The Domino Effect

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When most people can’t afford to buy things outright, the cost of money – interest – becomes even more important than the cost of the things themselves.Dominoes falling

For the past eight years, interest rates have been held down to 3 or 4 percent (or even less, in some cases) such that it costs almost nothing to borrow money. The private banking cartel that controls interest rates – the (ahem) “Federal” Reserve – did this to “stimulate” the economy – which is built on debt and people’s ability and willingness to assume it – after the cratering of Wall Street (and with it, everything else) back in ’08.

In particular, two areas of the economy: real estate and the car business. Both have “recovered” – somewhat – as a result of this. But it’s a shaky recovery, not based on underlying strength – which would be characterized by people’s increased ability to afford the things they’re buying. Instead, this is a “recovery” based on the fiction of affordability made possible via the Fed’s policy of effectively “free” loans.

In the case of the car business, longer loans have been the key to maintaining the facade of this Potemkin village on wheels.

By spreading out the payment over six or seven years as opposed to four or five (which was the usual not so very long ago) the cost of buying a new car has been made to seem more manageable. You pay less each month – even though you pay for more months.

But this dodge only works when the cost of the loan – interest – is low.

If it’s high, then the payment is going to be, too.rate hike pic

And with cars – unlike houses – there is a built-in limit to how far out the loan can be stretched as way to tamp down the month-to-month costs down. Eight or nine years is probably the absolute maximum, because cars – unlike houses – always decrease in value over time and because unlike houses, cars are fundamentally throw-aways. Probably 95 percent of all cars made during the 1980s are in junkyards now.

Axiom: The longer you own a car, the less it is worth  The mileage goes up – the value goes down. A car’s value lies chiefly in its newness, which inevitably wanes no matter how little it’s driven or how well cared-for it may be (there are some exceptions, such as exotic and collectible cars; but these are just that – exceptions.)

Let’s run some numbers.

A car you purchased for $30,000 (the average priced paid last year for a new car) will cost you about $416 each month on a 72 month loan, assuming zero percent financing.

But what happens when you’re paying 6 percent interest on the $30k loan? Your payment swells to almost $500 a month. In addition to the $30,000 principle, you’re also paying another $5,797 in interest (see here for actual calculator).

Put another way, the $30,000 car is now a $35,797 car … plus taxes and loan pic

In the past, the payments could be made more manageable by adding another year to the loan. Why can’t it be be done again? See that point above about the built-in time limit for car loans.

You can push a house loan out to 40 years (from the formerly usual 30) because the house stands a decent chance of at least maintaining most of its original value – and a good chance, despite the crappy economy, of appreciating in value. Because it is a durable asset, not a throw-away.

It is extremely rare for any car to retain even half its original value after as little as six or seven years from new. And cars almost never appreciate in value unless they are very rare, exotics or otherwise collectible. Your Camry is not going to be worth more than what you paid for it for ten years from now. You’ll be lucky if it’s still worth a third what you paid for it a decade from now.

And that’s why no lender’s going to push the payment schedule out much farther than the current outer limit of seven years (84 months). Because there is the risk – the probability – that the borrower will find himself owing more on the car than it’s worth long before it’s paid off. That he will be under water.

The temptation – an act of financial self-preservation – will be to cut bait and walk away. Just as so many people did from their homes during the real estate crash.unsold cars

This is why – I believe – we are going to see a car industry crash as a result of the Fed’s decision to begin raising interest rates. Like one of those domino chain-reaction things you see sometimes at the shopping mall, once the first domino (the cost of money) is set in motion, the rest of them falling is just a matter of time.

Car prices are not going to go down.

As a guy who writes reviews about new cars – and so keeps track of what they cost – I will affirm to you that even when a new car is what they call in the business a carryover (i.e., exactly the same car as last year, just a new model year) the price is almost always at least a couple hundred bucks higher, due to inflation mostly. Check Chemist Warehouse Catalogue on Catalogue AU. But even if the price of the car remained exactly the same – even if it went down a little – if interest rates go up significantly, the car is going to cost more.

Since no one has yet figured out a way to keeps cars from losing value the moment they are driven off the dealer’s lot, lenders aren’t going to go stupid and write loans for eight or nine years that put them in certain danger of being left holding the bag when the person decides to let them repo the damned thing rather than keep making payments on it.

You can perhaps see where this is going… .

