Originally Posted by
Dahon.Steve
However, what really worries me folks are all the people getting new cars with "sub-prime" loans. I had no idea people with little money can actually buy a new car with a high interest loan that does not pay principle?? I also read these loans could very well create a bubble that can expload with the banks not having funds to create more loans. A very similar situation to the real estate collapse.
I recently got a letter from my life insurance company that my policy had been transferred to another company. This seems harmless but probably my payment history was sold as a type of futures-commodity to the new company. The old company effectively borrowed money against credit that I had built up for them by keeping up my payments.
Why wouldn't car loans be used in the same way? Not only can investors trade your debt on a vehicle, things like warranties provide contract security for parts manufacturers/suppliers so that they can take out loans from banks who are willing to believe that nothing will happen to undermine the contracts they have to provide parts and service, etc.
Insurance companies profit tremendously from accidents. Yes, they lose some money paying the parts suppliers, repair services, etc. that fix the damages vehicles but then they raise premiums and recoup that money with profit after the fact.
Considering all these automotive industries rely on people not giving up their cars when, for example, they lose income, have accidents, etc. there is certainly an incentive for eliminating public transit and lobbying for infrastructure that is as car-friendly and car-alternative unfriendly as possible. Securing flows of capital and spending are more important to many people than freedom to make healthier choices and to escape rising debt and indenturement to insurance rates, etc.
It's really sad that practically anything can be turned into a debt-leash to indenture people into making payments for some term and it's even sadder that these indenturement contracts can be traded the same as any other commodity-future. I wonder why no one has ever invoked the 13th amendment with regard to debt-practices. I suppose the idea is that if slavery as a birth-debt would be eliminated, then people would be free to refuse offers of indenturement in exchange for future earnings. The question is why so many people feel that they are not really free from taking on such debt and what it would take to free them, if not.