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[njfan47]

A few years ago, it was speculated on this board that all of the long-term (84-96 month) loans that auto buyers were using to buy new cars at artificially low interest rates used by the Obama "administration" in the absence of a real economic policy would create a bubble in the auto industry and possibly lead to a recession.

That day is getting closer, as Avis (last week) and Hertz (today) reported very bad earnings. Even though these are car rental companies, they make a lot of their money on used car sales, selling cars once they hit a certain mileage level. When the numbers are tallied, Avis and Hertz spent a combined $110 billion on new car purchases since 2010, and sold those cars for $85 billion. This shortfall of $25 billion is covered by their rental business, but it's still a $25 billion shortfall. Once car prices go lower due to a flood of repossessions on the market, the $85 billion number will be lower. Keep in mind that the combined market capitalization of both companies combined is only ~ $4 billion. It won't take much more to wipe out their equity.

Also, Capital One Financial recently reported that they had to put over 5% into reserves for bad loans, mostly to democrats who bought cars, but couldn't make the payments.

Seriously though, this has the potential to be a problem for the economy if it gets worse, and it probably will. Cheap used cars means that new car sales have more competition than usual. This feeds back into the big auto companies, their suppliers, and suppliers to the suppliers.

This is what the deadly combination of slow growth and artificially low interest rates have on an economy, over the long term. The game works very well initially, until things fall apart. All the more reason why, even though Trump is easy for democrats to hate, they should root for him to get things moving. After all, nobody wants "the Trump economy to hit you with a 20% decrease for two years!"

 

[Stalker]

I

A few years ago, it was speculated on this board that all of the long-term (84-96 month) loans that auto buyers were using to buy new cars at artificially low interest rates used by the Obama "administration" in the absence of a real economic policy would create a bubble in the auto industry and possibly lead to a recession.

That day is getting closer, as Avis (last week) and Hertz (today) reported very bad earnings. Even though these are car rental companies, they make a lot of their money on used car sales, selling cars once they hit a certain mileage level. When the numbers are tallied, Avis and Hertz spent a combined $110 billion on new car purchases since 2010, and sold those cars for $85 billion. This shortfall of $25 billion is covered by their rental business, but it's still a $25 billion shortfall. Once car prices go lower due to a flood of repossessions on the market, the $85 billion number will be lower. Keep in mind that the combined market capitalization of both companies combined is only ~ $4 billion. It won't take much more to wipe out their equity.

Also, Capital One Financial recently reported that they had to put over 5% into reserves for bad loans, mostly to democrats who bought cars, but couldn't make the payments.

Seriously though, this has the potential to be a problem for the economy if it gets worse, and it probably will. Cheap used cars means that new car sales have more competition than usual. This feeds back into the big auto companies, their suppliers, and suppliers to the suppliers.

This is what the deadly combination of slow growth and artificially low interest rates have on an economy, over the long term. The game works very well initially, until things fall apart. All the more reason why, even though Trump is easy for democrats to hate, they should root for him to get things moving. After all, nobody wants "the Trump economy to hit you with a 20% decrease for two years!"

I do remember your mentioning this (!) and things have gone “flat” in the market. Probably not for long as cars are our drug of choice!

 

[njfan47]

I



I do remember your mentioning this (!) and things have gone “flat” in the market. Probably not for long as cars are our drug of choice!

Notice that there are no comments from Paycut and Snowflake. Perhaps each has an 84-month car loan. But even if not, the don't understand issues like this because it's not discussed on CNN & MSNBC.

 

[njfan47]

Isn't it amazing, no comments from any of our liberals on a story that clearly has impact on everyone, probably them most of all. These media-influenced individuals are only capable of "thinking" what the media tells them to think. And people ask why the media does what it does! Because it works, at least on some!

Now, if it's proven that Trump and or his campaign is guilty of something, I will acknowledge it and will agree that something should happen, depending on the potential severity of the act. Absent that, however, it's probably best to let things play out. Most of this is probably wishful thinking. It's more likely that Comey, who was appointed by Incapabama, was keeping this story alive since Trump is such a threat to the Washington establishment. They will do almost anything to get rid of Trump because he's a threat to them. I know that you libs don't understand this concept or don't want to understand it, but think of non-establishment vs. non-establishment, as hard as that might be.

And it is great entertainment to see liberals react, especially when they see some daylight, i.e. impeachment. Which brings up the question, if impeached, and it's a longshot right now, we know from history (Clinton) that the president doesn't have to leave office. Oops, these people aren't capable of flipping the situation; they don't even understand the concept.

And shouldn't Snowflake be more focused on Trump's tax cut, which would put more money in his pocket, since the first $25,000 or so of income wouldn't be federally taxed? Oops, the media didn't tell him that!

 

[njfan47]

Snowflake, any comments on whether you are excited to potentially keep more of your money if Trump cuts taxes?