There is little doubt that banks are some of the most hated institutions. Bankers rank up there (or down) with used car salespeople. To say they didnt deserve the reputation would be inaccurate. Certainly, bankers are known for their antics, obliterating the lines of ethical along with legal.
Within the wordl of cryptocurrency, the feels are magnified. One of the main attractions of this new technology is the ability to replace much of what the bankers do. This is not something that is going to happen anytime soon. However, like most disruptions, we can see how the banks are ultimately cooked.
This is an idea that makes a lot of people very happy. We know banks tend to indulge in excess. The major banks are even turning to the idea of privatizing profits while socializing losses. Many still have a bad taste in their mouths over the bailouts from a decade ago.
To say that people hate the banks, or more accurately the bankers, is an understatement.
Of course, that distaste tends change when banks stop lending.
No Money For You
People often discuss how much excess risk is undertaken by the banks. This is not always accurate as risk isn't always the main issue. Nevertheless, the confusion put out by central banks only makes things more difficult.
Nevertheless, we are about to see one industry cut off.
Over the last few years, the automotive sector was a roller coaster. The lockdown during the pandemic caused a flood of car sales. Since people could not spend on services plus had checks coming in from fiscal stimulus, they went car shopping.
The banks were caught up in the foolishness. They gave some insane loan-to-value ratios. They were going 130% or more on the value of cars.
Fast forward a couple years and things are completely different. The first quarter of 2023 saw an enormous jump in defaults. That means repos are increasing. Banks are having to look closer at loan portfolios.
I watched a video of a guy who I follow is seems to have a vast understanding of the car business. He was forecasting that bank lending would get tighter going into this year. He foresaw it last year.
He is now hearing of many banks starting to pull back from their lending. This means that customers are going to have a tougher time getting car loans.
Here we have a situation where people are going to be extremely upset. After all, few like to spend the time looking for a car only to be told they cannot have it. As banks pull out, the options for dealers starts to dwindle.
Banks Have To Do This
To be blunt, banks have to take this step. This is an unfortunate part of the business cycle. When things pass the peak and start to head towards the trough, money supplies always tighten up. This is regardless of what form of money is used. Things get very tight and quickly.
When dealership paper goes to hell, this becomes an industry-wide problem. Word spreads as to those dealerships that are questionable.
Of course, this ends up reducing selection. Auto dealerships were under pressure even before this. Tesla was able to garner more than 5% market car in the United States during 2022. That means we had 5% of the cars that were not sold through car dealerships. That is a fair bit of money pulled out.
What happens if Tesla pushes its market share to 7% this year? That is another couple points that is removed from the automobile dealer network. Of course, when we think about it in dollar terms, it is into the billions.
It doesn't matter what industry you are in, the removal of billions in revenues is going to have an impact.
People Will Complain About The Banks
People complain when the banks lend recklessly and ignore lending standards. Of course, when the belts are tightened, people also start taking to the Internet and posting how unfair it is.
The reality is that all pepole love easy money. This is another misnomer. Cheap money does not mean accessible money. The reality is that, for most, lending was difficult to acquire. Automobile loans was the one market where the average person could count on being given some cash.
Not anymore.
This is going to have a rippling effect. And people are not going to like it.
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It's true that banks and bankers have gotten a bad name over the years for doing things that are wrong and against the law. Cryptocurrency is a good option for many people because it can do many of the things that banks do. However, this won't happen overnight. People have every right to complain when banks lend money without thinking, but it's important to remember that easy money isn't always easy to get. In reality, it's getting harder and harder to get a loan, and this tightening of lending standards will have consequences that some people might not like.
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I do not really know much about the banks over there but the ones we have here may be very wicked.
They freeze people's account because of cryptocurrency transactions. They deduct money from our accounts anyhow. This is not a lie. You can ask any other Nigerian
Así es! nunca confié en los bancos y menos ahora.
The banks have always been the ones to generate money in the economy and as much as we don't like how money hungry they are, they are vital. Steven Van Metre has been talking about them contracting for a while and I think he also stated that the big banks were dumping their commercial mortgages too so I wonder if there is more things to hit the market.
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The car industry will have a very rough year between the workers wanting more pay because of inflation, less private lease because of the banks and Tesla price cuts.
When you cannot afford to pay for a new car in the market. You could make the commitment to buy a used car and have more money in your bank account.
What I personally believe that the Idea of Bank has become bit back-date, since the people's interests are shrinking and they are eager of playing their cards on real estate, stock exchanges and cryptocurrency.
But, still some of the banks are exceptional and Specialized banks fulfil what objectives they proclaim.
These are becoming popular now.
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