As we reported last week, a record 7 million Americans have fallen 90 days or more behind on their auto loan payments.
That’s 1 million more than the previous peak in auto loan delinquencies in 2010. But as Wolf Street points out, there is a big difference between then and now.
“Serious auto-loan delinquencies are now on par with Q2 2009 when millions of people had lost their jobs and when the economy was in free-fall. But today unemployment is low and the economy appears to be humming. What gives? “
Currently, there is about $1.3 trillion in auto loans outstanding. Looking at auto loan delinquencies in terms of a percentage of the total outstanding, the number hit 4.5% at the end of 2018. This is the same percentage as in the second quarter of 2009 as the economy was feeling the full effect of the 2008 crash.
Wolf Richter of Wolf Street highlighted some of the reasons for the surge in auto loan delinquencies in a recent episode of the Wolf Street Report.
In the first place, a lot of Americans are struggling with their jobs.
“While the unemployment rate is at around 4% and has been as low as 3.7%, there are many pockets of weakness in the labor market. A lot of people have gig work. A lot of people are underpaid. Their wages have not gone up with inflation. People have been discouraged and they’re not participating in the labor force anymore, and so they don’t show up in unemployment figures. So, there are many weaknesses in this labor market.”
Even so, Richter said it’s still the “cleanest dirty shirt of the labor market” we’ve had in a number of years, so the labor market itself cannot completely explain the surge in auto loan delinquencies.
A second issue is the rapidly rising cost of new cars. The average price of a new vehicle is now around $36,000. This represents a significant increase in the cost of vehicles and there has not been a corresponding rise in wages. Subprime borrowers face a double whammy. They not only have to pay the higher price; they also get hit with a higher interest rate.
A third, and according to Richter probably the most significant issue, is the number of subprime lenders who have plowed into the auto business over the last 10 years. This is an extremely profitable business for the lender, but an extremely risky position for the borrower.
“These are precisely the kind of customers who can’t afford those payments, and cannot afford to make those payments based on high-interest rates, and they can’t even afford that expensive of a car.”
The auto business actually looks a lot like the subprime housing market we saw blow up in the years leading up to the 2008 crash. These companies make risky loans. They use sloppy underwriting techniques. And then they package the loans together in auto loan-backed securities and sell them.
By 2018, the air was coming out of the auto bubble. A number of these specialized subprime auto lenders had already collapsed. Richter said now we’re starting to see many of these companies curtail their lending.
Of course, it’s not just specialized companies making subprime loans. According to Richter, about 25% of the auto loans on the books of big banks are subprime. Credit unions have also gotten into the business.
The big difference between the subprime auto loan market today and the subprime housing market in the years before the crash is one of scale. A collapse in the subprime auto market will cause some pain, but it won’t likely bring down financial institutions.
But that doesn’t mean this isn’t extremely problematic. The real question is how will the looming credit crunch affect the auto industry – an important part of the US economy? Richter says we’re already seeing the impact.
In 2015 and 2016, US automakers experienced record years. Since then, we’ve seen a downturn. As default ratios spike, lenders become more careful and that squeezed more and more potential customers out of the market.
“As auto-loan delinquencies continue to surge, as those losses are spreading, underwriting will continue to tighten and will make it more difficult for an entire layer of customers to buy new vehicles.”
And this is the rosy scenario. The real question is what happens if the economy goes into recession? What happens if we see growing job losses?
This gives us a glimpse of the underlying rot in the US economy. The Federal Reserve flooded the country with easy money. That blew up all kinds of bubbles, including the auto lone bubble. The simple truth is economies built on debt aren’t sustainable.
U.S. Speaker of the House of Representatives Nancy Pelosi attends a news conference following the NATO Parliamentary Assembly in Brussels, Belgium, February 19, 2019. REUTERS/Yves Herman
February 19, 2019
BRUSSELS (Reuters) – A delegation of U.S. lawmakers sought to reassure European allies in Brussels on Tuesday that differences over President Donald Trump’s policies were mere “family squabbles” and transatlantic ties remain strong.
