The NY Times today has an excellent article that starts: Ben Bernanke, meet Gary Crittenden. While you’re easing credit, he is tightening it.” In two brief sentences the writer (Floyd Norris) speaks volumes: Gary Crittenden is Citigroup’s CFO, who just told analysts the largest bank in the US is reducing consumer lending and raising interest rates. Asked whether credit card lending was an area where Citi might want to “pull back or increase pricing,” he responded, “All of the above.” Mortgage lending is also being cut.
That’s what a credit crunch looks like, in the ground: lenders working to repair damaged balance sheets end up throwing monkey wrenches into the Fed’s “printing press”. And that’s also how economies slide to the bottom of a liquidity trap, staring in frustration at a useless ZIRP .
Daily Archives: January 16, 2008
The Dealer Made Me Do It
First off, I’m not excusing auto dealers. Or lenders.
They have a moral and business responsibility to try to stop their customers from doing something stupid, such as buying a vehicle with a sticker price that will stick them with an oppressive debt.
But customers have responsibilities, too. It is their purchase, their money and their car payments. It is up to them, more than anyone else, to know their financial limitations and not cross them.
Yet, so many consumers today buy too much vehicle. Then, when the financial squeeze becomes eye-popping, they look for someone to blame. The dealership and lender make nice targets. Seldom do the debt-ridden blame themselves.
I pondered that while reading a Los Angeles Times article headlined, “New Cars That Are Fully Loaded – With Debt.”
The story tells how some Americans of average means roll over an existing loan on an expensive vehicle in order to get another expensive vehicle. They end up with two loans in one, when they couldn’t afford one.
From the LA Times article:
Americans haven’t just been taking out risky mortgages for homes in the last few years; they’ve also been signing larger automobile loans for significantly longer terms than they used to.
As a result, people are slipping into a perpetual cycle of automobile debt that experts think could lead to a new credit crunch extending from dealerships to driveways and all the way to Wall Street.
GPS Liability?
In early January accident, a California computer technician turned his rental car onto some train tracks in New York per the directions of his sat nav system. The car became stuck and he had to abandon it before an oncoming train hit it. There were no injuries, but there were significant delays in travel. “The rental car driver was issued a summons and is being held liable for the damage to the train and track.”
That leads a real live lawyer, Eric J. Sinrod, writing at c|net to examine the potential of a driver to point to the GPS manufacturer as being at fault. The article points out:
A History of the Packers vs. Giants
It was the day before New Year’s Eve, and New Yorkers were leaving the city in droves. Not to escape Times Square celebrations, but to watch the N.F.L. championship game.
Roughly 45 years ago, on Dec. 30, 1962, the Yankee Stadium championship rematch between the Giants and the Green Bay Packers was blacked out on local television sets. Enterprising fans fled to southern New Jersey, searching for the broadcast from Philadelphia, or to the north to receive the signal from Hartford.
Those who succeeded watched a pivotal piece of American sports history. The N.F.L. might have first grabbed the public’s attention in the late 1950s, but it needed celebrity, personality and recurring characters for its Sunday gridiron theater.
The 1961 and 1962 N.F.L. championship games, each ending with a Green Bay victory over the Giants, had it all. Born on those afternoons was pro football’s first televised dynasty with Vince Lombardi as king, Paul Hornung as prince and Bart Starr as trusted knight. And although the Giants were twice defeated, by 37-0 in 1961 and by 16-7 the next year, they were the franchise that brought an eminence to the clashes. The Giants were established N.F.L. royalty, having played for the championship three times in the previous five years. They would play for it again in 1963.