When new car sales slow, the pressure to make more profit off each sale will increase. Which will drive costs higher.

Or, the car companies could do what Mitsubishi did (zero down, zero percent financing and no payments for a year!) and sell cars at a loss, just to keep the production lines moving. You remember what happened to Mitsubishi…?

It will be like the physical jerks of a corpse subjected to electrical shocks.

It moves, but it’s not really alive. depends on you to keep the wheels turning! The control freaks (Clovers) hate us. Goo-guhl blackballed us.

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  1. And don’t forget there is less & less need to have one’s own vehicle.

    Most of us don’t use a vehicle in our vocation, & most of us live in urban or suburban areas, so services like Uber, Lyft, etc. provide transportation without one having to be stuck with carrying the full cost of a vehicle.

    • As far as I know those new transportation services are only available to those willing to carry tracking and monitoring devices (commonly known as “smart phones”) on their person.

      No thanks. I’m keeping my own vehicle.

  2. Hi Eric, et al,

    What you say about cars is true to a large degree. However, a vehicle’s value for some people relates more to value than age. You state correctly that vehicles are durable consumer goods, but actually so are houses, and any real estate used for residence. Granted that the lifespan for houses is, generally, longer than for vehicles but for longterm ownership of either consumer good, there are overheads to consider. As expensive as vehicles are to maintain, houses are even moreso. So, here’s why the automobile industry is doomed if it needs people like me to sustain it. I would never even consider buying a vehicle newer than say a 2006 or 2007. Those years are borderline too, but they represent the last dying gasp of user serviceable vehicles IMO. They also represent the last point before usage of computers for control became absurd. All of the manufacturers are touting how sophisticated their networked automobiles are and I, as a software designer of thirty years experience, see dramatically increasing potential points of failure as well as potential abuse by the PtB. So, dinosaur that I am, I will rebuild the engine and transmission on my 2002 Tacoma when it hits say 300,000 miles (if that’s even possible by then). Also, as a retiree on a fixed income, I can’t really justify the cost of a new vehicle….damn the new Tacomas are ugly, expensive, too big and just damned useless. When commodities go back up, the people who are plunking down the big bucks for shitty vehicles are going to peak and freak….and then go bankrupt. Pass the popcorn, 2016 looks to be an interesting ride.


  3. There are other questions to consider as well. Some people claim that this country was founded on biblical principles. I am not making an argument pro or con here; but one biblical concept was that loans must be forgiven after 7 years. What would the prices of houses be if the average middle class buyer had to be able to pay it off in 7 years? People have to live somewhere, and people have to sell homes. Have the costs of building materials been inflated to absorb the higher total payment windfall from 15, 20, 30, and now 40 year loans? Would our houses tend to be smaller if 7 year mortgages were the rule? Doesn’t modern mortgage terms contribute to the false economy?
    What would interest rates be if the banks could only loan the money that savers had in their accounts dollar to dollar? The banks now ‘create’ 9 new dollars for every dollar they are holding in client savings accounts. Would not savers be earning more interest from their savings accounts if fractional reserve banking practices were ended and the banks could only lend the money that they actually had? Fractional reserve banking clearly contributes to the false economy and to the boom bust cycle.

      • Pope Benedict XIV promulgated Vix pervenit in 1745.

        Vix pervenit: On Usury and Other Dishonest Profit was an encyclical, promulgated by Pope Benedict XIV on November 1, 1745, which condemned the practice of charging interest on loans as usury.

        The Holy Office applied the encyclical to the whole of the Roman Catholic Church on July 29, 1836, during the reign of Pope Gregory XVI.

        The encyclical codified Church teachings which date back to early ecumenical councils, at a time when scholastic philosophy (which did not regard money as a productive input) was increasingly coming into conflict with capitalism.

        Though never formally retracted, the encyclical’s relevance has faded as the Roman Catholic Church retreated from actively enforcing its social teachings in the financial sphere, and as the practice of charging interest on loans became very widely accepted, at least in the Western world.

        Vix Pervenit

    • Top shelf comment. 🙂

      I definitely would encourage more saving. It would also encourage people to really think through (as much as possible) spending money on different ventures.

