Debt junkies pile in again

UK new car registrations hit a decade high in September. So everything is lovely on God’s green Earth and all is well with the Blessing of Material Progress bequeathed by Him unto His favourite experiment creation.

How does that work, you ask. Where are Brits getting the money from to go piling into car showrooms when the rest of the retail world, from mighty Tesco to the humblest corner store, is suffering enforced withdrawal from their spending habits?

The Society of Motor Manufacturers and Traders knows. It says:

“Demand for the new 64-plate has been boosted by intensifying confidence in the UK economy, with consumers attracted by a wide range of exciting, increasingly fuel-efficient, new cars.”

But watch out, children. Whenever you see the word ‘consumer’ you need to know that they mean ‘debt junkie’. The bit about the economy is irrelevant context, or what it is more commonly called ‘balls’. Nor are these consumer debt-magnets especially attracted by ‘exciting’ cars. Half of them couldn’t tell you their new ride’s engine capacity. The deal clincher is availability of finance. And who provides the loans? Well, it is the industry that makes the cars. It’s like getting a special offer on drugs from your local pusher.

Crazy though the banks are, though, they tend to draw the line at throwing money at total deadbeats. So traditional unsecured loans are off the table. Luckily, the Gummint has ways of diverting QE into the hands of zombies when the need arises. Ladies and gentlemen, we give you Payment Protection Insurance pay-outs – neatly gauged to match the average deposit on a new car from your friendly auto finance company (which gets the car back if when the borrower can’t keep up the payments).

But shouldn’t these poor folks be persuaded to do something more useful with the unexpected cash windfall they were cold-called relentlessly into accepting? Like pay off one of their credit cards or reduce their mortgage or pay down some of the kids’ tuition fee loans? Dream on suckers. The best they get is new guidelines from the financial authorities, which go something like this:

  1. Put on serious face
  2. Say: ‘You really can afford this, can’t you.’ (Tip: If you like, you can make it sound like a question)
  3. Point to the dotted line for them to sign on.

Meanwhile, deficits increase in spite of austerity. The NHS totters. The pension funds these mostly late-middle-aged auto buyers count on get shakier by the day. Oil’s insidious death spiral notches down again as falling prices chase decreasing affordability, killing-off investment in high-cost resources like shale and polar formations.

It’s sub prime all over again, tailored to an economy where mere mortals can’t even begin to think about playing the housing market. And it looks like it’ll end the same way as 2007.

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