Are too-easy car loans the next subprime disaster?















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In a word, no. Wall Street-traded debt securities of all kinds are fuel for the next sub-prime financial disaster. The first three segments of this program all have the same thing in common: securitized debt bubbles. Whether in housing, health care, car loans, student loans; whether initiated by Democrats or Republicans, each for their own agenda, costs pumped up by investors, which are not allowed to come down and are instead bailed out with taxpayer money after collapsing (coupled with monetary policy that rewards moral hazard) is a formula for more financial disaster. Wages will forever be chasing runaway prices caused by debt bubbles if nothing is done to change the motivation to speculate in the financial industries, and people will continue to take on debt because they can't afford current prices. If sub-prime is no longer the threat that it was in '07, it's only because investors have bought up huge segments of the housing market and now mean to securitize that; namely, with CDO's packed with rental obligations and inflated property prices backed by Fannie and Freddie. Financial leaders (like Larry Summers) insist that rescinding Glass-Steagall had nothing to do with the '07 mortgage meltdown. If that's true, then why are they so reluctant to reinstate it? Forget nitpicking around with the Volcker Rule---reinstate Glass-Steagall and separate Wall Street from Main Street permanently.

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