  4. The way to have invested (and not lost) savings over the last 40 or so years has been to put 25% each of your money into gold, cash(money market), long term treasury bonds, and the stock market(via either SPY, QQQ, or DIA), and re-adjusted when gets 10% out of balance. Doing this has averaged 8-9% a year for last 40 years. Who knows if that will continue, but it has been a good track record.
    I think I did well(lucked out) with my last car purchase – found a guy selling a black 2013 Ford Focus SE hatchback he purchased new(with the bonus that he had the dealer put a sub-woofer in it, so the sound system is really good). The car was 15 months old with 11,915 miles, not a scratch, and 21 more months of factory warranty. Got it for $14K plus about $738 for tax title and license. It is a little small, but being a hatchback I can carry some somewhat big things (I do not understand why people buy cars with trunks, when you have so much more flexibility with a hatchback), and I get over 35mpg if I hyper-mile, which leads me to another idea – instead of the stupid idea of turning cars off at red lights, then immediately turning them back when the accelerator is pressed, what they need to do is when you take your foot off the accelerator the car should immediately shift into neutral then shift back into gear when you put your foot back on the gas.

  5. Somehow I cannot see how the prices on pickups became as high as they are unless its all because of the popularity.Quite frankly, in my opinion, unless you really need one for construction, farming or hauling anything less than a Titan rocket booster, the idea of owning one seem ludicrous. I see it as in some cases and ego or testosterone booster.
    Half the time I can’t see around a pickup parked next to me. I own a Town and Country and though that would be enough. Yes I use it for everything from hauling my R/C planes to and from the flying field to drywall, 2X4s, paneling and anything else I can get into it.
    I like this one…except the rear window defogger quit working and I have no idea which of the dozen or so relays in the IPB is the one for that purpose.

    • I live my life in big trucks for the most part and pickups for the rest. Some friends were speaking of winning the powerball lotto a few years back when it was the first of being in the hundreds of millions.

      One said he’d buy the most expensive pickup to be found among other things. OTOH, I said I’d never touch another pickup again if I had that sort of money. Go fishing, I’ll meet the boat owner(won’t own another boat either)at the ramp after being deposited there by a good driver in a doubly comfortable car.

      I would definitely own and work on an extremely hot sports car. I don’t expect it to be comfy or “nice”.

    • the reason pickups are so pricey these days is because they are no longer basic work tools. I know one guy is still driving the ’72 or so Ford F 150, 4WD (basic mechanical shift type, not some critter that thinks for you), four speed manual trans, bench front seat… he’s been a contractor since he bought it new. I redid the 300 inch six, perhaps one of the most bullet proof gasoline engines ever. UPS used them for years…. 4 or 500 K on them was typical. Had to replace the tailboard,m combination of rust/rot and too many compactor plates, 12 ton hydraulic jacks, loads of six inch spalls, etc, dumped on it, not to mention a couple of experiences being backed into a post or some such with the board down. Found one at the knacker’s yard, darker blue, for fifty bucks and put it on for him. It closes and works.

      Another friend of mine recently bought one of the current model F 150 Toy Trucks… 350 HP overhead cam V8, surroing sound system, nav station, backup video, posh bucket seats, mag wheels at what must be $400 per corner, sohpisticated electronically controlled traction and stability system, massive tyres at probably $300 per…..

      I bought my E 350 Powerstroke at eight years and 130K miles for welll under one third the new price. I’ve had it 11 years, put almost 200K on it, spent almost nothing. Time for a turbo bearing and seal kit, my cost $150 and maybe four hours time. Original trans, engine, nothing touched. A few peripherals, and tyres and brakes. First pair of Toyos I put on the back lasted about 100K. I have worked rthat thing HARD… no, harder than that. For a time I regularly had 16K lbs hanging off the ball, long mountain passes, freeway, etc. get about 17 mpg light (weight at 8K lbs) and down as far as 14 with scaled GVW at 26,700 on an interstate trip. I am thinking it might be time to see about a set of injectors for it…. the originals don’t quite seem to be adequately distributing the fuel for best economy. Last I checked, Ford want $60 K for a new one, and had stopped putting the Powerstroke in the 350 window vans.. cargo, yes, not window. I will probably drive this till the engine gets too tired to continue, then rebuild it. My cost maybe $4K? If it goes another 300 K I’ll maybe be done with it by then.

      • “I redid the 300 inch six, perhaps one of the most bullet proof gasoline engines ever.”

        That’s what I’m thinking of getting for my bump, a ’68 Ranger F250 Camper Special. It has the original 360, which has been reliable, but is ready for an overhaul.

