Washington state's Mike Whitney warns us about another debt bubble--this time, it is about auto securities (last time, mortgage securities).
Soaring auto sales are not so much a sign of a strong economy as they are an indication of financial hanky-panky. We saw this same type of fakery play out in housing between 2004 – 2006, when prices went through the roof due to a mortgage-lending scam (“subprime”) that crashed the stock market and sent the economy reeling. Now the bigtime money guys are at it again, writing up auto loans for anyone who can sit upright in a chair and scribble an “X” on the dotted line. .... The finance gurus are packaging these sketchy subprimes into bonds, offloading them on eager investors, and recycling the profits into more crappy loans. It’s a perfect circle and it won’t end until the loans start blowing up, jittery investors head for the exits, and Uncle Sugar rides to the rescue with more bailouts.Blowing, and blowing-up, investment bubbles is what advanced capitalists are left with after hoarding so much wealth at the expense of the planet's ecosystems and working people everywhere. I suspect that much of the recent free money (debt money) issued under the Fed's QE program has been inflating this bubble.