by Bill McBride on 9/03/2008 01:32:00 PM
Wednesday, September 03, 2008
"We expect the second half of 2008 will be more challenging than the first half, as weak economic conditions and the consumer credit crunch continues."From the WSJ: Ford Posts 27% Drop In August Sales
Jim Farley, Ford group vice president of marketing and communications.
U.S. auto sales continued their slide in August despite stepped-up incentives to buyers, with Ford Motor Co. posting a 27% drop from a year earlier as sport-utility-vehicle sales plunged 53%.BTW, Boston Fed President Rosengren spoke today on the "Implications of a Credit Crunch”. An excerpt:
Ford also lowered its second-half North American production forecast and revised its overall industry forecast to the low end of its range.
It was hoped that banks with a more national footprint would be less susceptible to regional shocks and thus more able to lend during regional downturns. Unfortunately, many of the largest commercial and investment banks had a significant concentration of their assets in complex securities that have declined in value, had significant exposures to subprime mortgages or so-called “Alt A” mortgages that have declined in value, and also had exposure to construction and residential loans that have suffered from national rather than just regional declines in value.The auto industry has been hit hard by both the change in credit conditions and higher oil prices.
In terms of securitization, the loss of confidence in complex financial instruments and their ratings has dried up the demand for all but the simplest and least-risky securitizations. So rather than serving as a shock absorber for banking problems, it seems that securitization has actually exacerbated the problem. Indeed, a wide variety of loans that were once widely securitized are now not available (e.g., subprime mortgages) or are only available from financial institutions at much higher costs (e.g., jumbo loans).
Posted by Bill McBride on 9/03/2008 01:32:00 PM