Sunday, January 5, 2020

auto derivatives


AUTO DERIVATIVES
You may have heard, and not altogether given two wet craps such as I myself felt, that subprime automobile loans delinquencies recently went from the semi-normal 2% all the way up 8%. You, as I, yawned and went about your day wondering what all the fuss was about, since it is just Poor Bitches nuking their credit, and perhaps a few shady companies going bankrupt. Well, now I'm reading that the problem is pressure on the derivatives market, shades of 2008 with sub prime mortgages. It isn't the bad loans or poorly run companies that matter. It is their hedging that poor behavior with derivatives.
*
I keep harping on derivatives, which, even at their most optimistic calculation are two to three times the size of the global economy. At worst, the exposures are one and a quarter QUADRILLION dollars. If Douche Bank alone carries $50 trillion in derivatives exposure, I'd bet on the higher number. Why is this scary? Because when a company or bank only has one half to three percent physical assets to financial bets, only a small amount of failures domino effect the whole system. We have seen this time and again, and each time is exponentially worse.
*
1987, Orange County, Russian Default and the Housing Bubble are the big ones. A small amount of bad bets have system wide repercussions. The Federal Reserve still has a Full Retard amount of toxic assets on its books from 2008, counting them as real of assets as Treasury Bonds would be ( not that they are any prize, no longer used for oil transactions as they had been-and getting worse every year ). As we speak, the repo market shenanigans are more than likely to cover the bad derivative bets made over in Germany.
*
You do understand that derivatives are not just a problem in the auto market, correct? The obvious gold and silver price suppression is orchestrated using derivatives. On some days, more paper silver is bet on than has been physically mined that year. No worries, right? Barely an inconvenience. Business as usual. Oil speculation was surely involved when the Saudi oil facilities were attacked. Like the gains from the 9/11 attacks. But the speculation is not really the focus but rather derivatives used as insurance, then a run on that insurance.
*
A sub-prime auto loan company knows its customers are a bunch of scumbags. Crackheads with jobs, still. But the intellectual capacity of a crackhead. The whole reason the auto financial industry was in the news this time was because some geriatric bimbo wanted a loan which was $800 a month, on income of under $700. Now, I don't read too much into this. The bitch could have other income, like from a cohabitant ( who wouldn't co-sign, say ). What amazed me was that she was buying a Kia. After an hour on YouTube, you should know what brands to avoid.
*
Kia is a 100k mile car. Like a Subaru ( I would cut off my own junk and use it as a marker to write on my forehead that I was a dumb ass before I ever bought another Subaru. Subaru's are the turds Toyota's make after burning rice ). They are complete junk, and are not worth anything approaching $800 a month. But they look pretty, and perhaps she has ass cancer from taking it up the pooper as a porn star, and only has a few months to live. Whatever, bitch, I'm not judging. I actually approve of your carbon emissions, just as hearty hump you to the Gore Warmers.
*
Hell, for all I know driving cars is the only thing keeping us out of an Ice Age. Sorry I'm not doing my part. At $30k a shot to save us from the glaciers, however, I think someone should just drive double, for me. The used car market was shot down in flames with Obammy's Cash For Clunkers, the mutant Kenyan. Thanks for nothing, as if doubling health care costs weren't enough. That Mick Jagger lip mother humper sure has a lasting legacy to commemorate the first butt pirate in office. Rot in Hell, Muzzie twat.
