5 ms·

Oh no. Not again. At least this time we know Bear Stearns won't go bankrupt. (In seriousness, this is just a lender to car dealers.)

by kragen 1y ago

zerosizedweasle 1y ago
It's contagion from Tricolor. There was an article about this a few days ago. It kept missing payments, and in light of the credit worries the lenders were considering pushing it into bankruptcy. Looks like they did.
arethuza 1y ago
Isn't that possibly like saying that New Century was "just" a real estate investor?
- kragen 1y ago
  It's always possible. But New Century was originating tens of billions of dollars of mortgages per year, and at first glance, PrimaLend seems to have been closer to 0.1 billion dollars in car loans per year. So I'd put this on the Candidate Apocalypse Etiologies List somewhere below the Trump tariffs, the Mutual Defense Treaty, TSMC, the Ukraine war, OpenAI, Gaza, the ASS buying drones, and Elon Musk's mental health.
  - arethuza 1y ago
    A fair point, but I do wonder if in these situations the tension builds up (e.g. the list you mention) and at some point something, possibly something relatively small, such as an Archduke getting shot triggers a much wider conflict.
  - dmsayer 1y ago
    "the ASS buying drones," care to elaborate on that one for me a little more? are we even doing phrasing anymore?
    - kragen 1y ago
      Niger, Mali, Burkina Faso.
- thinkcontext 1y ago
  Its possibly a leading indicator but not a domino like New Century was. But I suppose it really depends on how many opaque financial instruments are based on their underlying loans.
jongjong 1y ago
Interesting, I remember a few years back when I bought my car in Australia, there was a car shortage. Which was weird. It was really hard to find certain models of popular brands... One of my motivations for buying a new car at the time was the financing... It was fixed rate for the life of the loan. Which is refreshing in a country like Australia where banks essentially don't do fixed-rate loans for houses (cannot be fixed for more than a couple of years... Not real fixed rate.). Anyway I wonder if maybe it was a similar situation in other countries. Seems like car finance companies were set up for failure in a rising interest rate environment, consumers felt it and responded by buying cars on debt. It seems like a similar thing happened a few years earlier with Silicon Valley Bank except theirs was bonds. I guess the lesson is; don't loan money out at a fixed rate while the currency is being debased into oblivion. The other lesson is that wisdom of the crowds is real. I will never be able to understand how it's possible that pea-brained consumers sometimes seem to have a sixth sense about complex financial macroeconomics. Kind of what happened with Bitcoin as well. Stupid people with incredible gut instinct.
- deleted 1y ago
  [deleted]
- zerosizedweasle 1y ago
  A lot of subprime loans in the US are adjustable rate, or the interest is so much that you'd be better off with the possibility that it could go lower.
miohtama 1y ago
What's difference this time that no one believes private credit is or never has been safe in the first place. It's also often one step further away from banks: banks lend to funds who lend private credit. Risky things are expected to blow up, especially if there is a bubble.
- kragen 1y ago
  Nobody believed subprime mortgages were safe the last time around.
  - deleted 1y ago
    [deleted]
- nyeah 1y ago
  Yet somebody (or some...thing) has the tranches that are made out of default. That may not be the smart money, or even the dumb money, or even the money that was overexposed to heavy metals when it was young [1]. [1] Apologies to Ned Beauman https://www.penguinrandomhouse.com/books/709614/venomous-lumpsucker-by-ned-beauman/ https://www.penguinrandomhouse.com/books/709614/venomous-lum...
  - kragen 1y ago
    It might just be the money with a large appetite for risk but that hasn't eaten so much mercury and lead that it goes into a slot machine.
    - deleted 1y ago
      [deleted]
    - deleted 1y ago
      [deleted]
    - deleted 1y ago
      [deleted]

Oh no. Not again. At least this time we know Bear Stearns won't go bankrupt. (In seriousness, this is just a lender to car dealers.)

by kragen 1y ago

Oh no. Not again. At least this time we know Bear Stearns won't go bankrupt. (In seriousness, this is just a lender to car dealers.)

zerosizedweasle 1y ago

It's contagion from Tricolor. There was an article about this a few days ago. It kept missing payments, and in light of the credit worries the lenders were considering pushing it into bankruptcy. Looks like they did.

arethuza 1y ago

Isn't that possibly like saying that New Century was "just" a real estate investor?

kragen 1y ago
It's always possible. But New Century was originating tens of billions of dollars of mortgages per year, and at first glance, PrimaLend seems to have been closer to 0.1 billion dollars in car loans per year. So I'd put this on the Candidate Apocalypse Etiologies List somewhere below the Trump tariffs, the Mutual Defense Treaty, TSMC, the Ukraine war, OpenAI, Gaza, the ASS buying drones, and Elon Musk's mental health.
- arethuza 1y ago
  A fair point, but I do wonder if in these situations the tension builds up (e.g. the list you mention) and at some point something, possibly something relatively small, such as an Archduke getting shot triggers a much wider conflict.
- dmsayer 1y ago
  "the ASS buying drones," care to elaborate on that one for me a little more? are we even doing phrasing anymore?
  - kragen 1y ago
    Niger, Mali, Burkina Faso.
thinkcontext 1y ago
Its possibly a leading indicator but not a domino like New Century was. But I suppose it really depends on how many opaque financial instruments are based on their underlying loans.

jongjong 1y ago

Interesting, I remember a few years back when I bought my car in Australia, there was a car shortage. Which was weird. It was really hard to find certain models of popular brands... One of my motivations for buying a new car at the time was the financing... It was fixed rate for the life of the loan. Which is refreshing in a country like Australia where banks essentially don't do fixed-rate loans for houses (cannot be fixed for more than a couple of years... Not real fixed rate.). Anyway I wonder if maybe it was a similar situation in other countries. Seems like car finance companies were set up for failure in a rising interest rate environment, consumers felt it and responded by buying cars on debt. It seems like a similar thing happened a few years earlier with Silicon Valley Bank except theirs was bonds. I guess the lesson is; don't loan money out at a fixed rate while the currency is being debased into oblivion. The other lesson is that wisdom of the crowds is real. I will never be able to understand how it's possible that pea-brained consumers sometimes seem to have a sixth sense about complex financial macroeconomics. Kind of what happened with Bitcoin as well. Stupid people with incredible gut instinct.

deleted 1y ago
[deleted]
zerosizedweasle 1y ago
A lot of subprime loans in the US are adjustable rate, or the interest is so much that you'd be better off with the possibility that it could go lower.

miohtama 1y ago

What's difference this time that no one believes private credit is or never has been safe in the first place. It's also often one step further away from banks: banks lend to funds who lend private credit. Risky things are expected to blow up, especially if there is a bubble.

kragen 1y ago
Nobody believed subprime mortgages were safe the last time around.
- deleted 1y ago
  [deleted]
nyeah 1y ago
Yet somebody (or some...thing) has the tranches that are made out of default. That may not be the smart money, or even the dumb money, or even the money that was overexposed to heavy metals when it was young [1]. [1] Apologies to Ned Beauman https://www.penguinrandomhouse.com/books/709614/venomous-lumpsucker-by-ned-beauman/ https://www.penguinrandomhouse.com/books/709614/venomous-lum...
- kragen 1y ago
  It might just be the money with a large appetite for risk but that hasn't eaten so much mercury and lead that it goes into a slot machine.
  - deleted 1y ago
    [deleted]
  - deleted 1y ago
    [deleted]
  - deleted 1y ago
    [deleted]