Aspen Times Weekly: Hit & Run with John Colson
By the time you read this, the New Year will be upon us, New Year’s Eve but a hazy memory viewed through the bottom of an empty Champagne bottle, 2013 little more than an unsettling, dark gray smudge on the receding horizon as we speed toward the future.
Well, I’m here to tell you that 2013 is not leaving quietly by the back door, at least not as far as I can tell.
For instance, this morning I glanced through the Jan. 1-15, 2014 edition of The Progressive Populist, which bills itself as “A Journal From America’s Heartland” and views world events from the left, with no apologies.
On the front page is a story with a headline reading, “Cars: New Sub-prime Crisis” and a subhead, “America’s Next Big Rip-Off.”
Below that headline, writer David Dayen informs us that the financial world has discovered it can push automobile loans onto people who, due to a variety of circumstances, are not very good risks for loans of any kind.
And, these investo-bots have discovered, if you write enough of these questionable loans and package them together as “auto-loan backed securities,” you can sell them to other investors, starting off a daisy chain of profit-taking that seemingly has no end.
Does this remind you of anything?
Need a hint? Well, does the phrase “mortgage-backed securities” bring anything mind?
If not, I’m afraid the problem is that you’ve got no mind to bring anything to, so have another beer and surf the ESPN channels. You may stop reading now.
But to those of you who twitched at the above question, you’re right. The phrase was all over the news, blogosphere, Twitter, Facebook and every other organ of expression about six years ago, when the world’s economy was plunged into darkness.
The economic collapse, you may recall, was largely triggered by rampant speculation in “mortage-backed securities,” which were bundled sub-prime home mortgages sold to people who had no hope of getting a house through the traditional mortgage market, and who catastrophically defaulted on those mortgages.
The greedy housing industry was getting fat off the proceeds, as was the greedy investment market, as were home buyers who counted themselves lucky to get such a great deal as a no-money-down, low monthly payments for five years and, oh yeah, that pesky balloon payment that would never come due because we’ll be able to flip the house for a huge profit after a couple of years.
But the flip, as we all now know, was not to be, and instead the whole house of cards (pun intended) blew apart, taking the world’s economy with it.
And now we’re doing it again, but this time with automobile loans, which happen to represent the second largest purchase most families make after they buy a house.
Remember how the auto industry was deemed “too big to fail” (along with certain financial concerns) and was rescued by taxpayer bailouts? Why do you think that was done? Because the powers that be knew that if the auto industry imploded, that would be the end of the world’s financial structure, and chaos would be the result.
Some may think, wrongly, that we can just do it again, use taxpayer money to bail out the institutionally corrupt auto-finance industry and all will be right again, someday.
But this time there is no bucket of cash to be drawn down. Our economy is still gripped in recession, our reserves are depleted, and only the 1 percent have any cash to speak of.
And new laws designed to protect us from these shenanigans, such as the Consumer Financial Protection Bureau, are utterly useless because Congress exempted auto dealers from the law’s provisions. And auto dealers are the ones driving this new sub-prime loan debacle.
So, here we are again, just as we were a decade ago, with the only alarms being sounded by small, progressive news organs that are drowned out by the mainstream media, which is subservient to the needs and demands of the bankers and the power-brokers.
I can’t wait to see what 2014 brings.
This past week was a rather lively one for country music lovers in Aspen. The Belly Up brought three incredible country acts to the stage within a five-day period.
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