Posted August 28, 2023
By Matt Insley
A Mass Grave in Hangzhou, China
Continuing on the theme of auto-loan delinquencies (and repos), Pete C. recalls: “In 2005, after 14 years of marriage, my wife and I went to the bank just to see what kind of loan we could get to buy a house. Our income and savings were pretty low (lower-middle class basically).
“Well, the loan officer was ready to give quite the loan… When I asked what the monthly payments would be on a 30-year mortgage, they would've been around 65% of our net income.
“I started laughing and said ‘we are done here,’ and we left.
“When we did buy a house in 2008 (after the housing bubble burst in 2007), our mortgage was 25% of our net income (where it should be).
“Sure, there are irresponsible bankers and car dealers out there. But anyone who buys more car (or home) than they can afford hasn't done their homework on a very expensive purchase and is responsible for the end result.”
I wholeheartedly agree about personal responsibility, Pete, with one caveat: I lament the state of financial education in this country. At least, you knew 65% of your take-home pay was way outta line.
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Your Rundown for Monday, August 28, 2023...
Beijing’s EV Boondoggle
We’ve known about China’s ghost cities, filled with uninhabited buildings, for years now.
Courtesy: X (formerly Twitter)
But Beijing’s latest boondoggle? Acres of abandoned electric vehicles…
Drone footage from Hangzhou, Zhejiang Province
In 2009, the Communist Party of China (CCP) started offering EV subsidies — with rebates as much as $8,400 per vehicle.
In true Communist make-work fashion (plus plain ol’ human greed), the quality and/or quantity of the EVs was entirely inconsequential.
“Companies rushed to market with unimpressive offerings,” says an article at Reason, “some [EVs] got barely 60 miles of range per charge.”
YouTuber Winston Sterzel observed one “EV graveyard” in Hangzhou (see above), citing the vehicles all have registration plates.
Sterzel “alleges that Chinese EV makers register the cars and claim to have sold them… to obtain subsidies from the government,” per the website InsideEVs.
Reason adds: “China's example shows how subsidies skew the market. With the promise of free money, hundreds of companies flooded the market with substandard products.”
By 2019, when subsidies evaporated, about 80% of Chinese EV manufacturers fizzled out too.
Keep in mind, whatever a government subsidizes, it gets more of. In China’s case, it’s contributed to a real ecological disaster in the making.
Market Rundown for Monday, Aug. 28, 2023
The S&P 500 is 0.50% to 4,435.
Oil’s taking a breather at $79.46 for a barrel of WTI.
Gold is priced at $1,914.60 per ounce, according to Kitco.
And Bitcoin is down about 0.10% to $26,000.
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