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How Many Different Angles Can The Financial Industry Be Hit?

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June 19, 2008 – Comments (6)

Here another way the financial industry is going to be hit that I had not thought about, through expiring leases.  There are 800,000 vehicles coming off lease at an average value of $6k less than what was projected when the leases were signed 4 years ago.

Those big SUVs are selling for less than half price at only 2 years old.

It looks like about $15 billion in lease losses is coming over the next three years.

 

6 Comments – Post Your Own

#1) On June 19, 2008 at 7:40 PM, alstry (35.03) wrote:

You got me here.  I never even thought about this one.

Not only do the leasing companies lose....how are people with those big SUV's going to get enough money to trade in on  a new vehicle and pay off their auto loan?

Then what if housing falls another 25%.  Most of the debt of the $12 Trillion of outanding mortgages and HELOCS have much less than 30% equity as a number of homes are fully paid for or have very small mortgages.

And what happens when people can't tap their credit cards any more to buy food and gas and make HELOC payments?

I am not sure how this resolves, but whatever happens, I doubt we can compare it to any time in history.

 

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#2) On June 19, 2008 at 10:12 PM, hansthered0 (< 20) wrote:

How can we benefit from expiring leases on SUV's? Short automakers?

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#3) On June 19, 2008 at 11:36 PM, DemonDoug (92.48) wrote:

if less people drive less cars... does that mean less of a market for car insurance too?  (Insurance is the I in the FIRE economy)

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#4) On June 20, 2008 at 1:29 AM, MakeItSeven (33.05) wrote:

how are people with those big SUV's going to get enough money to trade in on  a new vehicle and pay off their auto loan?

If they can trade in their SUVs in the first place.  I read yesterday that dealers in northen CA no longer take SUVs as trade-ins. 

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#5) On June 20, 2008 at 6:39 AM, dwot (97.03) wrote:

Well, seeing how I am in the market for an SUV, this is looking very good for me.

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#6) On June 23, 2008 at 9:38 PM, TheGarcipian (58.28) wrote:

Demon, insurance could very well be the next victim, being part of the "Finance, Insurance and Real Estate" trifecta. Whether or not if you believe in global warming as I do and that humans are exacerbating an Earthly cyclic phenemon, weather has been getting worse and worse with major hurricanes, tornadoes & floods reaping more & more damage since 1997. We've already seen how insurers "handled" the Katrina and Gulf Coast problems of 2005. I expect more of these insurance companies to be going under (or at least more susceptible to bankruptcy) from this point out, although they are in a better position to protect themselves by immediate policy changes, tying things up in court with their lawyers, etc., moreso than the financiers who are more-or-less stuck with the CDO/MBS paper they've written & accepted.

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