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Subprime Auto Nation

Tyler Durden's picture




 

By Jim Quinn of The Burning Platform

Subprime Auto Nation

Have you heard the news? Auto sales are booming. Total sales for the month of August were 1,285,202 vehicles, according to Autodata Corp, the highest monthly sales figure for any August since 2007, when 1.47 million autos were sold in the United States. Year to date auto sales have totaled 9.7 million and are on track to reach 14.5 million. Between 2006 and 2007, auto sales ranged between 16 million and 18 million. They crashed below 10 million in 2009. The Keynesians running our government have pulled out all the stops to restart this engine of consumer spending. First they wasted $3 billion of taxpayer funds on the Cash for Clunkers debacle. Almost 700,000 perfectly good cars were destroyed in order to keep union workers happy.  This Keynesian brain fart distorted the used car market for two years, raising prices for cars needed by the working poor. After that miserable failure, they realized the true secret to selling vehicles is to give them away to anyone that can scratch an X on a loan document, with 0% interest for 60 months, financed by Federal government controlled banking interests. Add in some massive channel stuffing and presto!!! – You’ve got an auto sales boom.

General Motors sales are up 3.7% over 2011. Ford Motors sales are up 6% over 2011. The Obama administration continues to tout their saving of the U.S. auto industry with their bailout in 2009 that saved unions and screwed bondholders. If this strong auto recovery is not an illusion, how do you explain the two charts below? General Motors stock is down 42% since 2011. The highly proclaimed success story called Ford Motors has seen their stock collapse by 50% since 2011. This is surely a sign of tremendous success and anticipation of soaring profits for these bastions of American manufacturing dominance.

Chart forGeneral Motors Company (GM)

Chart forFord Motor Co. (F)

This is America, land of the delusional and home of the vain. The appearance of success is more important than actual success. The corporate mainstream media dutifully reports the surge in auto sales is surely a sign the economy is recovering and the consumer has finished deleveraging and is ready to spend again. The government propaganda machine proclaims the surging auto sales are due to their wise and forward thinking policies (like the Chevy Volt). Luckily for them, there are millions of gullible Americans who believe the storyline and are easily convinced that driving a $30,000 new car, financed over seven years, makes them a success. The decades of Bernaysian marketing propaganda has worked its magic on the government educated, math challenged citizenry. There are only two things that matter to the non-thinking auto buyer (renter) - the monthly payment and what the next door neighbor and his coworkers will think. Buying a fuel efficient car they can afford, paying it off in three or four years, and driving it for ten years, while saving the monthly car payment, is what a practical, rational thinking person would do. The fact that only 20% of the 9.7 million vehicles sold this year have been small cars and the average sales price of new cars sold is now $31,000 proves Americans are still living in a delusional fantasyland of cheap gas and monthly payments for eternity.

As gas prices surpass $4 per gallon across the country, somehow 4.7 million of the 9.7 million vehicles sold in 2012 have been pickups, vans, crossovers or SUVs. Three of the top eight selling vehicles are pickups. Luxury vehicle sales are booming, with Mercedes, BMW, Porsche, Land Rover and Audi showing double digit percentage sales gains over 2011. We’ve entered a recession, gas prices are approaching all-time highs, job growth is pitiful, and Americans continue to buy luxury gas guzzlers on credit. This will surely end well.

The average payment on a new car in 2012 is $461. For used cars, the average monthly payment is $346. Today, 77% of new car purchases are financed. About half of all used vehicles involve financing. Of those cars financed, 89% are through a loan vs. 11% with a lease. A critical thinking person might wonder how a country with 4 million less employed people than we had in 2007, median household net worth down 35%, and real wages lower than they were in 2007, could be experiencing an auto boom. The answer is a government/corporate/banker/media effort to funnel taxpayer funds to deadbeats across the land in a fruitless attempt to create a facade of recovery. Our governing elite are convinced that more debt peddled to the masses is the path to recovery for an economy that imploded due to excessive debt peddled to the masses in the first place. Essentially, it comes down to who benefits from the peddling of debt. It isn’t the masses, as they become enslaved in the chains of debt and monthly payments in perpetuity. Debt peddling benefits Wall Street bankers, politicians, and mega-corporations selling crap to the masses.

The storyline being sold to the vegetative dupes (watching Honey Boo Boo) that occupy space in this delusional paradise we call America, by the corporate media, is that consumers have deleveraged and are ready to resume their “normal” pattern of spending money they don’t have on stuff they don’t need. Of course, the facts always seem to get in the way of a good yarn. Consumers have never deleveraged. Consumer credit outstanding is at an all-time high of $2.58 trillion. The decline from $2.55 trillion in 2008 to $2.4 trillion in 2010 was NOT deleveraging. It was the Wall Street Too Big To Fail banks taking a big dump on the American taxpayers. They passed their bad debts to you through TARP, the Federal Reserve buying their toxic “assets”, and ZIRP. 

Revolving credit (credit card) debt peaked at just above $1 trillion in 2008 and “declined” to $850 billion during 2010.  The media storyline is that you buckled down and paid off your credit cards, therefore depressing consumer spending and creating a recession. Sounds convincing except for the fact that it’s a load of bullshit. The Federal Reserve’s own data proves it to be false. Your friendly Wall Street banks have written off $213 billion of credit card debt since 2008 and passed the bill to the few remaining taxpayers in this country. For the math challenged, this means that consumers have actually INCREASED their credit card debt by $68 billion since 2008. The bad news for our Chinese crap peddling mega-retailers is that the significantly poorer average middle class American household is using their credit cards to pay their property tax bills, IRS bills, and utility bills in order to survive.  

