These new bubbles threaten the economy

This system has once brought the world economy to the brink of the abyss: loans to millions of Americans for things many can not afford, with collateral whose value is often questionable, bound and resold to hungry for investors. Ten years after the unexpected collapse in real estate prices in the US first sparked the subprime mortgage crisis and then the global economic crisis, Subprime credits are again flourishing - in other words - low-rated loans and high interest rates. This time, however, mortgages are not worrying about observers. The debt of Americans grew particularly fast in three other areas, an analysis by N-TV Max Borowski writes.

Car loans

With a total volume of 1.1 trillion. dollar unpaid loans, American carmaker debt obligations reached a record level. About 107 million Americans, nearly every second elderly American, are currently paying car credit. A large part of these loans are rated "risky" or "high risk", ie with bad or particularly bad credit ratings. Will this bubble burst?

Credit cards

And as far as credit card debt is concerned, Americans would have their previous record before the financial crisis this year, with the debt amounting to the threshold of 1 trillion. dollar. Some observers see this as a good sign of the economy, as US citizens are clearly confident in their financial situation and persistently consume. Are we afraid of bursting the bubble? Most banks currently do not see any cause for concern. While unemployment is at the lowest historical level, they do not expect big losses. In addition, US households are currently spending less than ten percent of their debt servicing income, which is significantly lower than in previous years. But there are some warning signs: the American bank Wells Fargo recently lowered its outlook on card debts as the credit criteria were downgraded to an alarming extent.
What consequences would a burst of credit card bubble have? American banks are already aware of the painful bad debt on credit cards. During the previous crisis, they had to write off 100 billion dollars. Additionally, credit card lending is crucial for the US economy. If banks begin to refrain from doing so, this could hinder consumption and thus 0 of the whole economy. 

The rate of non-payment for car loans is relatively low, but rises above all in pp. Subprime segment. In addition, maturities are becoming longer - a sign that banks are constantly reducing their  customer requirements. Several aspects of the auto credit boom remind the practitioners of the practices before the mortgage crisis. According to numerous reports, some of the creditors are extremely careless. Thus, in many cases, debtors' creditworthiness is not considered. Many loans are obviously based on false information about assets and income from customers. This means that the proportion of bad loans can be significantly larger than the official one. The purchased vehicle is in most cases used as the sole guarantee for many car loans. However, in the event of a default, the resale value of the car is often found to be lower than the remainder of the loan. As a result, the client falls into a debt trap and the creditor can not collect some of his money. What consequences would a car bubble burst? More than 1 trillion. dollar credit volume of which more than $ 200 billion has a bad credit rating: these are huge sums, but not paying much of the car loans will not trigger a new global financial crisis. For comparison, before the financial crisis, US banks were selling mortgages for over $ 3 trillion a year. Some investors, however, can suffer serious losses. High risk loans are particularly popular at the moment as they have a relatively high interest rate of about five percent per year. Many of some earlier lenders combined their car loans and, together with the risks, sold them to investors.  Moreover, the debt pyramid is a problem for the automotive industry. Demand in the US drops. More loose lending, however, still keeps high-level car sales. But without credits, sales of new cars on the crowded market will collapse.

Student credits

Faster than credit card loans and car payouts in recent years, US student debts are rising. With an average of $ 34,000, university graduates are leaving university. Total student loans amount to about $ 1.4 trillion.
More on the topic

Americans prefer debit cards to credit cards

Can the balloon burst? To some extent, this has already happened. About 8 million Americans out of a total of 44 million with student loans fail to meet their obligations. This corresponds to a share of 18 per cent. Only a third of former students manage to repay their credits on time and without state or state support.
What consequences would a burst of student dollar bubble burst? In any case, it will be expensive for US taxpayers. If, prior to the latest financial crisis, student loans were mainly provided by banks, then 90% of new student loans are provided by the Ministry of Education. Thus, the state carries the bulk of the default risk. Moreover, the over-indebtedness of many graduates is becoming a problem for the economy as a whole and for society. Because of the higher weight of these student loans, fewer young Americans buy houses, furniture and other household goods than ten years ago. The American media even finds a link between increased indebtedness and the increasing incidence of depression and problems in young family relationships.