Yesterday I pointed out how the social engineering leftist morons that brought us the recession of the last 5 years, by using the power of government to fist coerce lenders into making horribly risky loans, then creating a legal climate that encouraged them to bundle these risky loans into vehicles that where traded as if they were valuable securities, and finally used tax payer money to bail out the financial industry when that house of cards imploded and the fat lady sang her closing song, decided that what we needed was more cowbell! Because nothing makes as much sense as taking a horribly idiotic practice that not only completely ignores the laws of economics and human nature, but goes out of its way to pretend they don’t matter and when they assert themselves, violently, on the stupid, that tax payers foot the bill, and doubling down on it.
Anyhoo, the god damned feds are not limiting their stupid to forcing lenders to make risky home buying loans to people that are very likely going to default anyway on them, but they are expanding it to the automotive industry as well. Ideologically blinded retards feel that more stupid is the answer to the pain their policies cause, I guess. From the article:
The Fed’s program, while aimed at bolstering the U.S. housing and labor markets, has also steered billions of dollars into riskier, more speculative corners of the economy. That’s because, with low interest rates pinching yields on their traditional investments, insurance companies, hedge funds and other institutional investors hunger for riskier, higher-yielding securities – bonds backed by subprime auto loans, for instance.
Lenders like Exeter have rushed to meet that demand. Backed by Wall Street banks and big private-equity firms, they have been selling ever-greater amounts of subprime auto loans in the form of relatively high-yield securities and using the proceeds to fund even more lending to more subprime borrowers.
Expansion of the subprime auto business was chronicled in a 2011 Los Angeles Times series. Since then, growth has continued apace. Consider that in 2012, lenders sold $18.5 billion in securities backed by subprime auto loans, compared with $11.75 billion in 2011, according to ratings firm Standard & Poor’s. The pace has continued so far this year, with $5.7 billion of the securities issued, compared with $4.4 billion for the same period last year, according to Deutsche Bank AG. On Monday alone, three deals totaling $1.6 billion of subprime auto securities were announced by Wall Street banks.
To make up for the risk of taking on increasing numbers of high-risk borrowers, subprime auto lenders charge annual interest rates that can top 20 percent.
Ohm but what could go wrong here, huh?
Look, we are so screwed. The problem is the feds keeping interest rates artificially low so they do not get hammered by the interest on the money they have to borrow to overspend. The effects of these low interest rates is killing savings and basically crippling economic growth of any kind. Stimulus after stimulus, with so far over a trillion dollars being pissed away, serve to do nothing but line the pocket of some connected people and fill the campaign coffers of politicians of one particular party, fails to do anything but pile on more debt and make it even more important to keep rates low. Sooner than later that bubble will burst, and what we have now will be thought of as the good old days.
Look at that bolded section at the end of the quote. We have lenders now “fleecing” the poor idiots that should have been turned away for a loan to the tune of 20%. How much do you want t bet that they will be made out as the bad guys for charging such exorbitant interest rates, instead of the fed’s policy of “encouraging” them to make loans to people they should have politely declined to give any money to? You cannot social engineer prosperity like the idiots behind these policies want to. We have already seen how things end. But here we are again with them doubling down on more of the same. What’s the definition of insanity again