Last week, we had a post up titled, What Does Boating Tell Us About the Economy?
Yesterday, the NYT had an interesting article about a Boat Repo Man: Times Are Tough, Except in the Repo Business
"Boating was traditionally the pastime of the well-off, but the long
housing boom and its gusher of easy credit changed that. People
refinanced their homes and used the cash for down payments on a
cruiser, miniyacht or sailboat. From 2000 to 2006, retail sales for the
recreational boating industry rose by more than 40 percent, to $39.5
billion, while the average loan amount more than tripled to $141,000.Last
year, as real estate faltered, the gears went into reverse. The number
of boats sold fell 8 percent. Many boats are fuel hogs, and rising
gasoline and diesel prices meant a weekend jaunt could cost hundreds or
even thousands of dollars. Owners found they could not sell a boat for
what they owed and could not refinance either.The solution for some is simply to stop paying on Jersey Dreamin’ or Just Do It or Bally Hoo. Then one day they come home and it is gone."
click for video
Source:
Times Are Tough, Except in the Repo Business
DAVID STREITFELD
Published: May 20, 2008
http://www.nytimes.com/2008/05/20/business/20repo.html
Folks walking away from ski resort condos too. Outstanding loans are at 5%, zero down. For new loans they want 8%, 40% down.
So their credit rating will be bad for a few years? Oh well. Paying $70k per year they say, for something that’s worth less that what they owe and going down in value as we speak.
And who holds that loan? Wamu.. yes the very same Wamu that’s dropping like an anchor.
One of my neighbors has an SUV parked on the street with a For Sale sign in the window. It’s a big one, late model, looks really nice, and only $7,000. They would probably negotiate. I wonder if it’s kept unlocked with a key in plain sight? I suppose even a thief wouldn’t want to fill one up. Maybe they should put a second sign in the window that says ‘Has Full Tank’.
More evidence of a pending economic boom!
The leap in fuel prices (along with general employment issues) is also going to affect the market for all those powered craft used for strictly recreational purposes, such as skimobiles, ATVs, jetboats, and motorcycles.
Here in SE Michigan the rural/semi-rural areas are full of these craft displayed with big “for sale” signs on one driveway and front yard after another.
Well, I’m not sure first. I wrote about boating stock Brunswick and other consumer related stocks cratering in July of 2006. But, the repo business is a good business right now. Across many sectors. So, what the hell are banks going to do with all of the repos? I’ll tell you what they are going to do. Eat them. Get ready for the great ‘used car’ sale.
It’s really a serious bout of irony that banks helped shape consumer bankruptcy reform (they basically wrote the legislation to their benefit) yet that won’t protect banks one iota. Silly, silly bankers. The law of unintended consequences strikes again.
In the end, banks will suffer the same fate. They were foolish in their risk management practices, tried to shaft consumers with strict bankruptcy legislation and in the end banks will be left holding the bag. Because if their was one thing grandpa said that trumps any bank, it’s that you can’t bleed a turnip. So, banks will repo a multitude of assets then end up selling them for a fraction of their loan value and take even more losses. Homes, cars, boats, chattel, you name it.
Ah, the stupidity of Wall Street. It’s endless.
bluestatedon wrote: [i]”The leap in fuel prices (along with general employment issues) is also going to affect the market for all those powered craft used for strictly recreational purposes, such as skimobiles, ATVs, jetboats, and motorcycles.”[/i]
IMO, this is one big benefit of higher gas prices. ATVS are a pox on the landscape- they’ve been identified by the USFS as one of the main threats to public wildlands due to erosion, soil compaction and impacts on water quality and wildlife.
Two-cycle jetskis emit 25% of their fuel unburned directly into our lakes and waterways. Fairly large vehicles gas hog are usually used to transport these “toys” to and from lakes and trails. And then there is noise issue.
In addition to clogging up highways, RVs are also a huge drain on public park resources. When people in their private buses show up at national and state parks and basically say “OK here I am, deal with me”, parks are forced to put much more of their limited funds into infrastructure and less into resource management.
Human powered recreation baby! Buy an oar powered raft. Buy a kayak. Buy a bicycle. Get out of your damn bus and WALK for Christ sake!!! It is much better for the environment and for personal health as well.
So who’s going to buy all these boats and stuff? I say we bag ’em up and ship them to China. They’ve got a growing middle class, eager to “live like Americans” and starting to find the time and money to do it.
Hey, at least all those boats that supply Wal-Mart won’t have to go back empty-handed…
Right, and last time this subject was raised I suggested checking boat insurance claims. Funny how the claims for fires are rising.
One of the great nuggets of knowledge I learned from my dad: The best days of boat ownership are the day you buy it and the day you sell it.
B-O-A-T: “Break Out Another Thousand”
What do you wanna bet that these same gas-hogging boat owners were driving Hummers or other gas-sucking SUV’s to the marina?
I bet they were driving like arrogant asshats tailgating people in the left lane to get them to move out of their way.
If I were President here’s what I’d do : if you want an SUV that gets sub-standard mpg, you can have that right by paying $5/gallon gas-guzzling tax unless you can prove beyond a shadow of a doubt it’s for indispensable work purposes. The tax derived from the gas guzzlers can be used to offset the price of gas for drivers of vehicles that get in excess of 30 mpg. A rebate of $1-2/gallon for being a responsible citizen.