What’s That Brown Thing In The Punchbowl?

20160917_auto1

ZH: Well, That’s Never Happened Before

I’m sure it’s nothing.

(H/t SLL)

16 responses to “What’s That Brown Thing In The Punchbowl?

  1. Alfred E. Neuman

    Reblogged this on ETC., ETC., & ETC..

  2. I’m hearing that sound all the kids make just as the roller coaster crests the top of the long slow climb revealing the view into the abyss…………………..

  3. Here’s something to consider along those lines related to the overstock of cars (and incidentally something I alluded to the other day in my last post). The prices of the most popular cars are not only going up, but they’re being offset by extensions of credit as well. Where 5yr auto loans were the de-facto standard are now replaced by 6yr loans with what looks like lower interest on paper.

    But the truth is that a) in 6yrs your car is usually of little value and b) the finance company has made little actual money, but rather sustained it’s cost based on today’s market value. That’s one reason that Chevy Suburban soccer mom grocery getter is costing $60k+ when it’s not worth near that in reality.

    They’re essentially kicking the can down the road. Now ask yourself, what would happen should another bubble pop? Say, something like the student loan industry? Which will pop the sub-prime housing market (all that urban gentrification around colleges- great examples and I know several people who’ve fandangled student loans for otherwise cheap ghetto housing) which will pop the auto market because they also need cars and usually buy based on want. And none of them will have a clue how to fix it, other than the usual centralized government answer they’ve been brainwashed to believe.

    It’s more serious than at first glance.

    • MichiganderJim

      “Now ask yourself, what would happen should another bubble pop?”

      Oh, there’s no if about it. It’s just a question of what folk choose to see, or look at more precisely.

      It could be a great thing, for maybe then lots of peeps will discover the difference between money and wealth. In the end, the bad guys get all the money…they created it and they control it anyway.

      But the wealth? That’s each person’s and maybe some will decide that they’re keeping it, period.

  4. Completely expected. One need only see the inventories of 2016 (made 2015) bloated designs of the Grosse Pointe myopians (h/t Brock Yates for the term) gathering dust as the non- debt-thriving folks drive by, shaking their head, muttering “honey, that thing is more than our house cost.” And they’re not pre-positioned on that lot for a fleet sale either. The “deplorables”, in increasing numbers, have drawn their line while Detroit has continually failed to address a market need. (Egg-shells on 4-wheels & $50K+ pickups ain’t it.) This is a good trend.

  5. ncscout is correct but it’s much worse. Ford Motor is offering 100% financing on some (maybe all) of their new vehicles. Since loans a front loaded for interest, all those heavily leveraged vehicles will be under water almost from day one. Ford is bloating their balance sheet with very bad loans.

  6. For the auto industry the problem may in fact be permanent. It will not be long before self driving cars are a reality and not a future thing. That reality may only be 5 years out. Now imagine if I bought a self driving car, then contract with Uber. I drive for my own purposes for the daily commute then release the car to Uber for ride share.

    Here’s the problem for the auto industry. Right now auto utilization is like 5%. We use a vehicle for a commute plus errands. The rest of the time its in a parking space not being used. But what happens when the utilization rate jumps to 50%? Fewer cars will be purchased as many people can use the same vehicle over a given period of time. The upshot is vehicle demand plummets which translates less profit for the industry. It also means that the auto insurance market is impacted as well.

    • Not a big fan of the self-driving car. Anyone pay attention to the # of times your electronic gizmos cliche, are slow, drop the call or your Mercedes accelerates thru a redlight, hits a tree and goes up in flames ?

      • The drop rate on cells are actually quite low when on compares them against a 24hr always on service life. We have a long way to go before self driving vehicles are standard issue, but not that far off. Nevada has already licensed self driving trucks.

        The personal preference may cascade past you. Boomers are retiring in droves. When they lose their licenses due to infirmities they will turn to self driving services like Uber as and alternative, in droves.

    • Who in the hell wants to sit in someone else’s car? Do I have to remind that not all people are humans? In fact, most are scummy, dirty, and don’t give a flying fuck about themselves, let alone another… Ride share? Renting out personal owned vehicle? Wondering who and how it’s being used? Worrying what shape it will be returned in?

      No fucking way.

      • On that score does it matter to you whether you are sitting in the back seat with an Uber driver or the car drives itself? If you are making $5k/mo by sharing what was once an expense habits change.

  7. Used to be that 1 in 6 US jobs were auto related. Do you think that when the massive layoffs come they will lay off the Americans or the low paid Mexicans? Hmmm. Another huge kick in the teeth for middle income Americans. The blue collar workers have been destroyed. I wonder if I can get a job as lap dancer. Maybe at a nursing home.

  8. There are some factors at play here:

    As one eagle eye pointed out, at the end of the loan term, the cars are basically worn out and trade value basically zilch. Then people who then can only afford to buy these worn out but once glorious machines are stuck with possible issues. They are technical marvels but when they break, you need a loan to get them fixed. (I know, I know, some of you savvy dudes “fix” ’em yourselves- youtube, Right?).

    The other factor is how better than to push public transportation then to make these marvels unaffordable for the lower masses?

    Factor 3 is if Trump wins and goes forth with his restrictive trade policies, cheap auto parts and any other consumables from China,Taiwan, Korea, India and any other Asia hell hole will cost a heck of a lot more (driving inflation, too) so your cost of ownership rises with ANY vehicle (except those who forage amongst the worn out iron in salvage yards).

    But hey, if there is a will, there is a way. Duct Tape and baling twine is always at hand!

    • I am waiting for the battery packs on the hybrids to start wearing out. Their cost of replacement can be higher than the street value of the car at that point.

    • Go talk to the Cubans about keeping a car running with duct tape and bailing wire. They are STILL doing it thanks to their tyrant dictators.

      /r
      Grey Ghost