U.S. Speaker of the House Nancy Pelosi cast the visit by a 50-strong delegation to Europe as proof of enduring bonds despite anger in European capitals over what is seen as Trump’s disregard for their interests.
“It is about one word: it is about respect,” Pelosi told reporters, stressing that the delegation was the largest yet to attend the Munich Security conference over the weekend.
Misgivings over Washington’s leadership on foreign policy issues was on full display at the conference of world leaders, with anxiety mounting over division in the West on how to deal with threats ranging from nuclear arms to climate change.
“Like in a family, there are ups and downs,” congressman Eliot Engel, chairman of the foreign affairs committee said. “Things sometimes are bumpy, but they straighten out.”
Referring to unease in transatlantic ties, congressman Gregory Meeks remarked: “We may have a squabble but those squabbles will dissolve.”
The European Union and the United States have traditionally been the closest of allies, working together also via NATO.
Trump, however, has lambasted his European peers for not spending enough on defense, raising doubts among many in Europe about his commitment to the Western military alliance and Europe’s broader security.
Speaking in Brussels, Pelosi pointed to bipartisan support for NATO after the U.S. House of Representatives last month approved legislation aimed at stopping Trump from withdrawing the United States from military alliance.
“I don’t think there is any difference between democrats and republicans on our relationship with NATO,” she said.
(Reporting by Clare Roth and Alissa de Carbonnel, Editing by William Maclean)
The attempted coup against President Trump continues to unfold with more obstructers calling for Trump to be removed from office by his own cabinet.
The latest to do so is former George W. Bush ethics czar Richard Painter, who declared Monday that Trump should be forced to resign because he is “not well”, a long ago worn out tactic that deep staters are now returning to after the Russia witch hunt monumentally failed to turn up anything untoward.
“I think we need to understand, though, why we’re in this situation,” Painter said, speaking about Trump’s national emergency declaration.
“The president is not well at all mentally. I think he’s an extreme narcissist.” Painter added.
“He has been denied what he wants, his wall, and he is having a hissy fit. He is out of control, and he will not take ‘no’ for an answer from Congress.” Painter continued.
“He is going to tear the country apart. It’s unconstitutional. It’s illegal. He is going to do enormous damage to the Republican Party which is going to split right down the middle over this, and we really need to keep in mind that this is because the president is not well,” he added.
The former Bush lawyer said that Trump “is a man who believes Vladimir Putin rather than his own intelligence sources.”
“[Trump] is not capable of doing the job. He does need to be removed under the 25th amendment, but he stocked his cabinet with people who are unwilling to do that, and Congress is apparently unwilling to even try to remove him through impeachment.” Painter also stated.
Painter has repeatedly attacked Trump, even suggesting in 2017, on MSNBC programming, that Trump is engaged in ‘destroying democracy’ via a coup.
“The commander in chief is Donald Trump,” Painter said, adding “There is a risk of him using that power to destroy our democracy, whether you call it a coup or anything else. It’s not from the critics of Donald Trump that the danger is posed, it’s the fact that the man who is commander in chief of our military is engaged in obstruction of justice.”
In addition to Painter, Democratic candidate Elizabeth Warren also called Sunday for the 25th to be invoked, and for Trump to be removed.
The desperate calls for the 25th Amendment to be evoked, and the moves by deep staters to implement such a plot have been a mainstay since Trump was elected over two years ago.
The media has relentless attempted to portray the President as mentally unstable to this end:
The President continues to warn that a coup plot is real:
“The biggest abuse of power and corruption scandal in our history, and it’s much worse than we thought. Andrew McCabe (FBI) admitted to plotting a coup (government overthrow) when he was serving in the FBI, before he was fired for lying & leaking.” @seanhannity @FoxNews Treason!