      • In re:

        “surround sound system, nav station, backup video, posh bucket seats, mag wheels at what must be $400 per corner, sophisticated electronically controlled traction and stability system, massive tyres at probably $300 per…..”

        centrifugal bumbelppuppy and electromagnetic golf come to mind…

  6. Real estate definitely can lose value. Just look at Detroit.

    The problem with extreme financing is that the salesmen are trained to sell the monthly rate, not the cost of the loan or even the price of the car. Most people have a hard time ingesting a number like $40,000 for a vehicle, so the salesman will spin it as “only” $350 a month. Well, most of us looking at a $40K vehicle have a good enough job(s) to be able to fork over $350 a month, so it’s much easier to visualize yourself enjoying your vehicle. But now you’re locked into a job that requires you to maintain that income level. So that means your employer can run sociological tests on you like rearranging the department every few months or so, shifting managers to new locations or roles, and generally changing your job description on a whim. All you can do is suck it up and live with it.

    If you buy a lottery ticket you’re considered a sucker, but if you bet that you’ll still love your job in 6 years by financing a vehicle for 7 years, you’re just an average American.

    • I’ve amazed a few loan officers by asking them to run the calcs for total cost over the life of the loan at various down payments and time to term and interest rates. IHad one guy who;’d been doing that business for years tell me I was the first one EVER to ask him to do that. NO ONE else had ever stopped to calculate it out before making the decision on the financing.

  7. Eric,

    Regarding your statement that new car prices will rise when interest rates rise is false. I know for a fact manufacturers have huge margins on new vehicles and are taking advantage of the current system.

    The 2016 F150 (2.7 ecoboost) comes standard with a trailer hitch, trailer wiring l tow 5k lbs.

    • Sorry my comment got cut off….

      The only difference between the standard towing equipment and the $900 “pro trailer tow package” is a trans cooler, upgraded swaybar and the stupid pro backup assist knob. A quick Google search shows that trans cooler kits run about $40 bucks (retail). Add in the sway bar (at Ford’s supplier pricing) and that $900 package costs them 50-100 bucks max.

      If the credit tightens up car prices will crash back down to what the market can support. Automakers will have to slash prices accordingly or they wont sell cars. The markup is there to easily sustain a 40-50% price cut off most vehicles.

      • When interest rates have gone up, historically dealers have put fewer new cars on the lots and prices have gone up. They make the switch from “volume” to “boutique” sales and prices climb.

        I recognize that I am one of a relatively small minority that fails to see the point in going into that kind of debt for what amounts to an inferior product. As I pointed out previously, the $9995 I paid for my F150 NEW in 1996 works out to just under $16,000 in 2015 dollars. A similarly equipped 2015 F150 comes out at $35,000 sticker. How exactly do we justify this? A $20K upcharge for inferior construction with a bunch of electronics that might have an L50 life of 5 years? (L50 is lifespan before 50% failure).

        The automakers are going to put themselves out of business by listening to beancounters, technology dweebs and safety “experts” while ignoring not only the end user, but purchasing ability as well. When I bought my last new car, I did so with cash that I had ratholed from bonuses for a couple of years. That is not possible anymore, with banks taking ever bigger bites of the pie across longer time periods. Throw in the increased costs of service after the warranty period expires, and the fact that your warranty is liable to be over BEFORE you’ve got a free and clear pink slip in your hands and you’ve got a business model that is in no way sustainable. You aren’t going to be buying a new ride when you are still paying off the payday loans that you took out to fix the last one. If I’m paying on something for 7 years, it had damned well better last long enough to qualify for historic preservation grants.

        I know more than a few people who are so horribly upside down on their car loans that there is really no way out. I prefer turning a few wrenches now and then and saving my money to retire on.

  8. 25% of new cars are leased, 65% are financed. Leases average 40 months, financing average 65 months; unfortunately I can not find recent data for the means. One out of every ten new automobiles are purchased outright, only half of the used market are cash purchases. Leasers will continue to lease and borrowers continue to borrow, rolling ever increasing debt into perpetuity. That’s a bubble.

    Proof that real estate is a depreciating asset. Do no maintenance, repairs, or upgrades over time and see what happens. Better yet, neglect to pay property taxes.


