Many believe it’s the big things that wreak havoc. Not so. Often it’s something quite small or obscure. Names most are unfamiliar with. Hindsight being perfect history frequently proves the point.
“As The Wall Street Journal noted earlier in the week, many young people borrowed to buy cars during the pandemic when they didn’t have to make student loan payments. Now they are struggling to repay both.
“Auto delinquencies and car repossessions are getting closer to 2009 recession levels.
“Yet investors have continued to snap up subprime auto debt.
“The Fed cut interest rates this week, even though current financial-market conditions suggest that monetary policy isn’t all that restrictive.
“Companies with low credit ratings issued a record amount of debt this summer as they sought to take advantage of high investor demand and shrinking risk premiums.
“There’s always a reckoning after periods of easy money, and the question is whether Tricolor is an outlier or a harbinger.
“Is Tricolor Holdings the June 2007 Bear Stearns Structured-Credit Fund of 2025?” More