take a break, ran out of popcorn. Anybody watching the worldwide currency-gold play through ?

Gonna take a break. I'll be back with my popcorn. Good to have you back. You are the prime chat catalyst. Kinda like jalapeno hidden under the pepperoni.

[GatekeeperBookman]

But we must measure what we PRODUCE with what came inside those now empty containers. I know, I know, they actually contain our factory jobs & hi-tech jobs & we are all going to die-but then maybe we are not. Open question. Just ask Willie Green & assoc.
I 'used' to be a factory rep in furniture-covered 5 states, had over 500 active customers at retail & shipped way over a million $ annual. The entire industry went overseas ( at least 80% anyway ). Too bad-now I got a real job, net almost as much money ( inflation adjusted ) with similiar tax bennies from IRS. Wind the tax burden back about 15 years & let me keep perhaps 75% of what I earn & I would shut up. In today's economy, most folks 'used' to be something else.

One of my oldest son's best friends got out of school with IT degree, worked at & lost about 5 jobs at brokerage houses maintaining their nets-now he is teaching high skrool to skulls full of mush. I am sorry but glad-he is swell young man & we do NEED decent peoplew in the pits known as government schools. What can I say?

U.S. May Add Jobs as Manufacturing Expands: Economy Preview
Bloomberg ^ | 11/30/03 | Bloomberg
Posted on 11/30/2003 4:07 PM PST by Pikamax
http://www.freerepublic.com/focus/f-news/1031243/posts

My real complaint
http://www.freerepublic.com/focus/f-news/1030336/posts
This Transfer of Poverty

[steve50]

Anybody watching the worldwide currency-gold play through ?

It's playing with $400 again as I type.

[arete]

It's playing with $400 again as I type.

Arnold is calling for 420 to 450. Shostak says 470 in the next 60 days. Sinclair is up to 529 I think. Russell is seeing gold and the Dow cross at about 3000. Round and round she goes and where she stops, nobody knows . . . but this is sure going to be fun to watch. Now who would have ever thought that I'd be cheering for Greenspan and his printing presses?

Richard W.

[imawit]

I believe that the no guts, $400 guys are getting shaken out and there are still the play but don't hold long term guys doing there thing. And, the buy and hold guys will probably carry the day this week. The drop in the dollar has not been factored in to the price of gold so it's a grand time to load up while the market is still trying to load up for the first shot at $400.


The big money is already playing the currencies and if you have interest in any kind of finances, the dollar/bank/government bonds boys are the ones to watch. Scratch the stock market for now. No earth shattering action there at all. Besides, they are two different regimens altogether.

[imawit]

Now who would have ever thought that I'd be cheering for Greenspan and his printing presses?

Ya didn't fool me, you're no bull.

[Soren]

USD gapped down and hit 90 before bouncing a bit. May be a manic Monday if we take out $400 and 90.

[palmer]

As capitalists we all have the responsibility to invest. The Fed says borrow and spend, but we must invest. The market says speculate, but we must invest. The politicians take your money to buy pills for wealthy seniors, but still we must invest. Many public schools do not much more than babysit, so we must invest in our own and our children's educations. Lack of investment is punishable by economic failure, traditionally death, but more recently the public dole. Once the Chinese stop the dole, our nation's lack of investment and the sum total of our failures to invest will result in the end of our current standard of living at the least, and the death of our nation in the worst case.

[imawit]

May be a manic Monday if we take out $400 and 90

I think once $400 is taken out, gold will continue up as the USD drop is priced in to gold.

Anyway, I jumped in big on the juniors earlier this week, also bought some bullion and made several thousand. Averaged over 6% per day and it actually, really hasn't gotten started yet. Only Soros, Buffet and the Li family have announced they are dropping the USD and Australia and UK are hawking their currencies. Poor Japan is still hawking the USD. I thought they would have more guts and be smarter with their large balance of payments and US treasuries holdings.

By the way, what's this we stuff. Are you a gold bug ?

[Soren]

Yes, I'm a goldbug. I have been heavily invested in PM shares for 3 years. Also, small amounts of physical.

[Axenolith]

What happens when they go underwater for the third time? Class?

Why, thats easy! Declare bankruptcy and go for a 4th on a subprime...

[steve50]

Poor Japan is still hawking the USD

I'm beginning to wonder how long Japan can continue to bail us out. I believe I read they just nationalized one banks debt, and rumors are there are many too follow.

[imawit]

I know. ..was just doin a lil kiddin.

Looks like the Chicken Britts took profit or bailed at the last moment an so did the Euro ninies.

[Soren]

LOL, ya got me. I was thinking to myself 'ain't it obvious when 99% of my posts are gold related'?

[imawit]

Looks like the Urope weenie guys who thought it was a trading day for gold just took it in the shorts

[Soren]

Gold got pounded when the ISM came out. But the USD didn't move much, so it looks like it was just an attempt by the shorts to defend $400. Sinclair has speculated that Barrick may have some exotic derivatives with a trigger at $400. OTOH, we've been waiting for the so-called "neutron bomb" since $354.