The fact that only 20% of the 9.7 million vehicles sold this year have been small cars and the average sales price of new cars sold is now $31,000 proves Americans are still living in a delusional fantasyland of cheap gas and monthly payments for eternity.
As gas prices surpass $4 per gallon across the country, somehow 4.7 million of the 9.7 million vehicles sold in 2012 have been pickups, vans, crossovers or SUVs. Three of the top eight selling vehicles are pickups. Luxury vehicle sales are booming, with Mercedes, BMW, Porsche, Land Rover and Audi showing double digit percentage sales gains over 2011. We’ve entered a recession, gas prices are approaching all-time highs, job growth is pitiful, and Americans continue to buy luxury gas guzzlers on credit. This will surely end well.
Offers of 7 year financing at 0% interest and monthly lease offers of $150 to $200 for brand new cars now are understandable. The newer model BMWs, Cadillac Escalades, Volvos, and Jaguars I see parked in front of the low income luxury gated townhome community in West Philadelphia now makes sense. A pizza delivery guy driving a new Lexus is now explainable.
Full article (‘Subprime auto nation’) here.
Swaminathan Aiyar’s piece on ‘Better Economics’ makes interesting reading. But, there is no better economics that is out there. This is all there is to economics. All we can ask for is for humbler economists.
Two + trillion US dollars of asset purchases by the Federal Reserve has not really helped. They are going to try more. Will they? We will know shortly. The full census bureau report is here. I am yet to go through it.
You can be optimistic or pessimistic about the outcomes, but you can’t speak of the China or, by implication Asia, miracle nowadays, without considering the chances of successful political and institutional reforms. More to the point, perhaps, what would the consequences be for China if, for existential reasons, the CPC wasn’t willing or able to go down this path?
Very well put by George Magnus of UBS in his new report, ‘Asia: is the miracle over?’. A brief blog post on that is here. I think the answer to the question is YES. According to work by Angus Maddison, China and India dominated the global GDP league tables up to around 1820. The baton has been passed on. I doubt if it would return to Asia soon.
A non-executive director at ICBC (China) writes on the end of good times for China banks. Couple of interesting statistics.
A Caixin edit (I think) asks governments in China – local and federal – to learn to live with and in hard times.
If Ben Bernanke did not read Ruchir Sharma, it is even less possible that he read Rajeev Mantri and Harsh Gupta in MINT. Now, we know that he did not read any of them nor, of course, Baretalk.
We have now learnt that the Federal Reserve would buy more mortgage backed securities (40 billion dollars per month), has determined that accommodative monetary policy would be warranted well after economic recovery strengthens and that zero to 0.25% interest rates would be maintained well into 2015. Markets would have been happier with 60 billion dollars per month of asset purchases but they would take this.
More pizza delivery on Lexus now!
In an action packed Thursday night, the Government of India announced an increase in the price of diesel by 5.0 Rupees per litre and limited subsidised cooking gas to six cylinders per customer per year. These are good decisions – overdue but incomplete. Under-recovery from diesel will still remain big. We have to wait and see if Congress’ ‘allies’ will let the measures go through.