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SW Ontario | For now........... Yellen made it clear that jobs AND inflation must be moving in the right way going forward or more "accommodation" will be necessary.
When asked what positive signs she saw in the economy, Yellen mentioned increased housing starts and lots of car buying. Sorry, but people are not buying cars, they are borrowing them, and cars are a depreciating asset so this is not a really an upbeat indicator in my opinion. It just surprised me that she could not come up with any more positive indicators that the economy is healthy.
As an aside, I was just out looking for a used truck to replace my old one yesterday. The dealer explained that if I financed it instead of paying cash, I could get it for $500 cheaper because the dealer receives a kick back from the bank for setting up financing, even though the loan is an open one and can be repaid in a couple of months if desired. That tells me that almost no one is accelerating their payments; otherwise why would the bank bother giving the dealer such a large kick back? If they are not receiving significant interest payments on other loans, they could never afford to pay a $500 or more kick back to the dealer.
This was totally backwards in my way of thinking. If someone pays cash, shouldn't they get a discount since the bank and dealer need not bother or take the risk in setting up a loan? For me, this was just further confirmation of how screwed up the economy and banking sector is right now. | |
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