What Happened Today: December 19, 2022
Car loan collapse; Binance looks bad; Congress removes mandates for military
The Big Story
“Potentially the biggest financial crisis ever” is how Tesla CEO Elon Musk characterized new data on car repossessions that has been unearthed over the past few days. Ratings agency Fitch is showing that the rate of car repossessions—aka, loan defaults—for the lowest-income consumers is now approaching pre-pandemic levels. In the third quarter of 2022, the percentage of loans that defaulted was 2.2%, compared to 2.35% in 2019. During the financial crisis of 2009, that number was slightly more than 4%. Analysts don’t think it will get that bad, although their analysis is contingent on the expectation that we aren’t about to repeat that Great Recession.
The core problem is the enormous increases in car-related prices over the past couple of years, first due to supply chain inflation thanks to the COVID-19 pandemic, then due to the increased price of gasoline driven by Russia’s invasion of Ukraine and the Western response to the ongoing war. Jeremy Cross, the president of International Recovery Systems in Pennsylvania, characterized it as “the perfect storm.” Essentially, although prices have increased due to short supply, people have still been able to purchase new cars because the government’s COVID-19-related stimulus spending led to artificially inflated credit scores and extra cash to spend. But now, with the stimulus money gone and prices still going up, many of those same people won’t be able to pay their bills—an ominous sign of much deeper problems in the U.S. economy. New research from the Consumer Financial Protection Bureau shows that while car prices for “prime” consumers (based on credit score) have increased 30% since 2019, they have increased 60% for “deep sub-prime” consumers.
Last time the global economy was in chaos, sub-prime mortgages were the culprit. This time it could be the more than $1 trillion car-loan sector. The Twitter account CarDealershipGuy—operated by someone who claims to be an auto dealership CEO and is clearly knowledgeable about the industry—reports that nine of his lending partners are now waiving “open auto stipulations” for consumers, meaning that people can default on their too-expensive car while simultaneously having debt financed on a newer one. According to CarDealershipGuy, “Car valuations are now plummeting. Some cars have declined in value as much as 30% y/y. And these same people that took out these big loans are now ‘underwater.’ Basically, they owe banks more on these cars than they are worth. And the banks are well aware of this.”
Read More: https://www.nbcnews.com/politics/economics/car-repossessions-are-rise-warning-sign-economy-rcna61916
In the Back Pages: Hanukkah in Ukraine
The Rest
→ Elon Musk’s reign as Twitter CEO, savior of free speech, promoter of hate speech, or what have you, now hangs in the balance as he hands his fate over to public opinion—or perhaps just appears to do so to get more free publicity for the site. An informal poll conducted by Musk on Twitter asking if he ought to step down received 17 million votes, 57.5% of which agreed that yes, he should. Musk has flip-flopped on various policies since taking over, including enforcing a brief ban on allowing users to post links to their other social media accounts—a brazenly anti-competitive step for a platform that still bills itself as a digital public square—before backtracking in the face of heavy criticism. Going forward, Musk has said that he would consult with Twitter users on large policy decisions, as he appears to be doing now, by soliciting votes on the company’s future leadership. Twitter is clearly taking a toll on Musk: Shares in his electric-vehicle company Tesla are down 60% year to date. According to Tesla’s largest retail shareholder, Leo Koguan, “Tesla has no working CEO.” Hopefully all the free marketing will pay off in the long run.
→ Potential GOAT (Greatest of All Time) Lionel Messi and his Argentina squad got it done on Sunday at the World Cup. Bringing glory back to the streets of Recoleta and La Boca, and thousands out to the Plaza de Mayo for an all-day party, the Argentine squad took down a strong challenge from the French in a penalty-kick shootout for all the marbles. After regulation, the game was tied 2-2, with Argentine goals from Messi and Ángel di María and both French goals from star striker Mbappé; extra time took things to 3-3, with both Messi and Mbappé getting one past the goalie. So, it all came down to penalty kicks, which the Argentines dominated, and then it was all over. On his 5th and maybe final try, Messi was crowned, and the nation of hyperinflation had something else to focus on. It’s worth mentioning that while this will probably be remembered as a great Cup, much of the infrastructure for it was built on the backs of slave labor the Qataris shipped in and abused, and three journalists—Grant Wahl, Khalid al-Misslam, and Roger Pearce—died suddenly during the proceedings.
→ Palestinian Authority President Mahmoud Abbas was thrilled with the World Cup, thanking the Emir of Qatar for “[p]resenting the Palestinian cause to the world in an unprecedented way.” Abbas was referring to the overwhelming presence of Palestinian flags in the crowd throughout the tournament, in contravention of the rules that bar banners of non-participant countries. Abbas also might have been referring to the egregious, constant harassment of Israeli journalists, captured on social media, by World Cup attendees from around the globe. According to sports journalist Tal Shorrer:
The best way to describe our experience so far is unpleasant. Almost every time we go on air we see fans coming up behind us with Palestinian flags, yelling “free Palestine.” We have also heard people calling us murderers, saying we aren’t welcome here, and that our microphone is red from blood.
