Economics & Finance

Re-visiting the Car

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While I dream about owning a Nissan GTR that I saw at the Chicago auto show, in reality I drive an old Nissan Altima about 10 years old. That damn car will run forever since I take decent care of it and my frugal nature won’t let me replace it without a valid reason.

As I drive around in my older car, however, I can’t help noticing all of the expensive cars out on the street. Right now it is Saturday night here in Chicago in River North, and lots of people are “cruising” up and down the major streets, seeing and being seen, in their tricked out cars.

The situation is the same even when I visit a poorer neighborhood. A relative of mine moved to Beverly, in the south side of the city, and no matter how you drive to get there, you need to go through some pretty rough neighborhoods. New and expensive cars are ubiquitous, even there.

Let’s think a bit about car economics. If you use $25,000 / loan at 48 months as a starting price point, and the average rate of 6.5%, you are paying about $600 / month.

However, that “minimum payment” model has gone belly up. Here’s why.

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The Obama Bounce

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The stock market is looking weak. Purely a coincidence, I am sure.

Frozen In Time

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I started working in Chicago in the early ’90s. At that time, we had a hangover from the ’80s building boom, with a number of completed but vacant buildings. Our firm moved in at 161 N Clark Avenue, the Chicago Title and Trust Building, which was almost totally empty at the time. I remember walking through the floors and around the halls to get a 360 degree view of the city. Later Accenture (the consulting firm) moved in and ultimately the building seemed to get totally filled up.

After the ’80s building boom which tailed off in the early ’90s, Chicago construction went dormant. Nothing significant seemed to get built for a few years since no one could put an economic case together for more building while so much was vacant.

In the late ’90s and into the ’00s, Chicago construction boomed again. Per this Chicago Tribune article,

For a decade now, Chicago has been on an astonishing building binge. Since 1998, developers here have completed or started construction on more than 195 high-rise buildings, according to the Emporis building database. (A high-rise is defined as a building at least 12 stories tall.) That’s more high-rises than there are in all of Detroit (132), St. Louis (106) or Milwaukee (83).

But now it is all grinding to a halt. Some sky scrapers are stalled for lack of funding:

Work also is frozen at 111 W. Wacker Drive, home to Chicago’s other stalled supertall skyscraper, the Waterview Tower and Shangri-La Hotel. (To be considered “supertall,” a skyscraper needs to be at least 1,000 feet high.) … the project is stuck on the 26th floor, its exposed concrete frame looming over Wacker … (the project requires more) than $300 million in construction financing to finish the job.

Here is a view of the construction of the Shangri-La from my window… note the other building still under construction on the left.

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The Choice

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A vote for Obama on Tuesday is not just a vote for Obama himself, but rather a vote for the triumvirate Obama-Pelosi-Reid…a vote to transfer enormous power to the leadership of the Democratic Party.

I’m convinced that across multiple sets of issues, the country will be far better off with a victory for John McCain and Sarah Palin. Here are some of the key factors as I see them:

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“Buying Fire Insurance From An Arsonist”

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In a recent Chicagoboyz post by David Foster we discussed whether the Democrats really understand the importance of small businesses to the economy.

There’s a great comment by Carl Pham in a discussion on Rand Simberg’s blog that puts the issue into broader perspective:

…The government should do whatever it is that makes new jobs more plentiful, whatever increases the salaries offered to new hires, whatever makes people running companies (or about to start companies) decide to take on more people and pay out more salaries.
 
And what do you suppose is the exact opposite of that policy? You guessed it, raising taxes, particularly raising taxes on higher income people (those with capital to invest in paying salaries) or on businesses (duh). We’ve known this since FDR fucked up the economy and prolonged the Depression by (modern economists estimate) nearly seven long years.
 
Obama and his party are not stupid, of course. They know this very well. So why go down that path? Because they’re not interested in a recovered economy. They’re not interested in a booming private sector, with lots of great high-paying jobs. That doesn’t help Democrats keep power, does it? That doesn’t make people want to vote the Federal government more and more control over the economy, let the Democrat civil servants hire more and more assistants for a bigger and bigger “helping” bureaucracy, does it? What brings Democrats to power, and keeps them in power, is an anemic economy, despair everywhere, no jobs, and people so desperate they’ll swallow their pride and take a government hand-out to survive. So that’s what they’d like to see. They’re not economic idiots. They just have different goals than most of us, and those goals do not include having us not need them.
 
You’re buying fire insurance from an arsonist, my friend.

Read the whole discussion.