Originally published March 5 2015
MSM propagandists urge Americans to take out seven-year loans to buy corporate stocks and ignore subprime loan bubble
by J. D. Heyes
(NaturalNews) Propagandists for the mainstream media (MSM) will do anything and say anything to keep up the facade that the U.S. economy is completely healthy and moving apace rather swimmingly, especially if it means advertisers will continue to plunk down big bucks with them.
As noted by ZeroHedge.com, CNBC recently dedicated three entire segments to subprime auto lending, "producing, in the process, three of the most hilarious clips in recent memory."
Zero Hedge noted that "expert" Phil Lebeau discussed the latest numbers from credit score company Experian, which purported to show that average monthly payments for automobiles reached a record high in the fourth quarter of 2014, coming in at almost $500. Also, Lebeau talked about Experian figures showing that the average amount of a car loan has increased 4 percent year-to-year, to around $24,000.
"It gets worse," Zero Hedge noted. "Fully a quarter of new car loans carry terms of at least 73 months," meaning 25 percent of new loans are being stretched out for more than six years (far beyond a time when the average car retains its loaned value).
I'm not concerned just yetAnd while that is bad enough, Zero Hedge reported that Experian's director of automotive finance, Melinda Zabritski - "the same Melinda Zabritski who last month said we are looking at a 'remarkably stable' automotive loan market" - is not yet ready to pass judgment.
"I haven't quite made up my mind on 84-month loans," she said, according to Zero Hedge, but she at least admitted she was "concerned."
Up next in the interview sequences, Zero Hedge said, was Mike Jackson, CEO of AutoNation, who observed that if you add in leasing (which is different from buying, so why bother about details), loan terms are really only about 56 months. Zero Hedge said the remainder of the clip can be summed up in three words: "Trucks, trucks, trucks."
Then, Zero Hedge wrote, in the third segment, "Bill Griffeth and Kelly Evans host WSJ's Jonathan Clements and Premier Financial Advisors' Mark Martiak for a discussion on what we're calling the car-stock arbitrage wherein you are (literally) encouraged to take out a seven-year loan with a rapidly amortizing asset as collateral in order to buy stocks."
The title of the segment, according to the video clip, is, "Seven-year car loan okay if you plan to hold onto it." That's an awfully long time to hold onto a machine that a) is used often; b) wears out a little more each year; c) loses its value year over year; and d) may be obsolete for your changing needs and uses before the loan is paid.
New subprime lending bubble building - in car loansNever mind the fact that guests with a vested interest in more auto loans were being asked what they thought about more auto loans. The fact that the subprime auto lending market is following the same path as the subprime home lending market in the late 1990s through to the bust in 2007 is appalling.
As noted by The New York Times in a January report, the vultures are preying once again on society's most vulnerable:
Across the country, there is a booming business in lending to the working poor - those Americans with impaired credit who need cars to get to work. But this market is as much about Wall Street's perpetual demand for high returns as it is about used cars. An influx of investor money is making more loans possible, but all that money may also be enabling excessive risk-taking that could have repercussions throughout the financial system, analysts and regulators caution.
Enjoy the good times. Nothing could go wrong. You deserve this. Trust us.
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