HERE WE GO AGAIN? Car Repos Soar 70% As Auto Subprime Bubble Pops; “It’s Contained” Promises Fed.

The auto loan subprime bubble may be the latest to burst (after student loans) as the rate of car repossessions jumped 70.2 percent in the second quarter, with much of that increase coming from finance companies not run by automakers, banks or credit unions. The good news: the percentage of auto loans that end in default is just 0.62% of all auto loans. However, as everyone but the Fed knows, what matters is the flow, not the stock, and the direction and acceleration in defaults simply means that the maximum saturation point has been reached and going forward lenders will experience ever greater losses, which in turn will limit their willingness to offer subprime loans to US consumers desperate to find a house (because clearly one doesn’t need to home when one can sleep in their Chevy Tahoe). . . .

The one reason we know the subprime auto loan bubble has burst and is about to lead to another round of devastation around the nation is one simple statement: “The New York Fed dove into lending data, and its economists found that the bubble fears may be misplaced.” In other words, it is “contained.”

Hm… where have we heard that before?