New Hyundai warranty covers job loss*

*Mostly.

hyundaiIn a mark of how bad things are “Hyundai is providing a complimentary vehicle return program for the first year on every new Hyundai that is financed or leased for owners who experience an involuntary loss of income within 12 months of the purchase date.

What that actually means is Hyundai is offering to cover up to $7.5K of the debt on a new car in case of

  • Involuntary unemployment
  • Physical disability
  • Loss of driver’s license due to medical impairment
  • International employment transfer
  • Self-employed personal bankruptcy
  • Accidental death

Details: You have to have made at least two payments; you are still on the hook for everything over $7.5K and; they get the car back.  Which means if you bought the bottom line Accent with nothing added to it (MSRP $9.9K) and make just the two payments you are only on the cuff for about two grand. Not great but so far it’s better than anything else out there. (What dumbass wrote that? Truth is below)

You are on the hook for only the depreciation OVER $7500. Example: if the car had an msrp of around 25 grand and you were on the peverbial hook for the whole magilla and the depreciation over the first 10 months was 30% ( 7.5 large ) you would owe nada.

The deal looks even better when you consider that none of your tax dollars have gone into propping the company up.

So the new motto is, “Hyundai — the car to buy if you think you’re going to get canned.”

Cut the bull and call it a Depression already

More of my happy thoughts from over at BlownMortgage:

Two weeks ago the National Bureau of Economic Research officially confirmed what we already knew: We have been in a recession for the past year. This begs the question, how long until we declare World Depression II?

The (disputed) technical definitions of Recession and Depression make them lagging economic nomenclature. Economists debate whether we are in a swamp while everyone else worries about the ever-increasing number of alligators. The lack of an official declaration of recession mostly just gives the chattering classes something to do while avoiding taking action.

“Is it a crisis?”

“There is no crisis!”

“Is there a large, green creature eating my leg?”

“There is no large, green creature eating your leg!”

Allow me to go out on a very, very sturdy limb and declare a Depression. The economy isn’t going to recover by the end of next year. There is a only a dim possibility it will recover the year after that. But no one in an “official” position is willing to be the bearer of that piece of bad news.

Doubt that it is (or soon will fit the technical definition of) a Depression? Look at the actual numbers…

What is the definition of “depression”?

More from me at BlownMortgage:

It is difficult to believe but earlier this year people were still debating whether or not we were in a recession. The debate broke down along the lines of, “We haven’t met the technical definition of a recession” vs. “If it smells, like a duck, quacks like a duck and looks like a duck then it’s a duck.”

One of the reasons for the debate was because there are so many different definitions of a recession.

The standard definition used by idiots and journalists (like me!) is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.

Idiots and economists (like them!) don’t like this because it leaves out the unemployment rate and consumer confidence as indicators. “By using quarterly data this definition makes it difficult to pinpoint when a recession begins or ends. This means that a recession that lasts ten months or less may go undetected.” Sadly, that’s not going to be an issue this time around.

BTW, now that the extension of unemployment benefits has passed the Senate expect to see a sharp increase in the unemployment rate — which only counts people who are collecting unemployment insurance. You are no longer officially counted as unemployed if you are not collecting insurance. A lot of people who used up their benefits but aren’t employed will now re-appear magically on the roles. They will just as magically disappear in seven weeks when their benefits are used up and the rate will go down again. However, those people won’t be any more employed.

Shanty towns and bank runs: recession may be the optimist’s outcome

Before the fiddlers have fled
Before they ask us to pay the bill
And while we still
Have the chance
Let’s face the music and dance

Last March, the BBC ran a story about shanty towns springing up in the US.

At the time BoingBoing and those few others who saw it asked why we were learning about this from the UK media and not from the US media. Now, a scant six months later, the US press has paused from parsing porcine lipstick and noticed.

The relatively tony city of Santa Barbara has given over a parking lot to people who sleep in cars and vans. The city of Fresno, Calif., is trying to manage several proliferating tent cities, including an encampment where people have made shelters out of scrap wood. In Portland, Ore., and Seattle, homeless advocacy groups have paired with nonprofits or faith-based groups to manage tent cities as outdoor shelters. Other cities where tent cities have either appeared or expanded include include Chattanooga, Tenn., San Diego, and Columbus, Ohio.

We’ve already had a bank run in the classic sense and one updated for today’s world: Yesterday’s announcement that Putnam was liquidating a “$12bn prime money market fund because of a spike in redemption requests from clients.” Just because they have the money to cover this — as it appears they eventually will — doesn’t make it any less of a run.

