If you think this has nothing to do with RE

Was just reading a different news source reporting this. Unemployment at 3.8%, however a large number of people that can't make a basic car payment? What gives? Perhaps just a lot of people getting into car loans / leases they can't afford. It's the underbelly of our consumerist economy, you make 40K-$60k a year and lease a $90,000 car.... Why do it yourself? Perhaps so you can post a picture on Instagram in front of your 325i or x5.

Car sales in China are also falling off a cliff.

I wonder what percentage of these loans would be classified as 'junk' or subprime?

@30 do you read Raoul Pal?

No I don't.
But usually the cycle you see is consumer debt default is followed by mortgage defaults. One of the reasons for the lag is that it takes banks a lot longer to move mortgages which aren't being paid into "actual" than any other for of consumer debt.

Didn't he call Bridgewater a total fraud?

To Keith’s point, average car price is $36k as per below. People are buying too much car or really SUV. I wonder how much of the issue is due to Uber and Lyft as they will show up as individual loans.

https://www.apnews.com/33ea7b9fe25c4a648b53575d7f17c5af

Wealth of data at St Louis Fed website. My go to source.
https://fred.stlouisfed.org/series/DRSFRMACBS

I'm not sure if he said that exactly but he did say something quite controversial, if not silly about Dalio. I've read a few of his articles and follow his tweets, he's also interviewed some pretty interesting people.

This was in all over the news last month. The defaults are highly concentrated in very subprime and young buyers, and over 50% of all auto loans are subprime (I must say, no one in my extended family has ever had a car loan). Most of the defaulted inventory are from 2015-16 vintage loans, so they likely are near maturity. Not saying that I disagree with this as a potential indicator for mortgage defaults, but subprime auto loans typically have 10%+ interest rates, so a default 3-4 years in is not a huge loss. I wholly that they problem is overextension. People are buying cars equal or in excess of their annual pre-tax pay. That is nutty.

Thanks for the insight. I would have thought that some one making less than $75k will only buy a good used Toyota without advanced electronics at $15-20k. But apparently that is not the case.

Auto derivatives will cause the next crash, like real estate derivatives did the last time.

Not student loans?

we still thinking this is a concern? it is very american to be overextended. I am shocked at how quickly the price of cars has risen

The reason I think it's a concern is that for a lot of people once they start walking away from things it is much easier to walk away from other things. Before the 1980s personal Bankruptcy was a huge stigma. Then at some point it seemed everyone was doing it. It became so common they rewrote the bankruptcy laws to start excluding things.

If someone has never walked away from something, the first one is hard. But if someone has recently walked away from a car, they figure their credit is shot anyway, and they are underwater on a house... The decision to walk away becomes much easier.

I can't recall how long ago this was...perhaps 4-6 years ago but certainly a few years after the 2008 collapse- but there were headlines about huge defaults in both auto loans and student loans simultaneously. The market brushed it off. I am not saying this is an irrelevant indicator, as the market can be irrational at times- but this is far from a certainty.

did they bail them out as well?

Nope

Honestly, car loans and student loans are both manageable. What has potential to break the bubble would be corporate debts and shale oil debts

Anton has contracted the dreaded 300 disease -