Credit Card Charge-off in Dollars 2005 – 2011 — Not Seasonally Adjusted:

Year Dollar Amount
2011 $46,017,459,671
2010 $75,090,106,350
2009 $83,179,901,000
2008 $53,506,353,600
2007 $38,149,440,000
2006 $32,111,934,400
2005 $40,634,994,400
Year & Quarter Dollar Amount
2012Q1 $8,772,385,443

 

The category of debt that barely budged in the 2009 collapse was non-revolving credit. It stayed in the $1.5 trillion range in 2009 and has since surged to over $1.7 trillion in 2012. What could possibly have made this debt skyrocket by 33% when the GDP has only grown by 12% over the same time frame? You guessed it – your corporate fascist friends in Washington DC and on Wall Street. Non-revolving debt consists of auto loan debt of $663 billion and student loan debt of approximately $1 trillion. Student loan debt has shot up by $300 billion since 2008. This student loan debt is being distributed, like candy by a pedophile, from the Federal government in an effort to artificially hold down the unemployment rate.

Approximately $500 billion of the student loan debt is held directly by the Federal government, up from $100 billion in 2008. The Feds guarantee the majority of the remaining student loan debt. Can you think of a more subprime borrower than a 40 year old former construction worker getting a liberal arts degree from the University of Phoenix, sitting at his computer in his underwear scratching his balls, and paying with a $10,000 Federal student loan from you? This fraudulent attempt to obscure the true employment situation will end in tears for the borrowers and the American taxpayer. It’s tough to make a loan payment without a job. The student loan bailout is just over the horizon and will cost you at least $300 billion. Delinquencies are already off the charts.

        

When has offering low interest debt in ample portions to people without jobs, income or assets ever backfired before? The bankers and politicians that control this country seem to be a one-trick pony. They will never admit that debt is the problem and reducing it the solution. The real solution would make them poorer, so their solution is to pour gasoline on the fire with more debt at lower interest rates to more people. The addict will keep injecting more poison into their system until sudden death. The bankers and politicians know we are a car-centric society and appeal to our vanity and poor math skills to keep the game going.     

During the first quarter of this year, total U.S. car loans totaled $52.5 billion. That’s 49% higher than the same period in 2009. Also during the first quarter, the average amount financed on new vehicles rose by $589, to $25,995, and for used cars by $411, to $17,050. Furthermore, buyers are stretching out payments for longer terms: The average length of new- and used-vehicle loans jumped a full month during the first three months of this year, to 64 and 59 months, respectively. The surge in auto sales is being completely driven by doling out more loans for a longer time frame to deadbeat borrowers. Subprime auto loans now make up 45% of all car loans and the vast majority of all used car loans.  They have even created a category called Deep Subprime. Borrowers classified as “deep subprime” (i.e. those with Vantage scores below 600) account for 10.7% of auto loans. You can also classify them as loans that will never be repaid.

 

Two thirds of all car sales are for used cars, so the fact that 37% of all new cars are being sold to subprime borrowers is exacerbated by the ridiculous lending practices for used cars. The fine folks at Zero Hedge have provided the outrageous data and a chart that proves beyond a shadow of a doubt what awaits the American taxpayer – another bailout. Zero Hedge has already revealed the GM fake recovery by detailing their channel stuffing over the last two years. Now they’ve dug up more dirt on why car sales are surging. What could possibly go wrong providing loans for more than the value of the asset to people with a history of not paying their debts?

  • Subprime borrowers received 56.46% of loans on used cars in the quarter, up from 52.70% a year earlier.
  • The average loan-to-value on new cars was 109.55%
  • The average used car loan-to-value ratio rose to 126.62%
  • 77% of Subprime Auto Loans are for a period greater than five years

It’s amazing how many cars you can sell when you aren’t worried about getting paid. This is the beauty of a fiat currency, a printing press, and a taxpayer available to pick up the tab after the drunken party gets out of hand. The chart below provides the details of our superhighway to disaster. The percentage of used car loans to prime borrowers is now at an all-time low, while the percentage of loans to subprime borrowers is near all-time highs reached just prior to the 2008 crash. When lenders cared about being paid back in the early 2000?s, they rarely made loans longer than five years. Today, more than 77% of all subprime used car loans are longer than five years and average FICO scores are now well below 600. Just to clarify – if your FICO score is below 600 – YOU ARE A DEADBEAT.

When you start to connect the dots, things that didn’t seem to make sense begin to crystallize. This is all part of the master plan concocted by Bernanke, Geithner, Obama and the Wall Street Shysters. The auto section of my local paper now makes sense. Offers of 7 year financing at 0% interest and monthly lease offers of $150 to $200 for brand new cars now are understandable. The newer model BMWs, Cadillac Escalades, Volvos, and Jaguars I see parked in front of the low income luxury gated townhome community in West Philadelphia now makes sense. A pizza delivery guy driving a new Lexus is now explainable.   

The master plan is fairly simple. The Federal Reserve lends money to the Wall Street banks for 0% interest. These banks then turn around and provide credit card debt at 13% interest, new & used car loans to prime borrowers at 5% interest, and new & used car loans to subprime borrowers at 16%. When you can borrow for free, you can take a chance that a significant number of your borrowers will default. Essentially, Ben Bernanke is screwing the prudent savers and senior citizens by paying them 0.15% on their savings in order to subsidize the bankers that destroyed the country so they can make auto loans to the same people who took out the zero percent down interest only no doc mortgage loans in 2005. In addition, Wall Street knows the Bernanke Put is still in place. If and when these subprime loans explode in their faces again, Bennie, Timmy and Obamaney will come to the rescue with your tax dollars. Its heads you lose, tails you lose, again.    

