New Subprime Borrower Crisis Recalls 2008

Are we seeing shades of 2008 market crash as WSJ says “More Subprime Borrowers Are Missing Loan Payments”? Bottom line: “Borrowers with limited or troubled credit histories are AGAIN defaulting on credit cards, car loans, etc.

This time, subprime personal loans (& not necessarily subprime home purchase loans) are a growing worry. In fact, “delinquencies on subprime car loans & leases hit a record in February, based on Equifax’s tracking that goes back to 2007.” Concluded the newspaper: It is a sign that the healthiest consumer lending environment on record in the US is coming to an end.”

You think? As in the 2008 fiasco, the GOVERNMENT is identified as a major problem-creator. Says the WSJ: “Many people, incl those with less-than-perfect credit, paid off debts & built up savings during the pandemic … [thanks to] … the government’s response, including stimulus payments and child tax credits … BUT now many of those [over-generous?] benefits have run out. Subprime borrowers, who sometimes have lower incomes or less savings, are being hit hard. Inflation, running near its highest point in 4 decades, is also forcing many households to choose between paying for essentials and paying their monthly loans.” It’s a perfect storm, then, depicted by the WSJ, and it is eerily similar to similar stories in the paper I read during 2007 about the subprime real estate mortgage bubble leading up to the 2008 market crash. Jus’ sayin.

Davd Soul