— Donald J. Trump (@realDonaldTrump) February 19, 2019
“This was an illegal coup attempt on the President of the United States.” Dan Bongino on @foxandfriends True!
— Donald J. Trump (@realDonaldTrump) February 18, 2019
Roger Stone joins Alex Jones to break down the democrats’ plan to unconstitutionally use the 25th Amendment to unjustly remove President Trump, and likely VP Mike Pence as well, from office to place Speaker of the House Nancy Pelosi in the highest seat of the Executive branch of our government.
Democratic California Sen. Kamala Harris stammered when asked by reporters Monday about the recent claims that Jussie Smollett may have staged his alleged attack.
@JussieSmollett is one of the kindest, most gentle human beings I know. I’m praying for his quick recovery. This was an attempted modern day lynching. No one should have to fear for their life because of their sexuality or color of their skin. We must confront this hate,” Harris tweeted on Jan. 29. (RELATED: Here Are All The Politicians Who Rushed To Judgement On The Smollett ‘Hate Crime’)
“Which tweet? What tweet?” Harris asked in response to a reporter’s question about her tweet.
“About saying that it was a modern-day lynching,” a reporter responded. “Jussie Smollett.”
“Okay, so I will say this about that case. I think the facts are still unfolding and I’m very concerned,” Harris answered.
Smollett alleged that two white men attacked him in the middle of the night as he was walking home from a Chicago-area “Subway” restaurant last month. He told police that the men poured a bleach-like substance on him, tied a rope around his neck similar to a noose, and shouted racist and homophobic slurs. Over the past couple days, the police have reported that it appearst that Smollett staged the attack and paid two Nigerian men to attack him. (RELATED: Jussie Smollett On MAGA Hats: ‘I Never Said That!’)
Many other Democrats rushed to support Smollett following the alleged attack. Democratic New Jersey Sen. Cory Booker and Democratic Reps. Maxine Waters of California, Nancy Pelosi of California and Alexandria Ocasio-Cortez of New York, among others, all issued statements condemning the alleged hate crime.
Pelosi deleted her sympathetic tweet about Smollett on Sunday evening.
Source: The Daily Caller
Graeme Gallagher | Contributor
It has been only a month-and-a-half since the start of 2019, yet many Democrats are not off to the best start.
Most recently, “Empire” actor Jussie Smollett has been under fire for his own role in an alleged attack on himself in January. The star first reported that two men beat him, tied a rope around his neck, poured chemicals on him, shouted racist slurs and yelled, “This is MAGA country!” at him in Chicago outside a Subway restaurant. He subsequently walked away from the attack with his sandwich still in hand.
However, a report from two Chicago Police Department sources believed that Smollett paid the two suspects — brothers from Nigeria who also happen to have been extras on “Empire” — to plan the attack. The development has led to increased doubt in Smollett’s case and prominent Democrats to rescind their support of the actor. (RELATED: Pelosi Deletes Sympathetic Tweet For Jussie Smollett)
Another Democrat who has faced a rough start to the year is New York Rep. Alexandria Ocasio-Cortez and her Green New Deal. The bill had a rough start in which her staff’s FAQ of the document did not match up with the bill itself, forcing it to be removed online.
On the Senate side, Massachusetts Sen. Elizabeth Warren has faced criticism for her claims to be Native American. The Democratic presidential candidate has been reported to refer to herself as Native American multiple times. After taking a DNA test, Warren found that she was only 1/1024th Native American and acknowledged that she is not a person of color.
Lastly, all the Democrats from Virginia have had a difficult beginning to the year. A controversial abortion bill paired with two instances of blackface from the governor and attorney general — and then topped with Lieutenant Governor Justin Fairfax being accused of two cases of sexual assault — made the Commonwealth at the center of news recently. (RELATED: GOP Virginia House Speaker Breaks Silence – He Could Be Next Governor)
Which Democrat do you think had the worst start to the year? Vote below.