Today the early headlines say Stocks soar at opening after gov’t rescue plan. Forgive me for thinking the markets are indulging in some irrational exuberance. We’ve seen this sort of response before. This is from the Wall Street Journal on March 19:

Stocks and commodities plummeted on Wednesday as the euphoria that carried equity markets to massive gains a day earlier gave way to nervousness that the broader U.S. economy hasn’t yet escaped the dangers of the credit crisis.

At some point we are going to see a huge impact from the Fed’s determination to once again deal with another issue by printing more money. Some commentators say this will simply mean an explosion in the size of the national debt. I wish that was all. The current crisis was created by pumping increasing amounts of money and credit into the economy, it is beyond me to understand why doing more of this will help fix it.  You know what they call it when you keep repeating the same behavior and expect different results, right?

I am not smart enough to determine if we are about to hit a period of inflation or deflation but I know something is going to happen and will keep happening until all the difference between the amount loaned and the actual value of assets comes into balance. (If you’re a debtor start rooting for deflation — it means any money you do use to pay off a debt will be worth less than the money you originally borrowed. A net gain, if not a happy one.)

As the year has gone along, I’ve tagged a number of items under Recession? What Recession? I can’t say they make for happy reading:

In March, when the BBC ran that shanty town story, it still seemed possible to have a reasonable disagreement over whether or not we were in a recession. Now the D word is in play. Soon we will be hearing that we are not in a depression and that we are trying to avert one. That is becoming the economic equivalent of promising to have the troops home by Christmas. As soon as you hear it, you know it’s a lot worse than anyone is willing to say.

The leading indicator of the “we are not in a Depression” meme came last week when Alan Greenspan — who is mostly responsible for the crisis — tried to put lipstick on this pig by saying, “First of all, let’s recognize that this is a once-in-a-half-century, probably once-in-a-century type of event.” Given that the Mississippi river keeps getting hit by floods that were once described as “once in a century” events, this is not a heartening phrase. Another troubling indicator is that the folks who decided what’s in the Dow Jones Industrial Average have replaced the now defunct AIG with Kraft. I suspect the real problem with leaving AIG is that it would have made the Dow actually reflect the economy.

Someone once asked Tom Lehrer why he stopped writing those wonderful, witty songs about the news. Having turned out anthems on topics from pollution to nuclear proliferation, Lehrer said he had begun to feel like a citizen of Pompeii being asked to say funny things about lava. Without having matched Mr. Lehrer’s accomplishments, I can certainly empathize. I have been saying for the last seven years that the real problem with the Bush administration is that it took all the fun out of being able to say “I told you so.” Unlike Mr. L, I refuse to leave the scene — especially when we are in such a target rich environment.

There may be trouble ahead
But while there’s moonlight and music
And love and romance
Let’s face the music and dance

While many people have recorded this song — but not Roxxy Music, for some reason — I still prefer the original by Fred Astaire. It’s on the soundtrack to Follow The Fleet. A happy little musical by Irving Berlin that was made into a movie in 1936.

Finance goes retro: Bank runs are back!

This ran in an Australian paper yesterday:

IN A modern financial system nothing is more frightening than a run on the bank. The US has now suffered a series of them, and they are escalating in size and scope, posing a serious threat to an already reeling economy.

This happened today:

LOS ANGELES – Police ordered angry customers lined up outside an IndyMac Bank branch to remain calm or face arrest Tuesday as they tried to pull their money on the second day of the failed institution’s federal takeover. …

Worried customers with deposits in excess of insured limits flooded IndyMac Bank branches on Monday, demanding to withdraw as much money as they could or get answers about the fate of their funds.

When it was clear some wouldn’t get in before closing, FDIC employees apparently took down names and told them to return Tuesday.

Other customers began lining up at 1:30 a.m. Tuesday, and by dawn, tensions escalated because people on the list were getting priority.

Ah, the good old days. Selling pencils and apples on the corner. An impending Democratic landslide. Hobo stew. An environmental disaster — then it was the dust bowl now its … hey has anyone seen the north pole lately? The rise of extremist political movements. Personally I am updating a few old songs. How about “Brother Can You Spare A Gallon”? “Twenties From Heaven”? Fortunately, “Let’s Face The Music And Dance” works just as it is.

Fortunately there is some good news: Oil prices plummet $7 on spreading economic fears

Oil prices plunged Tuesday as worries about the nation’s economic health shot to the fore and OPEC warned that high pump prices are likely to erode global demand for crude.

HUZZAH!

Every time it rains, it rains twenties from heaven
Don’t you know each cloud contains twenties from heaven?
You’ll find your fortune’s fallin’ all over the town
Be sure that your umbrella is upside down