As Barack Obama wraps his re-election bid around a resurging automobile industry and hopeful Republican Presidential wannabes trudge in-and-out of Detroit, I thought it would be interesting to provide commentary regarding a recent experience.
At one of the most heavily traveled intersections in Phoenix, AZ, I was patiently sitting in my car waiting for the traffic light to turn green.
However, due to ongoing electrical component repairs, the traffic light was temporarily out-of-order.
Therefore, my wait time to cross the intersection was not the customary two minutes; it was extended to almost five minutes.
During that time, I started counting the number of SUVs, heavy-duty trucks, and anything else that did not remotely resemble a regular automobile.
As those vehicles passed through the intersection, the ratio of gas-guzzlers to cars was a surprising 7 to 3.
These days, that’s certainly a lot of pain at the pump.
On the other hand, what intrigued me even more was the number of brand new vehicles that drove by.
These pristine motor vehicles were truly glistening, almost screaming affluence.
The drivers of these shimmering cars and trucks seemed to be sending a subliminal message: “I’m doing very well and my vehicle shows it,” although in my opinion, this is purely an illusion.
As Dan Aykroyd said in Trading Places, “Fear? That’s the other guy’s problem.”
Just sitting there and observing the dazzling parade of brand new vehicles took me back to another era in the not too distant past.
It was a period of time when everyone was purchasing at least one new house, sometimes buying two new homes, and maybe even more.
In fact, according to the general consensus, you were foolish if you didn’t buy.
The financing terms were irresistible: nothing down, no proof of employment required, verification of income was not necessary, no assets needed to be owned, and you had the ability to walk away from the mortgage if you decided to do so.
As we all know, that time period was labeled as the “subprime mortgage crisis.”
As I read how GM is selling record amounts of cars (to their dealers) and I hear how the great and not-so-great companies continue to layoff workers, I wonder if I’m not watching a smaller-scale repeat of the subprime mortgage catastrophe.
After all, they say history always repeats itself.
As I drifted further into deep thought, I imagined each new vehicle becoming a new house.
Along with his 40-years of dedication in the financial services industry, Bill is the President and CEO of GPSforLife, has recently authored a highly successful book entitled 44th: A Presidential Conspiracy, publishes his dynamic monthly financial newsletter MacroProfit, and faithfully continues his third decade on the radio with It’s All About Money, which can be heard weekdays on Money Radio in Phoenix and in podcast form on his website (and on smartphone apps) published at billtatro.com weekdays at 5pm Eastern. Bill can be reached via email at firstname.lastname@example.org and on Twitter @tatroshow.