    • We are the 10% that pay cash incl a trade in on a new car every five years (Hyundai and Kia (all we drive now days) have 5 yr warr. 10 yr on drive train) Others as you said, either finance or lease. Only way to finance like I did is when they started the 0% is buy at 0%. Eric: we quit Sam’s because the newer cars require “top tier” gas like Shell, Texaco, name brand gas. Can you do an article about direct injection requiring top tier gas? New gov. standards require cars have dir. inj. on new cars which drive up price. People need to know to stay away from off brand gas with cars w/ dir. injection .

  9. In 2001 I was hosting a news/talk radio morning show. I had Jeff Gilbert on who covered the auto industry for CBS radio at the time. We were talking about the North American Auto Show and the direction of the industry in light of the recent dot com collapse.

    Jeff repeated what a major auto exec told him, that in the industry, “we have profitless prosperity”. A cold chill ran down my spine. Now they can’t even make money on the loans.

    It has to implode, because no matter how big you build it, every house of cards does.

  10. What about the influence of currency exchange rates in the price change during “carryover”?

    VW , minus the bullshit diesel scandal, of course, could possibly have a lower carryover price next year due to EUR weakness relative to USD, yes?

    • “What about the influence of currency exchange rates in the price change during ‘carryover’?”
      Given that most cars now sold here are built here, I doubt currency exchange rates come into play. If we were still dealing with ‘imports’ that might be different.

  11. I’ve asked myself, what’s the end game. I see it. It’s complete hand-to-mouth slavery through financial bondage. No savings, just consumption and debt service. No building of capital.

    It’s now time for the bust phase. To collect the winnings, but negative interest rates are needed for the long term plan. Each cycle of boom and bust concentrates wealth in smaller and smaller hands. Once small enough the plug is pulled for good.

    • And also to keep you working, paying income taxes, paying into the insurance mafia, paying for lost time and using up the best years of your life to keep the machine running. If you don’t have debt that’s one less monthly bill you have to pay, one fewer reason to have to play the game.

      • This is why one of the strategies I’m trying to implement into my life is minimalism. Yeah I’ll always have to play the game, but hopefully I’ll be able to play it less.

        • Good strategy, Brandonjin. It’s worked well for me. I’ve never bought a new car. I’ve never committed to a 30 year mortgage. Right now, I’m debt free. I haven’t had a job in over 20 years and that’s the reward for being minimalist, or frugal which describes my situation better.

          • We bought our house in ’85 at the astounding rate of 14.6% due to the RR voodoo economics plan of trickle down economy. It felt like trickle down my back or just pissing down my back and telling me it’s raining. We paid it off in 15 years. I got close to a new pickup, a demonstrator with full warranty and extended warranty for really cheap. The vehicle before, a six month old El Camino was bought and paid for in 6 months. Oh wait, I did buy a new Suzuki GSL 1000 and paid cash for it, rode it a couple years and sold it for almost what I gave for it and bought another pickup. We seemed to never have enough pickups but they aren’t pavement queens.

            When I bought the demonstrator and the 5 year warranty that had me paying nothing for any repair, I was asked by the salesman, a bit incredulously, why I’d pay $500 for an extended warranty. I told him “Because I’m going to work this pickup into the ground”. My first warranty item, a front end half shaft replacement was a $500 repair. I made my warranty back on the first thing that broke. It was first in a long line. I was looking for a piece of sheet metal a few days ago to use for a big rig repair. I found the crumpled transfer case protector off that pickup and it was too bent to use. Tree stumps do that.

          • Wow Ed. No job in 20 years? That is impressive. I’d love to have a conversation about that. As I mentioned somewhere else, I’m trying to find alternate forms of income and somewhere better to put my money.

            Plus, there has got to be a better lifestyle than working 40 hours or more a week, five days a week, for the rest of my life. I’m on autopilot and don’t even know what I’m saving for.

            • Brandojin, I don’t have a clue about your life but I can tell you what you’re saving for…….the ability to do something else if/when the opportunity comes along.