Abu Mazen couldn’t have said it better himself.
→ Binance, the world’s largest crypto exchange, has been caught red-handed. In a bit of Homeland-worthy financial sleuthing, an independent journalist found that the Cayman Islands-based company, barred from doing official business in the United States since 2019, has been using a U.S. subsidiary to retain access to funds from American investors. After being barred, Binance created a supposedly wholly independent business called Binance.US to circumvent the ban. Reporting in Forbes in 2020 uncovered that the new company was intended to be a decoy, protecting the larger company from U.S. regulators. Now, the new discovery that Binance has been not only using Binance.US as a diversion but also actively moving funds from U.S. investors to its primary (outlawed) platform adds more fuel to the fire for those convinced that the exchange is going to crash and burn like competitor FTX did last month—a potentially catastrophic blow to the crypto industry. Between last Monday and Wednesday, the company saw $6 billion in withdrawals. CEO Changpeng Zhao continues to boast that Binance has more than enough funds to cover the withdrawals, but he may soon be charged by the DOJ on money-laundering charges stemming from 2018, which wouldn’t be good for client confidence.
→ America’s reigning doughnut king, Krispy Kreme, has announced a plan to automate 18% of its production over the next 18 months. This cost cutting—equivalent to $2 million a year—is just one of many moves the yeasty giant is undertaking to pay down its debt and boost revenue. Soon you’ll be able to get the warm glazed magic in France, Chile, Costa Rica, and Switzerland, in addition to the 31 countries where the chain already operates. The company is now charging more for its doughnuts, and soon it won’t even be human beings making them. It’s just one more sign of the recession. We’ll be watching to see if the holes in the middle get bigger, too.
→ Researchers from the Death Penalty Information Center have released their 2022 report, and they’re calling it “the year of the botched execution.” They found that even as the number of executions nationally has declined and is holding steady at a very low level, many of the executions scheduled are being mishandled. Only six states carried out executions this year, including Alabama, Arizona, Oklahoma, Mississippi, Missouri, and Texas, with Oklahoma and Texas making up half of the total. And two death-row prisoners were exonerated this year, making up a portion of the estimated 5.6% of all wrongfully accused death-row inmates the center has counted over the past 50 years.
→ A Maine parent is accusing her school district of putting her daughter on the gender-transition pathway without her knowledge or consent. At a recent school board meeting in Central Lincoln County, Maine, mom Amber Lavigne told the board that her 13-year-old daughter had been given a “chest binder” by her new social worker at school. Lavigne said school staff had taken to calling her daughter male pronouns, and that the social worker encouraged the teen to keep the chest binder secret from her parents. This is increasingly standard practice across the United States. In front of a recent congressional panel, Jessie Pocock of Colorado-based Inside Out Youth Services, an LGBT+ outreach center for youth, told representatives, “In terms of parents’ rights to know at schools, I mean here in Colorado, parents don’t have the right. If a young person is questioning their gender or their sexuality, there are laws in place that say that they have the right to process that with their trusted counselor.”
→ In the run-up to the 2020 election, the nonprofit organization Center for Tech and Civic Life gave out more than $350 million mostly donated by Facebook founder Mark Zuckerberg to “safely administer” elections. While the organization claims it gave money to every office that asked for it in 2020, the new list of county offices that will be receiving part of (non-Zuckerberg funded) $80 million in grants leans heavily Democratic. The grants have raised ire among Republicans, especially because there are basically no strings attached to how the money can be used. Texas Attorney General Ken Paxton announced in November that he was investigating the organization due to suspicions that it used the pretext of protecting voters from COVID-19 to raise money that was ultimately used for partisan electioneering.
Read More: https://apnews.com/article/2022-midterm-elections-united-states-government-and-politics
→ Big Tech is hoping its $100 million lobbying pays off as this session of Congress comes to an end. Companies like Facebook and Google have spent oodles trying to prevent lawmakers from cracking the whip on their obvious monopolies and privacy infringements, and so far, they’ve had great success. But before the end of this congressional session, lawmakers like Amy Klobuchar (D-MN) and Marsha Blackburn (R-TN) are trying to pass two smaller bills, one intended to protect children online and the other to break up the app monopolies Apple and Google have on iPhones and Androids to encourage more economic competition. If they fail, federal agencies and the Supreme Court might step up in 2023 to get the job done through other avenues. For example, the Supreme Court will be hearing arguments on Section 230, a law that indemnifies Big Tech against being sued over things people post on their platforms, and the Federal Trade Commission is considering imposing protections on the companies that might get them to stop using our data to target us with personalized ads.