 The chart below is like a who’s who of TARP recipients. The top 20 auto lenders control half the market. And look at the leader of the pack. Our friends at Ally Bank are the market share leader. You remember Ally Bank – they conveniently changed their name from GMAC (also known as Ditech – biggest subprime mortgage lender) after losing billions and being bailed out by you. They still owe you $11 billion and are 85% owned by the U.S. Treasury. No conflict of interest there. You have the biggest auto lender on earth controlled by the Obama administration. Do you think they have an incentive to make as many loans as humanly possible to help Obama create the illusion of an auto recovery? The only downside is for the American taxpayer when we have to eat billions more in Ally/GMAC losses. This insolvent excuse for a lending institution has been extremely aggressive in the subprime auto lending market and has forced the other wannabes – Wells Fargo, JP Morgan, Capital One and Bank of America – to lower their lending standards. Does this scenario ring a bell? 

top_20_car_lenders_market_share

We’ve become a subprime auto nation, addicted to easy debt, living lives of hope, delusion and minimum monthly payments. Storylines about economic recovery, fraudulent government statistics showing lower unemployment, feel good propaganda from the corporate mainstream media, and a return to easy money debt fueled spending does not constitute a real recovery. Until the bad debt is purged from the system and saving takes precedence over spending, the country will stagger and ultimately fall under the weight of its immense debt. We are lost in a blizzard of lies. This subprime fueled engine of recovery will propel the country into the same canyon of reality we entered in 2008. The crack up boom approaches.

 

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Sat, 09/08/2012 - 08:51 | 2774269 insanelysane
insanelysane's picture

but eveybody is doing it.........so it must be right

Sat, 09/08/2012 - 08:40 | 2774254 KFC1404
KFC1404's picture

Appearance over substance. Atypical.

Sat, 09/08/2012 - 08:48 | 2774263 ptoemmes
ptoemmes's picture

Yeah, and the NFL opens for real this Sunday...

Total mind melting experience.

Baseball/Football, Apple Pie, and Chevrolet

Sat, 09/08/2012 - 08:52 | 2774271 insanelysane
insanelysane's picture

Big Refereeing is holding out over Big Football.

Sat, 09/08/2012 - 08:49 | 2774266 insanelysane
insanelysane's picture

My wife just got an Audi.  She has a good job and we can afford it but there just isn't a reason to own the fucking thing.  I drive a 9 yr old truck and a 30+ year old motorcycle.  She wants me to get new ones.  Fuck that.  I love the motorcycle and the truck works fine.  My last truck I drove for 12 yrs 250k miles.  I am still kicking myself for not paying the $5k in repairs at the time and buying the other truck for $25k but even my mechanic recommended not repairing the old one.

As for idiot Americans and their math.  People think a $300 monthly car payment is a much better deal than $1,000 in repairs per year.  I just tilt my head a little and stare at them.  Of course, they are giving me the same look.

Sat, 09/08/2012 - 10:57 | 2774469 Rainman
Rainman's picture

+ 1 . Mrs. Rainman drives a new Lexus she bought for cash. Whenever I drive it with her as a passenger ( which is rare ) I am constantly cussing the computer electronics and all the other bullshit that requires an intensive training course to figure out. The insurance is an outrage in CA, even with no tickets or accidents.

I've got an 11 year old Tacoma Pre-Runner that runs like a champ. It ain't pretty, but it requires virtually no babysitting. I like a truck without gizmos ..... just a good AM radio. Every add on piece of electronics is another opportunity to spend thousands getting it fixed when it finally goes out.

Sun, 09/09/2012 - 00:59 | 2775693 respect the cock
respect the cock's picture

Stock Toyota PU w/22RE and 5spd...best truck ever

Sat, 09/08/2012 - 10:58 | 2774476 Abiotic Oil
Abiotic Oil's picture

I drive a 12 year old truck right now. I can afford a new rig but every time I really contemplate laying out the cash I remember three words about my truck. It's paid for. Then I either make an order from Wideners or Gainesville Coins.

Sat, 09/08/2012 - 14:32 | 2774893 cbxer55
cbxer55's picture

My ride is a 2004 Ford Lightning, white. I bought it used with 34,000 miles in Dec. 09, on a five year loan. It'll be paid off early in about one year. Gets bad mileage, being a supercharged V-8, but I only drive 14 miles round trip to work and back. The occasional trip to my parents is about 250 miles rt.

[IMG]http://i849.photobucket.com/albums/ab51/cbxer55/Lightning/01010001-12.jp...[/IMG]

I also have a 2006 Suzuki M109R (1800) that is fully paid for. Been contemplating selling it because a motorcycle in Oklahoma is not making sense anymore. But I do ride it to work when the weather permits, and since it is paid for, I'll just go ahead and keep it. Otherwise I'll end up buying another on a loan in the future.

[IMG]http://i849.photobucket.com/albums/ab51/cbxer55/M109R/01010004-2.jpg[/IMG]

BTW: 51 year old, sitting at the computer in my underwear, scratching my balls. But I got no credit cards, and the one loan I have will be gone in about one year.  ;-)

Sat, 09/08/2012 - 14:19 | 2774894 cbxer55
cbxer55's picture

STUPID DOUBLE POSTS!!!  :-(

Sat, 09/08/2012 - 16:42 | 2775104 peter4805
peter4805's picture

1998 Ford Taurus wagon here. I bought it in '02 for $3,500 cash when it had 147K on it. It now has 408K on it and is finally getting a bit tired. So, what will I do?  I'll drive it to the junkyard soon, buy another $3,500 car, and drive it for 10 years just like this one. Why in hell would I want to spend $35,000 on a vehicle when $3,500 will accomplish the same thing? The thougt processes of some people just boggles my mind.

