Credit Crunch Crunches Chrysler
You probably heard about Chrysler no longer offering auto leases. However, the story goes much deeper. Chrysler had no choice to stop the leasing because the banks that loan them the money pulled the plug.
(This is the Wall Street Journal’s story, so that’s were you want to read up about it.)
As the value of gas-guzzlers plunge, the banks are worried about how well the leases will hold their value. So, they are reluctant to make auto leases for the same reason they are reluctant to make mortgages: deflation.
July 2008 may be the beginning of the shift from inflation to deflation as the intensifying credit contraction tightens its death grip upon the economy. The prices of just about everything are falling now: real estate, SUV’s, natural gas (UNG), oil (USO), commodities (DBC), and of course, stocks.
When credit tightens, the prices of just about everything must fall.
July 28th, 2008 at 11:03 am
“July 2008 may be the beginning of the shift from inflation to deflation as the intensifying credit contraction tightens its death grip upon the economy. The prices of just about everything are falling now: real estate, SUV’s, natural gas (UNG), oil (USO), commodities (DBC), and of course, stocks.
When credit tightens, the prices of just about everything must fall.”
EXACTLY!