→ The new $858 billion defense spending bill, passed last Thursday in the Senate, would boost the Pentagon’s apparently un-auditable budget by $45 billion and would also rescind the Biden administration’s COVID-19 vaccine mandates for the armed forces. The bill includes new security aid for Taiwan and Ukraine and a raise for military members, and while it overturns the vaccine mandates, it will not provide restitution or reinstatement to those thousands of troops who were fired, as has been suggested by some members of Congress. One of those members is Sen. Ron Johnson, who was so concerned about data from the Pentagon’s Defense Medical Epidemiology Database (DMED) system presented to him by whistleblowers—data that showed large increases in health problems across the military in 2021—that he sent a letter to the DoD in February asking, “Is DoD aware of increases in registered diagnoses of miscarriages, cancer, or other medical conditions in DMED in 2021 compared to a five-year average from 2016-2020? If so, please explain what actions DoD has taken to investigate the root cause for the increases in these diagnoses.”
TODAY IN TABLET:
A Slice of History–On Rye by Jenna Weissman Joselit
An exhibit on Jewish delis serves up tasty servings of nostalgia while avoiding anything that might leave a bitter aftertaste
The Takeover by Russell Jacoby
Self-righteous professors have spawned self-righteous students and unleashed them into the public square
SCROLL TIP LINE: Have a lead on a story or something going on in your workplace, school, congregation, or social scene that you want to tell us about? Send your tips, comments, questions, and suggestions to scroll@tabletmag.com.
Hannukah in Ukraine
Candles. Sufganiyot. Missiles.
By Edward Serotta
Edward Serotta is the director of Centropa, a Vienna-based Jewish historical institute, and the producer of the podcast series, “A Ukrainian Jewish Century.”
Getting into Ukraine these days isn’t all that difficult, what with direct trains from Poland, Austria, Germany, Czech Republic, and Moldova.
The question is, Why go? The entire country is taking a beating as a vengeful Vladimir Putin sends missiles and drones screaming into Ukraine’s electricity grid and gas and water systems, terrorizing civilians and plunging millions of families into darkness and cold.
I wanted to see how Jews in Ukraine were coping during Hanukkah. After all, it isn’t called the Festival of Lights for nothing, and what is Hanukkah if not a story of resilience?
I began my eight-day journey in shell-shocked Odessa. Two weeks ago the power grid was badly hit, and a great many people are still living in freezing apartments; it is 29 degrees Fahrenheit outside as I write this (although not in the coffee house where I’m sitting). Cell phone towers were also destroyed, which means families can’t even stay in touch with the world. Utilities are starting to come back on in some districts, but progress is slow.
It’s enough to drive Ukrainians out of the country—and not for the first time—although draft-age men cannot leave. Some locals told me that Odessa lost a third of its population last spring but that some of those returned during the summer. When I visited in August, things looked relatively lively.
Much less so now. A fine Italian restaurant and coffee bar on Pol’s’kyi is now shuttered, and the restaurant next door looks to be on life support. A once well-stocked grocery store on Pushkin Street has now closed. And that’s just on the corner where I’m staying.
But just as cockroaches will supposedly be around after a nuclear strike, hipster barbershops were full, as were bars, including one called—wait for it—Shelter. Not all restaurants can prepare food, but they do serve drinks and pour wine by candlelight. Note to self for New Year’s resolutions: Never say a bad word about hipsters again.
Along every street in Odessa (and, I’m sure, everywhere else in Ukraine), you hear the sound of portable generators. The Beit Grand Jewish Community Center has a massive generator that keeps the heat and lights on, and the programming team, led by Marina London, is determined to run existing programs and start new ones.
This impressive building was funded by a family from Detroit that traces its roots back to Odessa, and the building’s activities are now funded by Jewish federations, family foundations in England, the Joint Distribution Committee, and locals. Holocaust survivors are looked after by the Claims Conference.
On the first night of Hanukkah, a dozen members of one of the Jewish youth clubs (“We have three of them,” Marina told me) were about to light the menorah in the lobby.
A lanky Kosta Beggelman, a 21-year-old engineering student and graphic designer, did the honors. Then he held forth on the meaning of Hanukkah.
A few minutes later, Kosta and his friends joined the audience in the auditorium for the School of Laughs, where young would-be comics were trying out stand-up routines in front of professional comedians. Their jokes had to include references to Hanukkah. Fifty-five people were in the audience.
“We are running more than 25 programs over these eight days,” Marina said, “from a Jewish Literature Club to a club for volunteer social workers. We also have a program for special needs children and adults. And we have a two-day course in first aid.” She raised her eyebrows, sighed, and said, “Of course people are depressed. And very scared. But everyone needs something to keep their minds off of what’s going on.”
As I left the building at 7:00 p.m., staffers from the Joint Distribution Committee were readying several hundred boxes of food to be given out the next morning.
Outside, there wasn’t a single street light on. Traffic lights weren’t functioning. A city plunged into darkness with a cold wind blowing in from the Black Sea.
There were few cars driving about, so there was little of that whining sound caused by tires racing along cobbled streets. What I heard instead was the sound of thousands of portable generators, like a constant, ongoing hum of defiance in a city determined to live its life.