Sat, 09/08/2012 - 08:51 | 2774267 kito
kito's picture

I'm mystified by this.....i really believe that america has hit the wall with debt based growth......that the market is over saturated with debt and cannot absorb any more credit expansion.....that americans were starting to see the light..and then I see these auto sales stats and I shake my head....perhaps im the delusional one..........

Sat, 09/08/2012 - 08:56 | 2774277 AnAnonymous
AnAnonymous's picture

perhaps im the delusional one..........

__________________

Nope, simply an 'American'...

Sat, 09/08/2012 - 18:20 | 2775217 css1971
css1971's picture

No, that was the house buyers. There are many more people in the economy to sell debt to. Children for example. They got barely adults with student debt. We just need to find something children would be willing to sign the rest of their lives away for.

Sat, 09/08/2012 - 08:53 | 2774272 bushwarcrime
bushwarcrime's picture

Oh please Tyler,

And what if they bought a KIA, or a Suzuki.  Are they appeasing unionists then?  Blaming the federal government for auto sales choices?  Flogging a dead Chrysler more like it.

Georgie

Sat, 09/08/2012 - 09:01 | 2774273 shovelhead
shovelhead's picture

Question is...

Who is Honey Boo Boo?

 

Edit: Ah... bless Google.

PS. Jim, don't watch that stuff. It'll make you stupid.

Maybe not all at once , but over time those brain cells will die a horrible and senseless death.

Sat, 09/08/2012 - 13:24 | 2774809 IAmNotMark
IAmNotMark's picture

This year's Snookie?

Sat, 09/08/2012 - 08:55 | 2774274 AnAnonymous
AnAnonymous's picture

As expected, the US keeps doing well, or very good, or great.

Contrary to the cheap propaganda as offered by 'Americans' on this site and their faulty econometrics.

This is a US world order and the world is organized in order to make consumption the easiest possible in the US.

Indeed, US Americans wont miss to point out how uncomfortable, how degrading it is to change cars every two years.

But for the welfare of humanity, some brave human beings have to sacrifice themselves to do the consumption job and US Americans have taken up the gauntlet.
'American' human beings'heart wont fail to be tear apart when seeing the total dedication US Americans put into their world saving endeavour.
And people have to give it to them: this situation is horrendous that they are fully entitled to a right through the firmest application of the natural rights theory to bitch around how their life is hard, and painful, and gruesome, and tedious.

Who could not understand that? If the world was not overpopulated by mindless non consumers whose task is easy as they consume nothing or so little, what a paradise on Earth it would be.

'Americanism' is the best thing to have ever happened to humanity.

Anyone should feel grateful to 'Americans' who keep paying the highest price to enable the 'american' dream...

Sun, 09/09/2012 - 23:31 | 2777501 akak
akak's picture

It is better to be thought a fool, than to open one's mouth (or pound on one's Chinese Citizenism keyboard, as the case may be) and remove all doubt.

Sat, 09/08/2012 - 08:59 | 2774281 Disenchanted
Disenchanted's picture

 

 

Quinn wrote:

"The Obama administration continues to tout their saving of the U.S. auto industry with their bailout in 2009 that saved unions and screwed bondholders."

 

The original auto bailout was in December 2008...Who was Prez then? All 'sides' need to quit ignoring the beams in their own eyes.


Bush Aids Detroit, but Hard Choices Wait for Obama By , and Published: December 19, 2008

 

WASHINGTON — The emergency bailout of General Motors and Chrysler announced by President Bush on Friday gives the companies a few months to get their businesses in order, but hands off to President-elect Barack Obama the difficult political task of ruling on their future.

 

The plan pumps $13.4 billion by mid-January into the companies from the fund that Congress authorized to rescue the financial industry. But the two companies have until March 31 to produce a plan for long-term profitability, including concessions from unions, creditors, suppliers and dealers.

 

In February, another $4 billion will be available for G.M. if the rest of the $700 billion bailout package has been released.

(continued at link)

Sat, 09/08/2012 - 09:03 | 2774288 spanish inquisition
spanish inquisition's picture

A lot more money needs to be spent on idiotic ideas to remove inventory so we can show more sales and production in the recovery.

First is the "They hate us for our cars" terrorism campaign. CIA starts a terror campaign by blowing up parking lots of cars and ships and trains carrying them. Most insurance companies do not pay for terrorism, so the government will pick up the tab on both sides! The bonus here is you can now use drone strikes to blow up whole parking lots to "foil" imminent plots.

Second, secretly build and release truckasaurus. Thousands of them. A great use for surplus tanks, bombs and ammo. Can be driven, remote controlled or my favorite full auto and programed for specific cars like aztecs. High score for breads and circuses to keep the sheeple placated.

More ideas are needed to promote Keynesian broken glass busy work. Expiration dates on houses?

Sat, 09/08/2012 - 11:01 | 2774483 monad
monad's picture

Expiration dates on citizens. Run runner! Run!

Sat, 09/08/2012 - 09:07 | 2774299 Stuck on Zero
Stuck on Zero's picture

Around here there are huge numbers of brand new Mercedes, Audis, and BMWs.  The highway is filled with $100K+ driving machines.  Someone is doing well.  I suspect government workers.  They don't have to save for retirement.

Sat, 09/08/2012 - 09:11 | 2774300 muppet_master
muppet_master's picture

If you are middle class OR poor

repeat after me:  JUST SAY NO TO STUPID CAR PAYMENTS !!