              I work as an employee for one of the few times in my life. If the govt. hadn’t robbed us, we’d be easing along, not breaking any records but making it fine……or not so fine(I can’t control the world)…..but whatever. I’ve had few jobs as an employee. Our sin against “the state” was an unforgivable one…..I didn’t go to work every day as in I didn’t leave the house. It was common for me to do research 20 hours a day trading stocks, and learning the in’s and out’s of the business. I wasn’t doing great but was getting close to investing in funds that guaranteed large profits and required at least 6 figure sums, something I was capable of by putting in too much in my opinion. Never invest more than you can stand to lose. I lost a bit now and then but mostly made good money and tried my best to invest more than I could afford to lose. As an old friend(deceased cousin, not of recent though)put it, since he did the same thing too in another field, living close to the edge. We did a lot of thinking about our money and how much we could make with a certain investment and if we lost it all, how much we could recuperate from. There was nothing illegal happening. But in this country, a guy who trades livestock, construction company and other things can’t turn to stock trading without going to some nearby town and bs’ing with the locals so they’d know just what you do.

              Freedom? Don’t make me laugh.

            • “Plus, there has got to be a better lifestyle than working 40 hours or more a week, five days a week, for the rest of my life.”

              Not holding a job for 20 years just meant that I often worked 84 hours in 7 days, at times. Being my own boss, I would sometimes push myself harder than I would have allowed any employer to push me. I realized that “employed” means “used”. Who wants to be used by another person or group of people?

              Before the wreck, I took two holidays a year, Christmas day and Easter Sunday, no vacations, for 20 years. Even now, being pretty crippled up, I have no plan for retiring. Doing nothing doesn’t appeal to me.

              You’ll do well, Brandon.

    • Brent, don’t remember who, maybe Heinlein, that wrote a book about the future where, at a certain age, you are kicked out into the world with a finite amount of chits, held by the ultimate authority. If you go broke, you’re terminated. It’s very close to what we now have. I guess some can(obviously)stand to be on the dole. I fully expect to die working, well, I hope so anyway. The alternative isn’t my cup of tea or is simply a pipe dream.

      • I am not sure how the end game will turn out but who gets medical care will be determined by productivity value. No matter how many ‘chits’ were used up a person who produced millions of dollars for the corporate system would not be terminated. Now someone who was a net drain would be. People don’t study, they don’t learn. They think they can be lazy and get free stuff without a cost. They don’t see how they are being lured into a trap. They don’t study obscure topics like 1930s eugenics to see what the game really is. Some writers put it into novels, science fiction and otherwise, and they still don’t see it.

        There’s a huge message in Star Wars and most people don’t get it. I watch the Twilight Zone and the messages were put in it to get past censors. So clear a moron should get it, but most people are like the censors, they didn’t see it.

        so it goes, po-tee-weet.

        • I miss Kurt on a regular basis. I almost grabbed Galapagos recently to keep it planted in my old brain. Ah well, it’s just sitting there waiting. I think I’ll look for some Carl Hiassen for entertainment though.

  12. Honestly, I’m surprised that we haven’t seen more uproar yet with the industry’s lack of a spine causing the most reliable consumers (the working class) to be effectively priced out of the market. Not to mention that in many ways, they are expecting us to go into debt for what amounts to an inferior product.

    I’ve been recently coming to accept the fact that my old Ford is not immortal (1996 F150 – $9995 NEW off the lot, equivalent to just under $16 grand today). A similarly equipped 2015 (2WD V6 XLT) comes in at $35,000 from the same dealership. Do I see a major inconsistency here? Close to $20K for unnecessary crap added by government diktat? Sorry, Ford. In spite of all the pointless crap the new one has, I’ll stick with my old ride for now and I’ll cruise the retirement communities with cash in hand looking for the right low mile creampuff. As an aside, I kind of got in an argument with the salesman who was telling me how great the new “Pro Trailer Backup Assist” feature is. After explaining to him that the ability to back a trailer without help was a prerequisite to procuring the Class A CDL that he insisted on holding in his hot little hands during the test drive, I let him know that I’ve been backing trailers without help since I was around 10, I was politely informed that I was hopelessly behind the times.

    I guess I can live with that assessment. As I walked away, I asked if they were aware that Henry Ford was rolling over in his grave, and not one indicated that they remotely understood why. Apparently Henry’s vision of a car that the working class could afford has also been relegated to history.

    When it finally does implode, let’s hope that there are still some Henry Fords, John Deloreans and Preston Tuckers ready to step up and build what people want.

    • With you, El Guapo…

      True Story: About a year ago, I attended a press “ride and drive” for the new Ford Edge. At one point, they – the Ford people – herded us over to demonstrated the new parallel and perpendicular park assist. I just stood there, looking depressed. A Ford guy came over and asked me if I wanted to try it out. I told him no. That it made my teeth hurt…

      • The reliance on computerized gizmos to do virtually everything really concerns me.

