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Millions of Americans skipping payments as wave of defaults and evictions looms

npr.org

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Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#21

Post by jniedrauer »

rhexs wrote: post #8

Guy has what looks like a luxury truck and is apparently having trouble deciding between food and his car payment. Sell the car, get a cheap used beater, reduce expenses, keep looking for a job. Not sure what NPR wants me to take from this example.

I suspect not many people are buying trucks right now, used or not. It would be hard to sell. It may not be bright to buy a truck worth more than your annual income, but I don't think the situation can be entirely blamed on consumers. It's a systematic problem. Trucks like this are the only profitable sector left for US car dealerships, and they have gone to great lengths to get people on the hook for them. The result is pollution, dangerously large vehicles clogging roads, and consumers stuck in over their heads.

Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#22

Post by pphysch »

cft wrote: post #11
0x8BADF00D wrote: post #2

Yet the S&P500 is still green. The Fed continues to print in order to delay the inevitable. Either a currency crisis or hyperinflation.

I wonder who downvotes this and why.

"Lalala I cant hear you, stonks go UP"

probably

Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#23

Post by api »

I know people who are skipping payments just to be in solidarity with people who can't pay. They see it as an act of protest not only of inequality generally but of the fact that no matter what happens the financial industry will get a limitless bailout at the expense of everything else. Not paying is a way of getting a piece of that bailout.

I agree with the latter point. We've seen in the past 10 years or so that the regular economy will be sacrificed to save the financial industry. This has resulted in a complete decoupling of the two. The regular economy can be in a state of total collapse and the stock market goes up.

(By "the financial industry" I mean top politically well connected banks, not necessarily smaller private equity or smaller financial institutions. Those will crash and burn and be sold off in fire sale prices to larger banks that get bailed out, just like 2008.)

If we ever have real leadership again, one of the tasks before that real leadership is going to be undoing the loss of integrity and trust created by the 2008 bailouts. Like the second Iraq war, people have yet to even grasp how much damage was done in those years.

Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#24

Post by danans »

walterbell wrote: post #7

If there is no spike in infections within two weeks, from areas which had large public protests in the past week, can millions of Americans be helped by restarting the economy?

> can millions of Americans be helped by restarting the economy?

That's already happening. The current slow reopening is restarting the economy in order to help millions of Americans get back to work. For example, the jewelry store in my neighborhood in CA is now open, but for 1 customer at a time (OK in their case because even before the pandemic they controlled the number of people inside). However, the breakfast diner nearby with closely packed tables is still shut down. Even if they could open, the owner has to figure out how to run that business with appropriate social distancing.

An additional problem is that the economy was fragile even before the lockdown. Many employers likely won't rehire nearly as many people as they let go. Those who are still hiring have slowed down their hiring rate.

And until people feel safe consuming services and gathering in public like they did before, the main street economy can't recover fast enough to employ everyone who was laid off during the lockdown.

This is why government support for laid off workers must continue until enough confidence exists that things are safe, even without the lockdowns, and that might take years for some sectors of the economy.

Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#25

Post by sct202 »

hamandcheese wrote: post #15
rhexs wrote: post #8

Guy has what looks like a luxury truck and is apparently having trouble deciding between food and his car payment. Sell the car, get a cheap used beater, reduce expenses, keep looking for a job. Not sure what NPR wants me to take from this example.

Many people finance expensive cars with no money down and are immediately underwater on their loan. In a situation like that, you can’t offload your vehicle easily without also coughing up thousands to cover the difference between the car’s sell value (who is even buying right now?) and the cars loan balance.

I had a friend who kept rolling the negative equity of his previous car loan on to the new one. It's pretty ridiculous what the deals will help you do now. He's since gone bankrupt.

Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#26

Post by cft »

bshipp wrote: post #17

This is just the start. Landlords would be smart to work with tenants to share some of the loss and renegotiate temporary adjustments to keep at least some revenue coming in because the heady days of high demand for rental units is likely behind us for a while. It'll be worse in downtown areas. I've heard from multiple firms that are looking at downsizing their expensive office space and continuing to allow employees…

In California for example, due to state-wide rent control, it's very dangerous for a landlord to lower rents. I would rather offer 6 months free rent than lock into permanent nonadjustable lower rent situation.

Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#27

Post by daenz »

walterbell wrote: post #7

If there is no spike in infections within two weeks, from areas which had large public protests in the past week, can millions of Americans be helped by restarting the economy?

I suspect we will be told that the protests were necessary and for a greater good that outweighed spreading coronavirus, and now that they're over, we should all go back into lock down to prevent further spreading, and anything else is reckless and literally killing people.

Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#28

Post by opportune »

I imagine a huge cash crunch is coming up soon as deferred payments come home to roost.

We can’t continue kicking the can down the road forever. If people are over leveraged or insolvent we have to bear the pain eventually. It’s part of the credit cycle and it’s how savers get their foot in the door regarding asset ownership. Otherwise we will have basically embraced some absurd worst-of-both-worlds kind of socialism in which we bailout the people who are leveraged and over-exposed-to-risk at the expense of future generations and savers.

The Fed/Government can probably kick it down the road until November though.

Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#29

Post by diogenescynic »

cft wrote: post #11
0x8BADF00D wrote: post #2

Yet the S&P500 is still green. The Fed continues to print in order to delay the inevitable. Either a currency crisis or hyperinflation.

I wonder who downvotes this and why.

Probably someone who actually looked into what QE actually does--it's more deflationary than inflationary. Look at Japan--they've been doing forms of QE for decades. These Fed printing money, inflation trolls are almost never right even though they've been screaming about it for decades.

Re: Millions of Americans skipping payments as wave of defaults and evictions looms

#30

Post by MattGaiser »

0x8BADF00D wrote: post #2

Yet the S&P500 is still green. The Fed continues to print in order to delay the inevitable. Either a currency crisis or hyperinflation.

Household incomes rose because of the stimulus.

https://www.bea.gov/news/2020/personal-income-and-outlays-ap...

https://tradingeconomics.com/united-states/personal-savings#....

So millions are defaulting, but millions of others are awash in newfound cash and savings.

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