1) who in the heck likes car payments 2) who likes their car repo whether it had a purchase price of $20k or $50k..i know = the fools that appear on the tv shows: operation repo and lizard lick

2) in CA pay 10% state tax and everywhere u gotta pay freight + dmv + depreciation !! IF YOU ARE SMART..you'll sock away slowly over the next 4-5 years those $20k and $50k and save it to buy PHYSICAL SILVER....when its at $4.00.....you can buy boatloads with $30k....

in 4-5 years that car will cost $$ for maintenance..will lose lots of value in depreciation and you could still have car payments, OR lose your job and car and have NUTTING !!

If you invest $30k in PHYSICAL silver (not "paper" silver) when @ $4/oz and if it goes to $50 = you'll have $375k....if you invest $50k you'll have $625k...

with $625k...you'll be upper middle class.....just saying....

or you can buy your subprime bs garbage !!! yes you can!!! get them while their hot..go get your car...you'll be styling, trying to keep up with the "jonesess" = the other poor fools trying to impress !!! = stupid !!

get a bike, use public transportation, or if possible do maintenance on your existing car...buying a new car is stupid !!! unless you plan to pay in cash and keep it for 10+ years !!

Sat, 09/08/2012 - 10:23 | 2774406 Stuck on Zero
Stuck on Zero's picture

My Jeep is 17 years old and costs $98 to license yearly in California.  It needs few parts.  Sometimes I'm jealous of the newer cars but every time I receive my vehicle license bill from the state I grin ear to ear.

 

Sat, 09/08/2012 - 09:17 | 2774314 Go Tribe
Go Tribe's picture

"Student loan debt has shot up by $300 billion since 2008. This student loan debt is being distributed, like candy by a pedophile, from the Federal government in an effort to artificially hold down the unemployment rate."

 

THAT'S very interesting. I hadn't put student loans and the unemployment rate together before. Always wondered how so many people could just stop looking for work, and hence no longer be counted in the unemployment rate and hence the rate going down ever so slightly. Now I know: they are full-time students living off you and me. Of course oblunder wants more student loans.

Sat, 09/08/2012 - 11:26 | 2774544 infinity8
infinity8's picture

An interesting fact - I have a friend with a 30-something daughter, single mom of 2. She had been working full time and going to school part time (not on loans) for a while. Employer went out of business earlier this year and she was told that she was not eligible for unemployment because she was a student. I couldn't believe this so I called someone else I know that works for the state Dept of Labor - he confirmed. This gal had been working full time for a long time so her employer would have been paying into the unemployment insurance system, right? Still don't get it but apparently it's some "rule" - you don't count if you're in school.

Sat, 09/08/2012 - 09:17 | 2774315 Go Tribe
Go Tribe's picture

"Student loan debt has shot up by $300 billion since 2008. This student loan debt is being distributed, like candy by a pedophile, from the Federal government in an effort to artificially hold down the unemployment rate."

 

THAT'S very interesting. I hadn't put student loans and the unemployment rate together before. Always wondered how so many people could just stop looking for work, and hence no longer be counted in the unemployment rate and hence the rate going down ever so slightly. Now I know: they are full-time students living off you and me. Of course oblunder wants more student loans.

Sat, 09/08/2012 - 14:22 | 2774897 toady
toady's picture

I'm not sure it works like that...

It's my understanding that you are counted as 'stopped looking for work' when you run out of unemployment. I guess a big slug off 99'ers just graduated!

Sat, 09/08/2012 - 09:38 | 2774339 john milton
john milton's picture

2006-2007 people were using cars for driving to work, 2012 people are using cars for living in them and for collecting food stamps..

Sat, 09/08/2012 - 09:38 | 2774342 Yardfarmer
Yardfarmer's picture

what should be addressed here is the psychological conditioning which is the integral component of our cultural malaise. you can produce all the wonderfully concise charts you want as the humble narrator is so accomplished at providing to evince irrefutable evidence of all the prevalent ills of our society and corruption inherent in our hopelesly entrenched and Kafkaen bureacracies. Above all you can assume a position of unassailable righteousness and moral superiority while pointing out the venality, collective ignorance and manipulation of the massa confusa as it heads lemming like for the cliff over which it will propel itself into well deserved oblivion. yet this is itself but an infinitely subtle manifestation of the same psychological mechanisms of social control which emanate from the Bernaysian/Freudian mental straight jacket emanating from such institutions as Tavistock. Thanks for your input, Jim.

Sat, 09/08/2012 - 09:44 | 2774345 tuttisaluti
tuttisaluti's picture

We go from petro dollar to auto dollar

Sat, 09/08/2012 - 09:47 | 2774350 shovelhead
shovelhead's picture

All the people that are broke drive new cars and the people with money drive older or used vehicles.

The wife-mobile is our new car. It's only 15 years old.

My Harley is 35.

Like my kids, I only get rid of them if they absolutely refuse to work.

Sat, 09/08/2012 - 09:56 | 2774362 AndrewJackson
AndrewJackson's picture

lol...good one. I am driving a 15 year old honda civic that I purchased for $2800 in 08. It has had minimal amounts of repairs and has received 33-36 mpg. And my wife wonders why I don't want to get a new car?

Sat, 09/08/2012 - 10:33 | 2774427 max2205
max2205's picture

Lol People like you are starving the beast.

Sat, 09/08/2012 - 09:47 | 2774352 john milton
john milton's picture

ot


Tax payment by credit card sends usage soaring

By Evgenia Tzortzi

Income tax payment via credit card shot up in August as a large portion of credit card holders in Greece chose this way of payment instead of seven installments in cash or by bank check at the tax office that the state has allowed for.

