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This week, I wanted to highlight the United States auto industry. In 2008, the real estate market was the main culprit: everyone was talking about the “subprime” mortgage-crisis. Subprime involves riskier borrowers with lower credit scores. Two years ago, I emphatically said that it this time around a recession will not revolve around subprime mortgages, but more than anything else subprime auto loans. And this is especially remarkable given the fact that in 2008 various large American car manufacturers were on the brink of collapse and eventually had to be bailed out by former president Obama.

Bloomberg’s Conclusion

<p>Source: Bloomberg, New York Fed Consumer Credit Report</p>

The New York Fed's Own Report

<p>Only the share of late payments on auto loans with the highest credit scores dropped; the other, riskier segments experienced a rapid increase in delinquency. Source: New York Fed</p>

Last But Not Least: The Second-Hand Car Market

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