Foggy Bottom Breakdown (Auto Da Fe)
In typical fashion, the mountainous labors of our august
KongressKlowns to ‘save the auto industry’ have given birth to a
ridiculuous mouse, and now the ‘markets’ are whimpering and crying for
mommy. Some things concern me more than the future of Detroit Iron and
pink Cadillacs, though.
1. Cries are already being raised for the
Federal Reserve or the TARP to lend. The problem here is constitutional
legitimacy. Rightly or wrongly, the legislature has rejected such
funding. But our culture has changed to the point that many consider it
acceptable for the executive branch to simply overrule the legislature
in caudillo fashion; that is, rule by decree. When you lose the rule of
law, you are living in the Third World. And that has very long-term
2. As for the idea of using the TARP, it reportedly
has only $15 billion left from the $350 billion first tranche. The $15
bil is needed just for daily liquidity — ordering in sandwiches,
paying the coffee vendor, buying printer ink, and such. Unlike ‘solvent
but illiquid’ entities which can benefit from emergency assistance,
Usgov is the opposite — ‘insolvent but [barely] liquid.’
negative net worth of nearly $60 trillion, or four years’ worth of GDP,
Usgov is indisputably insolvent. However, its sovereign power to tax,
borrow and print money allow it to continue generating short-term
liquidity by main force. To raise more TARP funds, for instance, Usgov
would have to shotgun the Treasury market with even bigger debt
issuances, above and beyond the heavy calendar of weekly maturities
which have to be rolled over.
To put it in different fashion, if anything
happened to disrupt the schedule of debt auctions or the D.C.-bound
flow of tax withholding — be it sunspots, an earthquake, or squirrels
chewing through a fiber optic cable — Usgov would run out of cash and
default within a few business days. It simply does not have any
meaningful level of cash reserves, in relation to its gargantuan size.
I ask you — is this any way to run a superpower? Is it really a superpower anymore?
Despite all of the above, a moment of catharsis is approaching. I have
been waiting for the flagship bankruptcy of a household name, which
exposes in indisputable and unforgetable fashion the wreckage of the
system. If we get 3-inch type headlines proclaiming ‘Gray Christmas’ or
‘Black New Year,’ that will be one of the great contrary-opinion fades
of all time. I would buy busted shares [not automakers, mind you] with both hands, whilst bellowing
‘More, please, kind sirs!’
BE THE ABYSS
One hour later — here we go — a White House spokesklown says TARP funds may be used to bail out the auto industry.
is how Hugo Chavez governs in Venezuela — handing out state funds to
his cronies, as if it were his personal bank account. ‘L’etat, c’est
moi,’ in the immortal words of Napoleon.
Welcome to the Third World, comrades. At last we’ll get cheap bananas when the steak runs out. Viva la revolucion! Viva TARP!
‘“Because Congress failed to act, we will stand ready to
prevent an imminent failure until Congress reconvenes and acts
to address the long-term viability of the industry,” Treasury
spokeswoman Brookly McLaughlin said in an e-mailed statement.
‘Since Congress rejected the president’s request, he will simply rule by decree until a new Congress complies with his wishes.’
Mugabe does crap like this every day. At least they don’t get freezing
winters in his bankrupt nation. Plus, everybody’s a millionaire
there. Harare, here I come! Cholera don’t scare me.
I think we need to watch this again!
Wow, here is one Senator who seems to have taken the Crash Course —
result of the bailout culture that now exists on Capitol Hill will be
incredibly high rates of inflation down the road as the economy picks
back up and prices reflect the amount of new money circulating through
is no question this will result in inflation,” [Senator] DeMint said. “The amount
of money we’ve borrowed, the amount of money we’ve printed has put us
in a more dangerous situation than we’ve ever been in as a country. We
may not see the inflation as long as the economy is slow. But, I’ve
talked to some economic experts and once the economy starts picking up
with so much money in the money supply and so much debt, we’re likely
to see very high interest rates and very high inflation rates.”
DeMint went as far as to say that General Motors (NYSE:GM),
one of the Big Three auto manufacturers lobbying for bailout money, was
better off than the nation that’s debating whether to rescue it.
you look at where we’re going, we’re not on a sustainable course as a
country,” DeMint said. “Frankly, GM is in a better financial situation
than we are as a country. The only difference is we can print money.
But as other countries around the world lose confidence in the value of
a dollar – that’s going to come home very shortly.”
Damn, Jim … YOU SOUND LIKE ART CASHIN!
FREE MONEY ISN’T FREE
i am in the second stage of awareness and i imagine i will eventually move into another stage at some point.
i hope i dont have to move out of my house tho……………………i am underwater and sinking fast……………somebody throw me a tarp