Why Jamie Dimon is warning of ‘cockroaches’ in the US economy | CNN Business
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When a pair of overleveraged Bear Stearns hedge funds imploded in 2007 when American stocks were at all-time highs many shrugged the episode off. Later, it became apparent that those bankruptcies were among the first shoes to drop in an epic meltdown that would impact virtually all Americans.

Here’s what’s going on now.

Subprime auto lender goes bust

Subprime loans were at the heart of Bear Stearns’ demise. The focus today is not on toxic mortgages but on subprime auto loans.

Tricolor Holdings, a Dallas-based auto lender specializing in loans to borrowers with weak credit scores, went bankrupt in September.

[…]

The bankruptcy shines a spotlight on how millions of Americans are hurting from the high cost of living and sluggish job market. Cars are more expensive than ever, and more and more people are falling behind on their car loans.

Even JPMorgan, which prides itself on what Dimon has dubbed a “fortress balance sheet,” suffered $170 million in losses linked to the Tricolor bankruptcy, according to the company’s earnings call on Tuesday. A web of murky financing is exposed

Just a few weeks later, First Brands, a privately owned auto-parts supplier, filed for Chapter 11 bankruptcy.

  • HaraldvonBlauzahn@feddit.orgOPEnglish
    5·
    6 days ago

    Another thing is that car insurance costs are also rising sharply in the US. This is caused by the surge of extreme weather which in turn is caused by climate change:

    https://www.dailyclimate.org/climate-change-increases-car-insurance-2669563061.html

    In a nutshell, car insurers make a profit by covering events that are expensive but happen rarely. Like your car being stolen, or being destroyed in a road accident, or going up in flames because something is wrong with the motor.

    Extreme weather adds to this profile risks that are expensive and happen much more frequently. Like a large part of the cars in the area of Houston being destroyed by flooding. Against such risks, insurance does not help much, which means that owning cars becomes even less economical than it is already.