Source: The Daily Caller
President Donald Trump and his administration believe there are "strong legal grounds" behind the decision to declare the border situation a national emergency and that Trump had the presidential authority to take the action, White House Director of Strategic Communications Mercedes Schlapp said Monday.
"Congress has the statutes and it has been used before over 50 times since 1976," Schlapp told Fox News' "America's Newsroom." "What we're seeing right now at the border is an emergency."
In addition, Border Patrol agents are having difficulty having enough operational support to secure the border, said Schlapp.
Schlapp also commented on Trump's statement at the Rose Garden Friday that he didn't "have to" go the route of a national emergency, saying that he didn't want to choose the route he took.
"He wanted to see if Congress would negotiate a better deal," said Schlapp. "They, of course, fell short with pushing forward $1.375 billion toward the physical barrier. That is better than the zero or less than $1 Speaker (Nancy) Pelosi was willing to offer."
There also are several pots of money the president can start using even while legal challenges mount to his declaration, including from the departments of Treasury and Defense.
"This is an opportunity to really be able to build these physical barriers in much-needed areas," she said. "We can start building immediately and start working with our contractors. The president met last week with the generals from the U.S. Army Corps of Engineers to get the process going. The president wants to move fast."
Source: NewsMax Politics
U.S. Speaker of the House of Representatives Nancy Pelosi is welcomed by European Commission President Jean-Claude Juncker at EU Commission headquarters in Brussels, Belgium, February 18, 2019. REUTERS/Yves Herman
February 18, 2019
BERLIN (Reuters) – U.S. President Donald Trump has promised European Commission President Jean-Claude Juncker that he will not impose additional import tariffs on European cars for the time being, Juncker was quoted in a published interview as saying on Monday.
“Trump gave me his word that there won’t be any car tariffs for the time being. I view this commitment as something you can rely on,” Juncker told the German daily Stuttgarter Zeitung in an interview.
If Trump imposed tariffs on European cars nonetheless, the EU would react immediately and not feel obliged to stick to its promise to buy more soybeans and liquefied gas from the United States, Juncker added.
(Reporting by Michael Nienaber; Editing by Mark Heinrich)
House Speaker Nancy Pelosi deleted her original tweet sympathetic for “Empire” actor and singer Jussie Smollett amid reports that Smollett may have staged the alleged January 29 attack against him.
Smollett claimed to law enforcement he went to a local Chicago Subway eatery at 2 a.m., and he was physically assaulted by two men in ski masks who poured a bleach-like substance on him and tied a rope around his neck like a noose. (RELATED: Here Are All The Politicians Who Rushed To Judgement On The Smollett ‘Hate Crime’)
Smollett, who is gay and black, also told police his attackers yelled racial and homophobic slurs at him as well as told him, “This is MAGA country.”
Politicians and celebrities alike rallied around Smollett, including Pelosi, who tweeted on January 29, “The racist, homophobic attack on [Smollett] is an affront to our humanity. No one should be attacked for who they are or whom they love.”
However, as the case unfolded over the past two weeks more questions arose as to whether Smollett was telling the complete truth about the January 29 incident.
Others have yet to retract their original statements or delete their original tweets, including California Democratic Sen. Kamala Harris and New Jersey Democratic Sen. Corey Booker. Both are running for the Democratic nomination for president.
Booker was asked about the recent developments in the case and would only say he is waiting for more information before he makes any further statements about the matter. (RELATED: Cory Booker Called Smollett ‘Attack’ A ‘Lynching,’ Now He’s Refusing Comment Amid New Evidence In The Case)
According to ABC News, two Nigerian brothers, initially arrested by Chicago Police in connection to the assault against Smollett were later released after telling law enforcement that Smollett paid them to stage the attack.
One of the brothers is Smollett’s personal trainer, according to a statement to ABC News from Smollett’s attorneys. They had decided to cooperate after investigators revealed that they had evidence the brothers had bought the rope that was put around Smollet’s neck at a local hardware store.
