Subprime Bubble? Pure Bullshit!

Annual bankruptcy filings dip for a seventh straight year and repo rates remain historically low relative to risk. 

'Just came in. It's a repo.'
Mike Baldwin via CartoonStock - www.cartoonstock.com/cartoonview.asp?catref=mban4236—Mike Baldwin via CartoonStock - www.cartoonstock.com/cartoonview.asp?catref=mban4236

Despite the drumbeat of daily doom that the fearmongers ferociously throw into their daily diatribes, the overwhelming majority of folks these days are having no problem with paying their car note. 

In a population of nearly 250 million adults, only 771,000 declared bankruptcy this past year according to the American Bankruptcy Institute. The lowest number since 2006.

As for the riskiest loans. Those alone have risen from a credit starved  1.6% delinquency rate in 2014 to a 2% rate today. But historically, that 2% is  still far away from the worst of times, and it highlights a hidden truth. More people are getting auto loans than ever before. All other market segments have either remained stable or declined. 

A lot of variables have helped make the subprime bubble of doom a non-event despite a drumbeat of doom going all the way back to 2013.  Personal bankruptcies have become a 330 to 1 remote reality in the modern day. Interest rates have remained near 45 year lows. The job market has recovered immeasurably over the past 7 years, and auto loans have been extended in length from a three-to-five year norm, to a seven-to-eight year period. 

The longer period with lower rates translates into cheaper payments for most debtors, and often times that lower payment overrides the increased risk that comes with a longer period of payment. An overlooked truth that you will rarely see reported in today's world of yellow journalism