        If you don’t enjoy the actual act of DRIVING, and need a computer to do it for you, you should probably look into the many mass transit options available, or perhaps invest in a bicycle and/or some quality walking shoes.

        Hell, when I need to decompress, nothing does it like a cruise up the mountain with the windows down, no radio on, manual transmission and no distractions.

        • EG, you sound a great deal like me in that you groove on the gears. I’m an ex-screaming meme owning/driving person and a gearhead every day putting in my 5-700 mile days doing heavy hauls.

          The main lesson I learned early: You don’t get paid til the job is done.

          I wouldn’t have it any other way since the exception will always be a way to defraud you.

      • Just a note Eric, some financial folks are trying to do the 10 year car financing plan by making the buyer purchase insurance (called GAP) against vehicle loss and the value being paid by the accident insurance being insufficient to cover the note. This does substantially add to the cost of the vehicle and does not cover for a walk away situation. Locally our Ford dealership is coming off of a third year of the lowest sales (numbers of vehicles) in their 40 year history. I think you pegged it. They are dying.

      • Friend of mine got a new Avalanche a few years back… one of the first “trucks” with a back up camera. Sometime in the first few months he’d had it, he backed into the side of hiw Wife’s brand new Suburban…. did about $3K worth to the left rear door and quarter. fat lot of good it did. He’d probably have done better without it, because then he would have HAD to figure out where the “Burb was… and would have known. His reliance on the machine bit him. He really felt like an arse chatting up the insurance people after that one….

        • Hi Tionico,

          I purposefully ignore the cameras. I use my eyes and my head and my sense of spatial relationships. Using a back-up camera is like having someone else run a 5k for you and then pretending you did.

          • eric, first use of one I had to get out, line up on the vehicle and prove to myself the pic was accurate with the way it was pointed and the way the front tires were turned. It was. I was impressed and thought how much more use I’d get out of it on the back of a big rig.

            Backing around a 40 bbl tank on the drivers side and a 15″ high pressure gas line on the other with the gas line turning at some point so you’re backing up to it, that cam would be the nads. I detest having a spotter who doesn’t drive a truck help me. They’ll have you come on back oblivious to many other things. Come on back they motion meanwhile you know the tractor and front of the trailer are going to run over something quite possibly lethal to a lot of people.

            On a job one day this poor driver has two guys “helping” him and manages to run right over the very thing he needed help around. Everybody got a drug test right there. The driver only needed a test to understand why he would rely on spotters who don’t savvy trucks. He probably spent the night reliving it and asking “why didn’t I keep getting out and doing a walk-around?…..never again, never again”.

            • I experience the same thing Eightsouthman. Frack sand haulers have to back up to sand movers or castles located at the usually under-sized well-sites. You are supposed to do EXACTLY what the ground guide tells you, but experience has lead me to look into my mirrors and to ‘adjust’ the directions given to me. Many guides are OK with that, but some will get hopping mad at me for doing that even though I WOULD have had my right mirror collide with the driver mirror of the truck parked beside my spot. They sometimes do not care that you cannot fully open your door, or squeeze your body between trailers to make connections either.

              • Brian, it’s a good thing it hasn’t happened to me, an ass-chewing for not being where I was supposed to be. I know what you speak of, they get every truck closer than safety allows, often closer than contact allows. I don’t play that game, learned it from my oldest uncle who would threaten those who’d dent his trailer or scratch the paint. He was correct too. They don’t have to pay for that and deal with another trucker whose rig you impacted. The only rig to rig impact I’ve had in my life is when the sand frac truck ran over me.

                That crap of standing on one side and telling you to come on back is good only as long as you can see every side. They get pissed when I get out and walk around it and see I am, just as I expected, way too close to something.
                Just don’t take a spotters word for it. Once the damage is done, they’ll just walk away and you’ll be on the hook for the entire thing. It’s like getting DOT tickets. It goes on your record but it’s not your rig and you have no say in the shape it’s in except you “choose” to operate it that way. Of course the alternative as you well know is looking for another job, one that won’t hold that infraction”s” against you. Probably nobody but you and I would believe you can be backing into another trucks mirror and not see it til it’s in your side window or your mirror, physically.

