Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

A new credit bubble gets ready to burst

greenwichtime.com

Post reply on HN
Print view View original

101–110 of 126 posts

Re: A new credit bubble gets ready to burst

#101

Post by mrb »

StevePerkins wrote: post #80
chiph wrote: post #29

> And household debt has grown no faster than household income and is concentrated in households best able to pay it back. I'm not so sure about this - what I'm thinking is that the next (current?) bubble is in auto lending. I'm seeing tons of advertisements saying "We will lend up to 72 months with very little down". With the average new car priced around $37500 that's a payment in the mid $500's for someone with go…

> With the average new car priced around $37500 That's absolutely jaw-dropping. I assumed that was a made-up Internet stat, and was going to ask for a cite, but some quick web searching confirms it. I'm a used car guy, typically buying vehicles 2-3 years old, and would never contemplate paying above $20k. Even a brand new sedan (e.g. Nissan Altima, Honda Accord) is around $23k MSRP. A crossover family vehicle (e.g. N…

"What on earth are people purchasing, that the AVERAGE price is a low-to-mid range Mercedes?"

I think that's a classic median vs average situation. The median purchase price is probably a lot lower than $37500, while the average is skewed up by a minority of buyers purchasing very expensive cars.

Re: A new credit bubble gets ready to burst

#102

Post by MR4D »

0xffff2 wrote: post #27
Waterluvian wrote: post #24

Earlier quoted context omitted.

Zero down payment isn't even legal in Canada and anything less than 20% down and you must purchase mortgage insurance. I'm amazed that 0% is allowed in the US after 2008.

Mortgage insurance is required for nearly all sub 20% down mortgages in the US too. Most banks won’t do straight 0% down either, but will do ~3%. A notable exception to both of the above are VA loans, which will finance 100% with no PMI, but VA loans are only available to a very small segment of the population.

3% should be outlawed. If you sell your house for exactly the price you paid for it, you would have just lost at least 6% to realtor costs. Even more when you consider expenses like title insurance, taxes, and other fees.

Anything less than 10% is insane, and less than 20% means you can’t afford it.

Re: A new credit bubble gets ready to burst

#103

Post by [deleted] »

jasode wrote: post #33
not_a_moth wrote: post #11

Really seems like Wall Street is in love with the term "shadow banking", because it implies "can't regulate it". Yet we know exactly who the participants are, the types of firms, and their practices. Step 1 to better regulation of creative rent seeking is to stop treating it like it's nebulous.

>Really seems like Wall Street is in love with the term "shadow banking", Actually, the hedge fund and private equity fund people hate that term because it implies something nefarious is happening. In reality, the new post-2008 crisis bank regulations in both Europe and USA to ensure stability causes a new phenomenon to emerge: Non-banks lending money to companies that banks are not allowed to lend to. Every economis…

[deleted]

Re: A new credit bubble gets ready to burst

#104

Post by apta »

rdtsc wrote: post #86
gruez wrote: post #83

Earlier quoted context omitted.

>Pickups and SUVs with insane markups and profit margins. dumb question: why do pickups/suvs have insane markups/profit margins?

There's a demand for them. SUV are quite popular for families who don't want to "drive minivans" but they still want a large vehicle to fit in everyone. Others buy it because of the perceived safety, larger vehicle so they feel more "protected". Trucks are just what you drive in rural areas. And there are a lot of small towns and rural areas. Companies noticed that people are shelling out $40k for them, so they start…

> Others buy it because of the perceived safety, larger vehicle so they feel more "protected".

It's not just perceived safety though. Heavier cars are objectively safer when crashing into a lighter car. IIHS did several tests on this. The fact that SUVs are higher means that they have an advantage if crashing head on with a sedan.

Re: A new credit bubble gets ready to burst

#105

Post by Kyragem »

kgwgk wrote: post #69
Despegar wrote: post #43

Earlier quoted context omitted.

