More Sub-Prime Loans

"Have you heard the news? Auto sales are booming. Total sales for the month of August were 1,285,202 vehicles, according to Autodata Corp, the highest monthly sales figure for any August since 2007, when 1.47 million autos were sold in the United States. Year to date auto sales have totaled 9.7 million and are on track to reach 14.5 million. Between 2006 and 2007, auto sales ranged between 16 million and 18 million. They crashed below 10 million in 2009. The Keynesians running our government have pulled out all the stops to restart this engine of consumer spending. First they wasted $3 billion of taxpayer funds on the Cash for Clunkers debacle. Almost 700,000 perfectly good cars were destroyed in order to keep union workers happy. This Keynesian brain fart distorted the used car market for two years, raising prices for cars needed by the working poor. After that miserable failure, they realized the true secret to selling vehicles is to give them away to anyone that can scratch an X on a loan document, with 0% interest for 60 months, financed by Federal government controlled banking interests. Add in some massive channel stuffing and presto!!! – You’ve got an auto sales boom.

At a time when the stock market has just reached multi-year highs, the auto industry is not doing so well. Apparently the ignorant public will grab whatever amount of free financing they can get (known as sub-prime loans) to buy bigger and newer cars. Politicians, in an ongoing attempt to buy votes, are willing to this funding regardless of the damage done to the financial condition of the less sophisticated. Stock investors, playing with their own money, appear to see through the latest scam at least with respect to the auto companies:

General Motors stock is down 42% since 2011. The highly proclaimed success story called Ford Motors has seen their stock collapse by 50% since 2011. This is surely a sign of tremendous success and anticipation of soaring profits for these bastions of American manufacturing dominance.

The so-called auto recovery is little more than the same smoke and mirrors that created the massive bank bailouts. The same foolish loans are being made again to pretend the economy is recovering. They will default in the same fashion as sub-prime home mortgages did. More bailouts are coming as a result, and there is not a damn thing taxpayers can do about it. You are paying for the pretend economy that politicians need for the next election, whether it be 2012, 2014 or future elections. The decision has been made to cover up the truth for as long as possible.
This foolish charade cannot go on much longer. As Mr. Quinn notes (my emboldening):

We’ve become a subprime auto nation, addicted to easy debt, living lives of hope, delusion and minimum monthly payments. Storylines about economic recovery, fraudulent government statistics showing lower unemployment, feel good propaganda from the corporate mainstream media, and a return to easy money debt fueled spending does not constitute a real recovery. Until the bad debt is purged from the system and saving takes precedence over spending, the country will stagger and ultimately fall under the weight of its immense debt. We are lost in a blizzard of lies. This subprime fueled engine of recovery will propel the country into the same canyon of reality we entered in 2008. The crack up boom approaches..."
 

at  http://www.munknee.com/2012/09/more-sub-prime-loans/