There is an old saying about the more things change the more they stay unchanged.
Recently we mentioned water filled balloons and how when pushed on in one spot they bulge somewhere else. For those who didn't see the article that's just another way of saying water seeks its own level. And so does big money. Crap games float and so do investment bankers.
On Market Watch today there's a story, "How much did sub prime loans fuel GDP boom?" It's really a story about subprime auto loans, not altogether a new topic in the financial press, and how much car and light truck sales contributed to whatever recovery we're currently enjoying.
In the second quarter, motor vehicle and parts spending grew an annual
17.5%. Put another way, cars made up 3.7% of all consumer spending, the
highest rate since the first quarter of 2008.
Subprime loans make up about a third of new car-sales and two-thirds of
used cars, according to data from Experian Automotive, at the end of
last year. The New York Times, in a story about the subprime loan sector
, pointed out that growth has climbed more than 130% in the five years since the crisis.
No prizes, by the way, for guessing which sector was cut out of regulation
by the Consumer Financial Protection Bureau in an amendment tacked onto the Dodd-Frank bank reform law.
If we all aren't' careful this administration may be getting set to foist another clunker dunker program on American taxpayers. You remember that gem. Officially known as the Car Allowance Rebate System, another one of those silly acronyms bureaucrats love, this time CARS, it was supposed to create 70,000 new jobs and stimulate the economy.
According to a post-program study by Joe Biden's alma mater, the University of Delaware, it created exactly 3,676 jobs at a cost of $1.4 million per job.
A well known economist who is still around tossing out advice, Alan Blinder, the former vice chairman of the Federal Reserve under Sir Alan Greenspan (Are we in trouble yet?), helped promote CARS, calling it a tripartite winner that would stimulate growth, help the environment and reduce economic inequality.
Later, a University of Michigan study revealed it did help the environment by boosting fuel per gallon from 0.6 mpg to the whopping 0.7 mpg. Here's another way it helped America. According to Wikipedia, "It led to a gain in market share for Japanese and Korean manufacturers at the expense of American car makers, with only Ford not taking a significant hit.[13]
In case you don't get it, in this administration that's called out-sourcing in-sourcing jobs. We'll close by quoting the writer's, Steve Goldstein, last two paragraphs. They'll do wonders for your confidence.
In the interest of full disclosure we do not know Mr. Goldstein, have never met the gentleman and have no connection to MarketWatch.
If we all aren't' careful this administration may be getting set to foist another clunker dunker program on American taxpayers. You remember that gem. Officially known as the Car Allowance Rebate System, another one of those silly acronyms bureaucrats love, this time CARS, it was supposed to create 70,000 new jobs and stimulate the economy.
According to a post-program study by Joe Biden's alma mater, the University of Delaware, it created exactly 3,676 jobs at a cost of $1.4 million per job.
A well known economist who is still around tossing out advice, Alan Blinder, the former vice chairman of the Federal Reserve under Sir Alan Greenspan (Are we in trouble yet?), helped promote CARS, calling it a tripartite winner that would stimulate growth, help the environment and reduce economic inequality.
Later, a University of Michigan study revealed it did help the environment by boosting fuel per gallon from 0.6 mpg to the whopping 0.7 mpg. Here's another way it helped America. According to Wikipedia, "It led to a gain in market share for Japanese and Korean manufacturers at the expense of American car makers, with only Ford not taking a significant hit.[13]
In case you don't get it, in this administration that's called out-sourcing in-sourcing jobs. We'll close by quoting the writer's, Steve Goldstein, last two paragraphs. They'll do wonders for your confidence.
There may well be a good argument that the risks from subprime car
loans, to use the memorable word from former Federal Reserve Chairman
Ben Bernanke to describe subprime mortgage loans, are “contained.”
There’s no evidence that the current financial system is built on
leverage to the auto market in the way it was to the housing market
before that bubble burst.
But it’s also worrying the U.S. economy so quickly shifts from one area
propped up by loose lending to another.
In the interest of full disclosure we do not know Mr. Goldstein, have never met the gentleman and have no connection to MarketWatch.
No comments:
Post a Comment