*
Anyway, no matter what kind of dumb ass you are, the finance company is not going to lose money on you, so they buy insurance against defaults. Those are your derivatives. As far as the sub-prime auto loan bank is concerned, they have zero exposure to increasing defaults. But the folks that insured that bank, they aren't going to be ass raped either, so they buy insurance on the insurance they sold. And etcetera, rinse and repeat. When one insurer in this gay train suddenly doesn't have enough money to pay off a lost bet, everyone is effected.
*
Netflix came out with a movie somewhat covering this, a few months ago. It was by the same guys that produced ( directed? ) “The Big Short”, but about a hundred times worse. “The Laundromat” is about The Panama Papers, but the beginning about the boat operators insurance gives you a flavor of derivatives insurance. If you do attempt to watch the turd, I wouldn't waste my time finishing it. Great fun was had by all, except the audience. And you must suffer through Maryl Streep. I don't recall her being so insufferable in earlier movies.
*
Now, honestly, I don't care about the auto loan market. That is more indicative of the US economy, with Detroit as the poster child, again, than having to do with the western banking sector imploding ( after all, the US economy has been offal for a long time, but the bankers did paper it over. Without those scumbags, nothing is propping it up. Certainly not the hot air from jingoistic military cheerleaders and fracking industry apologists. GAWD! How I shall cherish my victory dance as events unfold. You will rue the day you embraced optimism and positive attitudes! )
*
What concerns me is when you add the repo market with the auto subprime market, to the paper gold market ( if you forgot, Britain just refused gold reparations, again. I think if it was my countries gold I'd be shopping around for a semi-retired IRA freedom fighter with explosives experience, and send a little message to a London bank. Remember that John Cusack movie, with the paper boy? “Where's my $2?!”? [ clips HERE ] Where's my gold, bitches?! ). And what other events are unfolding that independent analysts haven't sniffed out, yet? Are the commercial real estate companies suffering from mass retail closings started to see derivatives failures yet?
*
Yeah, this suckers going down, for good this time. And if they do hyperinflate away the problem, we'll only need to wait a year or so and the fracking industry implodes, which will definitely do us all in. Consider this my 2020 forecast. We go down for good in 2020. Because I always get those predictions hilariously wrong, hopefully I'm erring on the side of doom.
( .Y. )
( today's related Amazon link click HERE )
*
note: on Tubi, the movie "The Crazies".  It is the 2010 remake, not the original.  The first one, despite trying twice ( the beginning has really nice boobs, and is a pleasure to view ), I simply couldn't watch.  Low budget drive-in drek.  At least I could watch this new one.  It isn't good, but it is watchable.  The first part is about the military attempting containment, and has boxcar deportation goodness, but the second half is just cheesy "jump scare" nonsense.  First half, thriller.  Second half, really bad horror.  The end MIGHT be worth suffering through the second half, but mileage may vary.
*
note: free for today books, EMP HERE 
*
note: sale today only, a $35 stripped lower receiver, Primary Arms HERE 
*
Please support Bison by buying through the Amazon links here ( or from http://bisonprepper.com/2.html or www.bisonbulk.blogspot.com ). Or PayPal www.paypal.me/jimd303 

