Population Statistic: Read. React. Repeat.
Sunday, December 30, 2020

fade to orange
Since this likely will be the last time I get to post this vintage Tampa Bay Bucs creamsicle-orange uniform photo of Vinny Testaverde, I’m going take it. Because today’s otherwise meaningless season finale between the Buccaneers and Carolina Panthers at Tampa marked the quarterback’s official retirement from the NFL after 21 years.

It’s too bad the only signifier for it was Carolina sending Vinny in for the final kneel-down to end the game. Given that the site was the same city where he began his career in 1987, I was hoping for something more. If not actual game action for Vinny, then the Bucs should have hauled out some vintage Florida orange, Bucco Bruce-emblazoned uniforms to wear in honor of the occasion.

by Costa Tsiokos, Sun 12/30/2007 10:52:05 PM
Category: Florida Livin', Football
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To go along with the tricky financing required for all those supersized mortgages that are now imploding, millions of Americans also have been setting themselves up for heavy debt-loads to buy more car than they can afford:

The longer loans are directly related to the higher balances. By extending the length of loans, lenders keep monthly payments down. But because these loans take longer to pay off, a much larger piece of the principal remains unpaid at the time the car is traded in.

The response of the automotive finance industry? Extend loans further and allow the indebted customer to roll what he owes into a new loan with little, if any, effect on his new monthly payment. In effect, the driver is paying a loan on two — or more — cars at once.

Basically, it’s a cycle that means you never are without a monthly car-loan payment. When I needed to own a car, I remember that you looked forward to finally paying the car off, so that you had at least a year or two car-payment free before getting on the new-car carousel again. Looks like that’s out the window these days.

Instead, we’re left with a perpetual payment model that carries a timebomb of macro-economic proportions. The scenario is certainly dire enough:

It’s not just individual consumers who are at financial risk. Nationwide, an estimated $575 billion in new and used auto loans are written every year by auto manufacturers, banks, credit unions and other lenders. About 30% of the loans that are originated by banks, and 100% of those issued by automaker financiers, are, like mortgages, repackaged and sold as securities, according to the Consumer Bankers Assn.

Analysts warn that just as investors didn’t comprehend the risk inherent in some of the more exotic home mortgages in recent years, they aren’t considering how risky these car loans are. If longer loan terms allow debt on the loans to grow too large, many drivers may simply default, leading to expensive repossessions.

The parallels to the housing bubble are painfully obvious: Cheaper lending rates spur volume growth, with dealerships concerned only with the immediate signings. The longer-term mess is obvious, but is basically being deferred to some miraculous future bailout — a salary raise, whatever.

The missing ingredient here, though, is the valuation speculation. In the housing game, the assumption was that the piece of property bought would rise in value — not an unreasonable assumption, given real estate’s traditional security as an asset. But that notion is laughable when it comes to cars, because common knowledge holds that a vehicle depreciates the second it rolls off the dealership lot. So the constant trade-ins and roll-overs had nothing at all to do even the illusion of building equity — it’s pure consumerism, disguised as upgrades in reliability.

Another reason to savor urban-core living, where parking/garage costs alone make it ridiculous to own a car. Add in this hazardous financial stew — along with the lack of real need for individual car ownership — and it’ll be a long while before I ever again consider car ownership.

by Costa Tsiokos, Sun 12/30/2007 02:50:12 PM
Category: Business, Society
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