According to bank data, tax payments by credit card came to 200 million euros, representing between 40 and 50 percent of total credit card turnover in August. This constitutes a massive increase in the use of credit cards, whose use had been severely dented as a result of the economic crisis.

However the above trend is now being reversed, to the extent that the benefits to be reaped from the use of credit cards for paying tax debts are multiple compared with the arrangement for seven installments in the form of cash or bank check by next February that the state offers. Credit card payments can be stretched over up to 12 months because banks that issue credit cards allow for the spreading of each installment, thereby allowing for smaller amounts to be paid every month.

As a result, if a taxpayer owes 3,000 euros in taxes, he is not only allowed to break down the payment into seven, nine or 12 installments, depending on the bank, but can also reduce further the amount he would pay every month -- i.e. instead of 428 euros per month in seven equal installments, he could pay 12 installments of 250 euros each.

What is more, taxpayers who choose to pay the entire income tax bill by credit card and then pay the bank in installments will also benefit from a 1.5 percent discount the state offers for tax payment in a lump sum, a benefit that taxpayers using the state’s arrangement for seven installments in cash or by check at the tax office miss out on. Consequently, in the above example, the taxpayer with a debt of 3,000 euros can also save a total of 45 euros that way.

This means that the use of credit cards for the payment of tax debts is expected to increase further in the coming months, as this fall will be a period when additional tax burdens will weigh on taxpayers, concerning the special tax on properties paid through electricity bills and the road tax for vehicles.


somehow I got this feeling in my gut that its going to be me and my fellow north european citizens who will be paying these taxes at the end..

Sat, 09/08/2012 - 09:50 | 2774353 Ungaro
Ungaro's picture

Repo business will be booming for years to come. Let's put together "Repos-R-Us", sign up all the lenders at cut-rate fees to repo vehicles and we could IPO in 12 months!!!

Sat, 09/08/2012 - 09:51 | 2774355 AndrewJackson
AndrewJackson's picture

The stupidity in this country has reached levels that just make me want to bang my head against the wall. I graduated from college in 2011 and can say that stories of 50-100 thousand in student loan debt are not only true, they are way more common place than you would ever expect. One of my wife's friends, went to nursing school for 4 years and borrowed close to 100k. You would think that after graduation, this girl would be in a frenzy to get a job and start her slow road to economic recovery. Instead, this girl maxed out her credit cards to go on a vacation in peru and has only applied to nursing jobs at about 4 hospitals in the area. And here is the kicker, facing looming student loan payments that will begin in November, she straight up asked my wife if she wanted to go on a cruize with her in January 2013. Also, this is the same girl in the last year who bought a new laptop, ipad, and iphone. Call me crazy, but both me and my wife work full time at good paying jobs and we have not gotten a quarter of the consumption goodies that our friends and family have (even though they have huge debts and no income). Then again, we also have accumulated a fairly good stack of pms since and have no debts, so I guess that is a tradeoff I am ok making.

Sat, 09/08/2012 - 11:07 | 2774504 Mesquite
Mesquite's picture

You're doing great, imho...

"The Majority is never right..."

Sat, 09/08/2012 - 18:10 | 2775204 css1971
css1971's picture

Sounds like you're doing it the hard way.

Sat, 09/08/2012 - 21:46 | 2775438 rambo1028
rambo1028's picture

I named my son jackson andrew after my favorite POTUS. :) and bc Ron Pauls district is lake jackson.

Sat, 09/08/2012 - 09:57 | 2774366 Meesohaawnee
Meesohaawnee's picture

"cheap gas"? really.. I paid 4.40 last night. wonder whats so cheap about that? Beuhler? Beuhler?

Sat, 09/08/2012 - 12:45 | 2774722 epwpixieq-1
epwpixieq-1's picture

What about 8.80, as what they are paying in Europe?

It is actually amazing that some countries, with sufficiently efficient infrastructure and economies still can prosper under the wait of this prices.

Just imagine what would be if here the industry and the consumers had to deal with such realistic gas prices.

Sat, 09/08/2012 - 18:09 | 2775202 css1971
css1971's picture

4.40 is 50% off.

You got a bargain there. You should thank your military.

Sat, 09/08/2012 - 10:01 | 2774367 chunga
chunga's picture

One has to wonder if this sub-prime auto deal is another trick of stealing money from people who have none by giving it to them.

Are these lenders buying unregulated forms of default "insurance" (at face value...no depreciation ever on the collateral) from outfits that are TBTF and will get bailed out as necessary?

This way here, it's even better if the "deadbeats" don't pay it back!

Unless I win the lottery I will never buy a new car again. I also plan to use the car I have now as a coffin. 2000 Park Avenue - 45k miles. 500 bucks straight cash homey.

($1200 sales tax at initial registration mother-fucker)

 

 

Sat, 09/08/2012 - 10:04 | 2774379 My Days Are Get...
My Days Are Getting Fewer's picture

Another outstanding article on ZH

I forwarded the guts and the link to many people

Possibly and act of futility - everybody wants a free lunch

And, "nobody wants to give up anything" to fix America

Sat, 09/08/2012 - 10:07 | 2774385 Meesohaawnee
Meesohaawnee's picture

futile. without a doubt. I find it sad that the economy is always number one on americans minds yet few want to take the time to understand anything about it. I feel your pain. I do the same and usually its crickets on the other end.

Sat, 09/08/2012 - 10:10 | 2774388 DosZap
DosZap's picture

And, "nobody wants to give up anything" to fix America

Not when the Government is doing all it can to drive it off a cliff...........................