*** Unless you are in extreme poverty, spend a buck a month here, by the above donation methods ( I get 4% of the Amazon sale, so you need to buy $25 worth for me to get my $1 ) or mail me some cash/check/money order or buy a book ( web site for free books, Amazon to pay just as a donation vehicle ).
*** My e-mail is: jimd303@reagan.com My address is: James M Dakin, 181 W Bullion Rd #12, Elko NV 89801-4184 ***E-Mail me if you want your name added to the weekly e-newsletter subscriber list.
*** Pay your author-no one works for free. I’m nice enough to publish for barely above Mere Book Money, so do your part.*** junk land under a grand *  Lord Bison* my bio & biblio* my web site is www.bisonprepper.com *** Wal-Mart wheat***Amazon Author Page
* By the by, all my writing is copyrighted. For the obtuse out there

20 comments:

  1. A friend with a finance degree told me a long time ago that people with subprime loans fail 50% of the time if the loan term is more than 5 years. The cards are stacked against subprime borrowers in several ways that may not be obvious. You are right, the lenders require insurance on the loans and in accordance with law sometimes that insurance is wrapped in the loan and sometimes as an additional rider to the loan. When you see the car ad on TV saying $400 a month you don't see the additional $50 a month for the loan insurance.

    You typically can get out of any contract within 3 days and if any subprime borrower took the time to actually read that stack of paper called a contract, and had 2 working brain cells, all of them would rescind the contract immediately. But no, the smell of that leather upholstery, that amazing light display in the center of the dash, the appropriateness of driving your friends around the 'ville is too much for the typical subprime borrower to resist. Until that noose becomes too much to bear. After 3 years the maintenance costs start to mount and then one day the AC goes out and the $1000 it requires to make it work again is not available and that leather sure gets hot in the summer, and $3 gas just ain't as easy as it used to be. yadda yadda another one bites the dust.

    As far as used rides go, they are almost as expensive as new ones. It will be a buyers market, new and used, before you know it. Plenty of free ones too! Maybe you'll get a new ride after all, Jim!

    ReplyDelete
    Replies
    1. Soon, cars will be like old computers. Nothing to fuel them. Enjoy your pimping rides.

      Delete
    2. To understand anything about this economy you have to go back to the first Great Depression. People would give up almost everything else before they'd give up their cars. As the old saying goes, "you can live in your car but you can't drive your house".

      Even after the gas is gone, as least people got a shot at parking where they think they might survive best. Not best, but where they *think* is best.

      Add in the fact that in the US you are unemployable if you don't have a car, and you can see that subprime auto loans are not going anywhere. For the average poor fucker, it's be unemployed and homeless with no shelter, or pay a $500 a month car loan which gets them a $1000 a month job, so they have $500 a month to live on, in their car. $100 a month for gym and a storage unit, and you've got the modern "square" personal economy with car, job, gym, and storage unit each being one corner of the square.

      Delete
    3. This dood's got it all figured out! What a country!

      Delete
    4. I don't blame folks for being blinded, if they only listen to the media. They think they'll always have a $1k a month job. Suckers.

      Delete
    5. I went from homeless working day labor, I did have a small savings that I wouldn't touch from the Army. I saved my day labor cash camping in the woods outside of town. Bought a $500 ford escort and lived in it for 18 months, then bought the van I have now. In less than 3 years I went from being drunk and homeless to buying land and building a structure. Getting away from rent by car living can get you the cash to get some land and never pay rent again. It was a lot of hard work saving up the cash while living in squalor but was worth it. Now it's all hookers and blow and preps.

      Delete
  2. Ha ha ha lol lol.

    I'm getting my chuckles in early regarding your "financial" forecast that 2020 is the year the economy (& country) goes down the crapper.

    Keep the jollies rolling in Lord Bison the Suleimani killshot handwringers are getting already getting overwrought & tiresome ("WWIII...Draft...Horror... Orange Man...reeeeee! ") we need something new.

    Your prognostication is like a dash of hot paprika in the goulash. A little pick me up for a midwinter supper.
    MOAR! :)

    ReplyDelete
    Replies
    1. Yeah, I think the Iran General thing is all BS. Shades of Nork Danger. But we have to ask ourselves, why? Why that distraction, now? Could it be the ONE FRIGGIN TRILION DOLLARS A WEEK on liquidity injection? Okay, the last trading day it was $215 billion. They might not match that every day. But they did start us out last September at "only" $70 billion a day. Just saying, Douche Bank is most likely the new Lehman. All my yearly forecasts hideously wrong? I gotta be right one day. I'll be more than happy to be wrong again. And I'm glad you got my attempt at humor.

      Delete
    2. You may have a valid point on the economy thing. Diversion by war makes it easier to hide and print more bogus cash. Makes jobs and keeps the rubes occupied in a patriotic frenzy.
      Make that Orange Zero the Golden Hero ? (in his own mind)
      How many buckets of wheat does it take to block x-rays and gamma radiation I wonder...

      Delete
    3. Orange Man is a legend in his own mind, somehow better than your average rich crook. But...Hilary. Nothing goes through her mind.

      Delete
  3. Rackets. Just as Semedley Butler infered with the war rackets, (current history events prove correct-often) Jim is out in the woods flashlighting the other sundry Rackets that are being conducted with conspiracy cooperation by .gov, media, statist orgs.

    Dealers are front loaded with inventory just for parking spots for unsold inventory. Units are just ground up for recycling, not parted out to keep parts prices inflated, if unsold. The loan writer is the peacock of the dealership above techs and sales staff.

