Cartoon 800: Here we go again!

As an economic system, capitalism is not a system of stasis. In other words, a “win-win” condition is unnatural and not sustainable. Therefore you should be suspect whenever there is the appearance of mutual beneficial gain.

Automobile sales have rebounded. This is despite the continuing economic malady. How is this possible? Who are the buyers? How can they afford to do so? The bottom line; where is the money coming from?

It is the new “subprime” loan industry of automobiles. There will be a reckoning down the road just like with the mortgage subprime industry. Perhaps they will coin it “autogate”. Another case where lending institutions knowingly fund an unsustainable condition. Will the public bail these institutions out again? The lending institutions obliviously believe so or they would not be making the loans.

Let us take a realistic look at how banks faired with the mortgage crisis.

#1. They made the loans and created a mea cupa of balance sheets and executive bonuses #2. They charged outrageous interest #3. Inflated the value of the properties #4. Received a financial bailout from the public #5. Repossessed the property to flip it #6. The borrowers are still required to pay on property they no longer have in their possession

I am certain Bernard Madoff is envious. Why has our supposedly fiscally conservative politicians not spoken up and made it clear no public bailout when things fall apart? Their hands are again in the till.