  13. Imagine if one could actually buy the car they wanted to buy. Possibly minus the many thousands of dollars of added cost for guvment mandated add-ons. Lower price, lower payments, affordable.

    Also, you didn’t mention the ‘lease’ in the article. The long-term rental is often how folks get a vehicle they could never actually afford to buy. I suppose lease rates will go up along with interest rates.

    • Windplr,

      They may say I’m a dreamer.
      But I’m not the only one

      It is possible to get a vehicle with
      good mpg (at least 30mpg combined)
      room for 5
      reasonably safe
      reliable (at least 200k with regular maintenance)

      One example (Although I do not prefer SUVs)
      ~260 000 Rupees == under $5 000 USD

      What causes the difference in price from something like the kwid compared to most small cars available in the us?

      • if yu really think Renault build a car you should own, perhaps I could interest you in favourable pricing on my et chicken… she can fly to the moon and back in two weeks.

        I learned all I ever needed to know about Renault when I lived and worked in British Columbia. After the third one, I vowed never to touch another. They are insane. Dealer support is a joke. Quality control makes their dealer network out to be absolute genius…… Nope. Dem frogies can KEEP their steenkeeng “ren-oh’s”

        • Tionico,

          I cannot speak about your experience. My (limited) experience with Renault is the 2CV. A fun small car, that is easy for me to work without special equipment.

          I enjoyed the car. Not perfect, but good for A to B transportation.

          The main point is that cars could be much more affordable than they currently are today.

    • I’d take Jerry Titus’ Cheetah Chevy just for a grocery car. Go for a gallon of whole milk, get back with some creme and half and half.

  14. Basing the entire economy on debt seems flat-out wrong to me. I was raised by parents who lived through the Great Depression and retain some of their economic habits, such as staying out of debt. I can’t claim to have done this 100% but can say that I have not taken out any type of credit or loan in about 35 years now. I don’t know and don’t care what my “credit rating” is. The banksters and their pet politicians can go pound sand as far as I’m concerned.

    The chickens will come home to roost on the phony prosperity most people are riding and it’s going to be a rough ride when that happens.

  15. “the house stands a decent chance of at least maintaining most of its original value”
    Well, at least in nominal (FRN) terms. But real estate depreciates too. If not, the IRS code would not allow depreciation to be taken on ‘income’ property.
    To quote the Mogambo Guru, ‘We are all freakin’ doomed!’

    • Another thing affecting pickup price is everybody, no matter if they never intend to use that bed(and we see smaller and smaller beds but larger cabs, and Ford now has a bed so small a couple coolers is all it will hold)has to have a pickup. I guess it’s because pickups are such great handling things. One thing I hear a lot from women “I want to see over the cars” and that’s just dandy on the face of it but there are virtually no cars in this state and the pickups are ever taller so aftermarket parts to make them ever taller than the ever taller stock models, sell like hotcakes. Now the hot item is a dually(no matter if like the Dodge, the bed is just an afterthought, tiny thing it is)with 4WD and huge wheels and tires front and rear. So a 3500 looks more like a 5500…..only taller and wider(gotta have the rear taller to clear those duals that now won’t fit UNDER the fenders. I have hell getting into some of them and can’t get into some. At least big rigs still have steps.

      In the last several months I have noticed, on one particular highway, an older Peterbilt with a headache rack that looks like it’s set up to be an oilfield type truck but with 22.5 tires. I noticed it the first time since it has new paint and looks great. It’s a very short wheel base for a long nose Pete, just what you need for some things but rarely seen in this short of a wheel base plus full rear fenders. I have seen it enough times now, no grease on the fifth wheel, nothing in the headache rack and not a scratch on it that the last few times I notice more detail and have finally figured out somebody is simply using it as a car. I wish I had the tax write-off to be able to do it myself since it’s probably insured for only liability and is worth nothing at the tax office and probably gets about the same mileage as the jacked up pickups. Pickup tires will wear out and are expensive to replace. I doubt these tires will ever wear out and neither will the brakes. It’s a real curiosity piece. If I ever meet it in a vehicle I can whip around and follow it, I will, just to see where they go and who it is.

  16. Of course, it doesn’t end here. When the auto industry crashes, it will have a major “domino effect” on our whole economy.

    And when the interest rates go up, the housing market will probably crash too.

    Eric, I know you hate seatbelts. But speaking metaphorically, I just gotta say that it’s time to…….



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