    The built in self destruct poor quality and jacked up service costs with locked door technology to owners causes folks who desperately needs that "car" to hold employment must change out vehicles, and roll over that old loan into a new loan on the next one every few years. My deplorable neighborhood is littered with 20 to 30 year old vehicles that people hang onto until death because they are the ones kicked out of the old paradigm game of getting new cars every 5-8 years for their participation rewards in Uber America.

    Outside Vegas is a massive auction outfit slinging off repos, trades, into secondary markets that are financed on worse terms for the next marginal credit buyers worse than new dealers. There would not be massive carpet bombing amounts of auto commercials (and title loan shops) advertising if there wasn't troubles going on in the economic forests out there.

    ReplyDelete
    Replies
    1. Thanks for the boots on ground details. I had no idea of the destruction of unsold units. Or the advertising on subprime ( I love my bubble, but I do miss the reporting among the weeds )

      Delete
    2. My local Fry's Electronics (which is soon going out of business) has a huge parking lot since it's the co. headquarters. I was riding my bike through there and wondered why there were cars packed in the "back 40" and realized, they're probably just being stored there. There's a Ford commercial truck sales place next door and commercial vehicles are still doing well as long as the real estate bubble keeps going, and maybe the cars are trade-ins or something. I should take another tootle through there tonight and report back.

      Delete
  4. I am going to have to warn my friends not to read this blog. Reading it is much too dangerous. I have nearly choked on my spit several times by laughing too hard while reading it.

    To avoid legal liability, there really should be a warning posted at the beginning of each article.

    ReplyDelete
    Replies
    1. Even bad publicity is good publicity. A few of you bastards end up dead and in the papers, my march towards global domination will have begun! Just call me the good hair Dr. Evil

      Delete
  5. I financed a few new/used cars, when I was younger, and more foolish. The first few months were cool, but that new car appeal soon wore off, after a few months of receiving those high monthly statements. My midget cousin just went out and financed a new Toyota Rav4 hybrid. She paid around $32k for it. Apparently 70 month car loans are a thing now.

    My faggot cousin Francis informed me that you can easily pay $70k for a specialty vehicle, such as a full sized 4x4. Knowing how full of shit he is (Especially after having it thoroughly packed :D ) I investigated it for myself, and sure enough, he was telling the truth on some level. I can’t imagine paying that much for a vehicle, what the cost of a home in a sane state would be.

    Didn’t know that Subaru’s sucked, and thought that they were actually decent. But they aren’t cheap, so that’s as good a reason as any to not get one. I drove my 92 Toyota Corolla the moon (250k miles) and it still ran great when I donated it, which I later regretted.

    ReplyDelete
    Replies
    1. Granted, the 80's Subaru's were worse, not even getting to 100k ( twice experienced ). I largely go with "ask scotty" on YouTube for the macro picture on cars. Some Cyrstlar's ( sp? ) are having auto transmissions failing under 50k. A lot of the auto's are plunging in quality, very quickly. At the least, quality is falling as quick as the prices rise.

      Delete
    2. Chrysler PT cruiser. I think it's something to do with a bunch of sensors in the auto-trans. They get dirty and the whole thing takes a shit. GF I had years ago had one of those shitmobiles and she was getting a new trans every year under warranty.

      Delete
    3. Even Honda has a dud every once in awhile with new types of transmissions. I guess fifty to seventy years isn't long enough to get it right :)

      Delete
  6. Yep they all have quirks no matter brand or model, cross your fingers like finding a life mate or a mortal enemy as a luck of the draw option.

    Like Any thing take it easy on it as it is a mechanical thing subject to wear and tear and accelerate the service regimens exceeding specs will help.

    Also just the rental car fleet in Vegas will annually cycle through more vehicles into secondary markets than on the roads in elko county. It is sicko metropolis out there.

    Soylent green version of our future, a grounded car will be your pod house out in the dirt somewhere.

    ReplyDelete

COMMENTS HAVE BEEN CLOSED