Sat, 09/08/2012 - 10:17 | 2774392 adr
adr's picture

I tried to help my uncle get out of his expensive car and get a used car after he lost his job and had to take a job at Home Depot. He has a credit score of 635.

It wasn't that he couldn't get financed, it was that the terms were insane. 13% interest for 64 months on a $10k 2008 hatchback.

The biggest problem was that the banks would not finance any car older than 2007. The gap between a 2006 and 2007 model of the same car was $3000 on the used car lot. He could have afforded the payment on the $7000 2006, but he would have to pay cash. In fact the entire sub $5k budget lot was cash only.

The banks are forcing people into the cars coming back from the Cash For Clunkers program. 2010 MODELS ARE SELLING FOR THE SAME PRICE AS BRAND NEW 2012s.

In past years the sub $5k car market was where lower income and young people went to get a car. You could get a 60 month 5% interest loan and pay $100 for a decent car. Now these people are being pushed into buying $15k cars with 72 month 14% interest loans. Since they can't get a car any other way, they do it.

The answer has always been to destroy the TBTF banks and end the centrally planned washington government.

Sun, 09/09/2012 - 04:44 | 2775804 malek
malek's picture

I think the first answer is that people have to save some money for emergencies (if they have any chance at all to do so),
and then in case of major issues such as losing the job, have to start cutting down their expenses way before they run out of savings.

Sat, 09/08/2012 - 10:44 | 2774437 monad
monad's picture

I'm so glad we are finally entering the civilized /socialist utopia, where everyone is their brother's keeper. Because I'm getting old, and its getting harder to get foxey dates; at least without paying for it. In return for my wealth being confiscated to raise other people's children, to put them through school and subsidize them to hold jobs in finance, government and air traffic control for which they are obviously not qualified, I want my own personal ball washer, and a minimum of 5 college chicks per month. I *need* my own personal ball washer, and a minimum of 5 college chicks per month, plus whatever shinola it takes to get them to enthusiastically bounce my stiffy. Its my right. I demand my own personal ball washer, and a minimum of 5 college chicks per month. And a maid. To each according to their need, right comrade AnAnnymous?

 

Sat, 09/08/2012 - 10:45 | 2774443 Winston Churchill
Winston Churchill's picture

It would not surprise me at all if these loans are being packaged

and monetised via some new hybred derivative.

Of course the banks would sell the loans multiple time and cash out again and

again via CDS contracts.

It worked out just fine for them before.Trillions in off shores havens, and no jail time.

Why would it be different now ?

Sat, 09/08/2012 - 10:47 | 2774448 FiatFapper
FiatFapper's picture

Superb article; these red pills are hard to swallow.

If only there was a way to condense this wall of text into sexy-soundbites so Joe 6pck could understand, then the message is truly palpable by the masses.

They obfuscate truth with unfathomable lies for a reason...

Front-run the bubble fuckers:

-dot coms
-housing
-student loans
-auto industry
-next up: carbon tax portfolio companies

Sat, 09/08/2012 - 10:55 | 2774453 monad
monad's picture

I was travelling through a worker's paradise. Every house had a white picket fence covered with roses and a prize winning garden. Finally I asked one of these lucky socialists (this was before VAT) why it was that they all had perfect landscaped nests, roses and gardens. He told me that up to 20K the income tax is 15%, but over 20K the income tax is 80%, so noone wants to work after they make 20K, which they can easilly do in 3-5 months. So they spend their time guilding their cages, and witholding their contributions. And vindicating Ayn Rand.

Sat, 09/08/2012 - 10:50 | 2774454 Earl of Chiswick
Earl of Chiswick's picture

U.S. auto loan delinquency rate hits 13-year low

http://articles.latimes.com/2012/aug/23/business/la-fi-autos-loan-delinq...

Turek "Consumers now value their auto loans more than their credit cards and mortgages,"

that phrase is being repeated throughout the financial media

e.g. Maryann Keller on BBG
http://media.bloomberg.com/bb/avfile/vOaZrfGTAJW4.mp3

Sat, 09/08/2012 - 11:01 | 2774482 SafelyGraze
SafelyGraze's picture

looking ahead .. due to defaults on these subprime loans, there will evidently be large numbers of reposessed cars hitting the market in a couple of years

ultra-low priced used cars

used never-serviced beaten-up ripped-upholstry funky smelling cars

which, as you know, is the only thing I drive

Sat, 09/08/2012 - 12:36 | 2774710 epwpixieq-1
epwpixieq-1's picture

And one can buy an cheap used car and convert it to 100% electric, either by himself for by someone who knows what he is doing ( such people are now so rare as one may think ). Of course, this car better be small, otherwise you are going to use a lot of precious KW just driving several tons of metal 30-40 miles in the "nearfield" around your place.

Sat, 09/08/2012 - 11:04 | 2774491 thomasincincy
thomasincincy's picture

I have seen people walking the shoulder of the highway as a form of transportation

Sat, 09/08/2012 - 11:07 | 2774505 boooyaaaah
boooyaaaah's picture

Homes and Cars

America

Home loans and Car loans -- America

It was not difficult for previous generations to get a job get a loan get a family pay off the loan

This was simple math

So you now think that big bad fed is trying to goose the economy with bad loans bad math

They may be stupid but they know math

What if private homes -- private cars were the target --- you know transforming America

Funny how corrupting the home loan market corrupted more than just the sub prime borrowers

The home building, home furnishing, real estate, construction in general an all the peces that go into building have been corrupted as well

And now private transportaion (cars) is being corrupted. What ever happened to "go where you wanna go do what you wanna do"

Maybe a private home and a private car is the target. Public homes and Public transportation sound so much better in our transformed world. And can you blame the government from providing the basic neccessities of home & transportation after all it was the greedy people the greedy banks the greedy builders and greedy car makers that caused the problem.