The shadow banking is fine. The taxpayer isn't responsible if a PE fund engaged in direct lending to the middle market loses all their money. But shadow banking can and should be scrutinized, and potentially regulated, if there are systemic risks that will lead to the taxpayer being on the hook once again. If it's just isolated private actors losing money it doesn't matter.

The “private actors” are not always so private: CalPERS is doing a lot of PE, for example.

CalPERS should really fire their 100 Goldman Sachs advisors and really do what NVPERS is doing (fund managed by 1 person who mainly invests in index funds).

Re: A new credit bubble gets ready to burst

#106

Post by smnrchrds »

gruez wrote: post #83
jstarfish wrote: post #81

Earlier quoted context omitted.

Pickups and SUVs with insane markups and profit margins. A Ford F150 Raptor's MSRP is something like $60-70k.

>Pickups and SUVs with insane markups and profit margins. dumb question: why do pickups/suvs have insane markups/profit margins?

At least some part of it, and perhaps a majority of it is due to chicken tax. Trucks in the US enjoy a level of protectionism few other industrial products do. US manufacturers, as a result, can increase their margins without losing market share to foreign competition.

https://en.wikipedia.org/wiki/Chicken_tax

Re: A new credit bubble gets ready to burst

#107

Post by Donald »

StevePerkins wrote: post #80
chiph wrote: post #29

> And household debt has grown no faster than household income and is concentrated in households best able to pay it back. I'm not so sure about this - what I'm thinking is that the next (current?) bubble is in auto lending. I'm seeing tons of advertisements saying "We will lend up to 72 months with very little down". With the average new car priced around $37500 that's a payment in the mid $500's for someone with go…

> With the average new car priced around $37500 That's absolutely jaw-dropping. I assumed that was a made-up Internet stat, and was going to ask for a cite, but some quick web searching confirms it. I'm a used car guy, typically buying vehicles 2-3 years old, and would never contemplate paying above $20k. Even a brand new sedan (e.g. Nissan Altima, Honda Accord) is around $23k MSRP. A crossover family vehicle (e.g. N…

There's significantly higher demand for used cars than there was a decade ago, which has allowed banks to extend finance terms out to 96 months.

For example, take a look at this depreciation curve for a Ford F-150: http://usedfirst.com/cars/ford/f-150/ There is very little depreciation from 2017 - 2015, meaning that if you keep the truck in good condition, you can basically drive a truck for just its operational costs (fuel, maintenance, etc.) Not a bad deal assuming market demand stays hot for these vehicles.

Re: A new credit bubble gets ready to burst

#108

Post by mikeash »

gizmo686 wrote: post #75
mikeash wrote: post #39

Earlier quoted context omitted.

Credit ratings are an attempt to turn weird moral tests into a concrete number, and they have a massive effect on one’s ability to get a mortgage. It wouldn’t be at all surprising for a bank to try to account for factors the credit score misses.

What "moral tests" do credit scores use? You could certainly argue that they are not an accurate reflection of credit worthiness.

Whether you’ve paid back your debts previously.

Re: A new credit bubble gets ready to burst

#109

Post by pascalxus »

StevePerkins wrote: post #80
chiph wrote: post #29

> And household debt has grown no faster than household income and is concentrated in households best able to pay it back. I'm not so sure about this - what I'm thinking is that the next (current?) bubble is in auto lending. I'm seeing tons of advertisements saying "We will lend up to 72 months with very little down". With the average new car priced around $37500 that's a payment in the mid $500's for someone with go…

> With the average new car priced around $37500 That's absolutely jaw-dropping. I assumed that was a made-up Internet stat, and was going to ask for a cite, but some quick web searching confirms it. I'm a used car guy, typically buying vehicles 2-3 years old, and would never contemplate paying above $20k. Even a brand new sedan (e.g. Nissan Altima, Honda Accord) is around $23k MSRP. A crossover family vehicle (e.g. N…

The auto industry is increasingly regulated and cheap cars are becoming illegal to produce
Post reply on HN