Smollett’s attorneys released a statement denying he staged his own attack, saying in part, “As a victim of a hate crime who has cooperated with the police investigation, Jussie Smollett is angered and devastated by recent reports that the perpetrators are individuals he is familiar with. He has now been further victimized by claims attributed to these alleged perpetrators that Jussie played a role in his own attack. Nothing is further from the truth and anyone claiming otherwise is lying.”
Kerry Picket is a host on SiriusXM Patriot 125
Source: The Daily Caller
According to news reports, multiple sources on the Senate Intelligence Committee have indicated that their bipartisan investigation is now winding down, having failed to uncover evidence of any collusion between President Trump’s campaign and the Russian government, despite interviewing 200 witnesses over the past two years.
"If we write a report based upon the facts that we have, then we don’t have anything that would suggest there was collusion by the Trump campaign and Russia,” said Senator Richard Burr, R-N.C., the chairman of the committee, adding that "We know we’re getting to the bottom of the barrel because there are not new questions that we’re searching for answers to.”
Notably, Burr isn’t alone in his convictions. Multiple Senate Democrat investigators also signaled that the probe has failed to uncover any direct evidence of collusion.
The Senate committee’s findings echo the conclusion that was already reached by the House Intelligence Committee, which published a report last year stressing that its own probe “found no evidence that the Trump campaign colluded, coordinated, or conspired with the Russian government.”
Of course, the whole Russia witch hunt was never really about finding evidence of collusion to begin with. For more than two years, the Democrats have milked the unfounded allegations to their political advantage, using them to justify taxpayer-funded investigations that were intended from the start to obstruct President Trump’s policy agenda and bolster the “#resist” movement that was created by Democratic Party leaders.
Unfortunately for America, nothing suggests that the Democrats are done wasting our tax money on frivolous partisan probes just yet — especially now that they control the House of Representatives.
For the current Democratic Party leadership, obstruction comes before justice.
The revelation from the Senate Intelligence Committee, for example, only made the Democrats double down on their collusion talking points and stress that there is no evidence to clear President Trump of any wrongdoing – shifting the burden of proof to the accused and his campaign, upending our presumptions of justice in America.
"We were never going to find a contract signed in blood saying, ‘Hey Vlad, we’re going to collude,’" one Democrat aide told NBC News in an apparent effort to downplay the conclusions of the Senate investigation. Debunked rumor and innuendo have now taken the place of evidence and demonstrable transgressions of law in the realm of the Pelosi Congress.
Meanwhile, Democrats in the House are already preparing to keep the Russia scandal alive even if the Mueller investigation likewise finds no evidence of collusion between Moscow and President Trump’s campaign.
House Intelligence Committee Chairman Adam Schiff, D-Calif., has even raised questions recently about Mueller’s probe, suggesting that the special counsel’s investigation didn’t sufficiently analyze President Trump’s business deals with a German bank.
“If the special counsel hasn’t subpoenaed Deutsche Bank, he can’t be doing much of a money laundering investigation,” Schiff said. And thus, the political retribution continues without the Office of Special Counsel, which was doing great for Schiff as the lead inquisitor – until, that is, it found no collusion. Now, Schiff says, the Special Counsel couldn’t possibly have done the job right if it fails to find collusion.
For the current Democratic Party leadership, obstruction comes before justice — that’s why they refuse to let the presumption of innocence, which has long been a cornerstone of our criminal justice system, apply to President Trump.
The reason there is no evidence of collusion, as President Trump has repeatedly stated, is that no collusion ever took place. How many investigations must reach that same conclusion; how many tens of millions of taxpayer dollars squandered; how many witnesses’ names must be dragged through the mud, only to be ultimately cleared, before the Democrats will accept reality? So long as the Democrats continue to misuse their power to drag out a fruitless investigation at the expense of the American people’s agenda, it will be endless.