Juggling Dynamite

Danielle was a guest with Kerry Lutz on The Financial Survival Network, talking about recent developments in the world economy and markets.  You can listen to an audio clip of the segment here.

As the cost of capital rises and financial discipline moves back to the fore, consolidations and mammoth conglomerates that were enabled by ‘free money’ and lax regulation will naturally be unwound one way and another.  This creative destruction will help unleash competitive forces once more.  Jonathan Tepper explains in this segment as well as why share buybacks must be banned while corporations are underfunding their pension plans. No brainer.

Jonathan Tepper, founder of macro research firm Variant Perception and author of The Myth of Capitalism, calls in to discuss the rise of corporate monopolies and its implications. Here is a direct audio link (you can advance playbar through commercials).

Indebted households have reduced spending and saving ability for the years it takes them to pay off debt. Today Canadians owe a record $1.71 of debt for every $1.00 of disposable income.  This suggests an extended period of lower consumption ahead, even if interest rates did not rise further from here.

On top of massive mortgages and lines of credit, Canadians are also servicing record auto debt stretched over the longest repayment periods in history. More than half of all new car loans are currently financed for 84 months (7 years) or longer, compared with an industry standard that used to be 60 months (5 years).  J.D. Power numbers suggest that more than 30% of Canadians who trade in a car today have negative equity–owe more on the car than it’s worth.  This will make it more difficult to afford repairs and replacement vehicles over the next few years.  Creative financing allowed the car industry to bring forward future vehicle sales and book them in the present.  It also detracted from future sales.

Canadians are buying more vehicles than ever. With most borrowing money in order to make this purchase, Jacqueline Hansen reports that longer and longer car loans are the new normal.  Here is a direct video link.