Making loans to the ever expading sub primers

2 things I "got" from socailism. 1)The reality is that it "runs out of other peoples money" but the cure is to make other peoples money worthless. 2)And the reason socialism doesnt work is because not everyone is a memeber. If only everyone could be brought under government socialist control then success would surely follow (transformation?)

That brings us back to homes and cars

Until recently a man's home was his castle -- how barbaric. And his car a means to vote with his feet. Travel to a where the jobs are --- how wasteful of the governments precious resources (fuel).

I think that the whole thing is a power grab

They aint that stupid they know math

 

 

 

 

 

Sat, 09/08/2012 - 11:25 | 2774536 Earl of Chiswick
Earl of Chiswick's picture
Has Your Bank Said “No” to a Loan? RoadLoans.com says, “Yes!”

WTF Banco Santander

and the US auto loan business "apply today and we can approve you in seconds before you even start to shop"

https://www.roadloans.com/apply

Skip your auto payments for up to 60 days*

or

 

Lower your auto payment up to $100 per month* even with less-than-perfect credit You can even choose a cash-back option, up to $5,000
Sat, 09/08/2012 - 11:22 | 2774537 deez nutz
deez nutz's picture

whenever big O states ".... I save the Auto industry" he should follow it with "your money".  He should also not generalize the "auto industry" but GM and Chrysler only.  

Sat, 09/08/2012 - 11:31 | 2774562 boooyaaaah
boooyaaaah's picture

read the green mask

Sat, 09/08/2012 - 11:36 | 2774576 Earl of Chiswick
Earl of Chiswick's picture

Santander Consumer USA, issuance of $10 billion this year in asset-backed debt linked to vehicle loans to borrowers with spotty credit records compares with $8.2 billion in the same period of 2011

 

"“There is broad-based demand for any reasonably safe bond that offers any meaningful amount of yield,” said Harris Trifon"

 

"The subprime auto finance business has grown during the past two years as new lenders compete to make loans with rates of about 17 percent annually"

 

http://www.bloomberg.com/news/2012-07-30/subprime-auto-abs-grows-as-lend...

Sat, 09/08/2012 - 11:44 | 2774591 tahoebumsmith
tahoebumsmith's picture

Adds a whole new meaning to the term " Roach Coach".

Sat, 09/08/2012 - 11:56 | 2774599 Atomizer
Atomizer's picture


Love the photo Tyler. Allow me to show it from another vantage point.

 

Click me Komrade

Sat, 09/08/2012 - 14:23 | 2774899 icanhasbailout
icanhasbailout's picture

The inability to replace pulled-forward demand is the problem, and of course the default solution by TPTB is to pull forward some more demand.

Sat, 09/08/2012 - 14:48 | 2774944 Never One Roach
Never One Roach's picture

Reminds me of those shacks in the Caribbean where inside sit desperately poor & hungry natives but they are staring at a Big Screen TV watching Jerry Springer tease his guests who have IQs less then a worm..... and a bright shiny yellow Cadillac sits outside in the 106 heat on the unpaved dirt road.

Sat, 09/08/2012 - 15:11 | 2774976 Mox E
Mox E's picture

I contributed to this. I don't use my credit. I pay for everything with cash. This does not help my credit score. I was advised to purchase a car and make payments for at least 13 months. I bought a Porsche. I've got plenty of money and can pay this car off no problem. I still got a raw deal on financing but, I was able to haggle and get the car for 30% less than asking.  According the dealer, the market is very soft. It was so soft, that they wouldn't take my pristine BMW convertible as a trade (they're overstocked). I was able to sell my BMW within one week though, so that's all good.  I'm not thoroughly convinced that this will help my credit though because I'm going to pay the car off quicker than the loan term. I think banks will still frown upon that, but I gotta try somethin' to boost my credit.  I'm not a fan of the rules of this game, but it's the game that's being played so... game on.

Sat, 09/08/2012 - 22:56 | 2775521 El Hosel
El Hosel's picture

US auto makers brought back the muscle car just in time for $4 a gallon gasoline....... Zombie auto makers, making Zombie car models, financed by Zombie banks.

  Z ya later

Sun, 09/09/2012 - 01:44 | 2775736 ubercool
ubercool's picture

Jim, this is the best story I have ever read on Zero Hedge. How do we get the word out?

Sun, 09/09/2012 - 09:24 | 2775964 Geoff-UK
Geoff-UK's picture

Yeah, that's a great plan. Except it doesn't account for the vast, vast majority of the human population that are the grasshoppers. We ants doing productive work and saving our wealth will be left holding the bag, because buying a Mercedes with no money down sounds FANTASTIC when you're illegal and don't intend to pay off the car anyway.

Always bet on the bankers. They always seem to win--check history.

Sun, 09/09/2012 - 10:20 | 2776021 Jim B
Jim B's picture

Well done! Very informative.  

Good thing the taxpayer saved ALLY, they are doing Gods work! 

 

Sun, 09/09/2012 - 16:09 | 2776672 marriedgeordie
marriedgeordie's picture

right after the sub-prime crash, i got a year-old car with 4K miles for $24K. the MSRP on that was about $45K. and, i got it from Carmax, so the original owner got REALLY screwed. these times are coming back, it seems.

Mon, 09/10/2012 - 12:26 | 2778734 billsykes
billsykes's picture

What about subprime gun loans, then package them up via a SPV into a CDO, trache em and sell em backed with your own CIO from another SPV.

Guns for derivatives

true weapons of mass destruction.

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