Thursday, October 1, 2009

Cash for Clunkers - The Morning After

We tax all the others and pass the revenue on to you

Fox Business reports that September auto sales... suck big-time. GM is down 45%, Chrysler is down 41%. Wow, who could have seen that coming? Here's part of what I wrote in my August 9 column:

As a consequence, post c-f-c sales will be dismal and jobs will be lost.

And that's with the gummint forcing its new fleet purchases to its captive car companies, regardless of what the fleet managers say they need. Total car sales were down 4.8 million units. Ford, the remaining private American car company, was down only 5%. Go figure. Maybe there is something to be said for the private sector. If the two bailed-out car companies can't sell cars without taxpayer-paid incentives then they don't belong in the market. Oh yeah, and then we lose the $63 bil in bailouts. Do you care?

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The Wall Street Journal ran a story about an investigation into possibly improper payments to the NY Fed (hello, TimmyG) from Lehman's bankruptcy. Who could have seen that coming? Here's a comment in passing from my April 30 column:

Chrysler will either fail in bankruptcy or succeed by renegotiating or voiding its debt and contracts, including salaries, pensions and health insurance. A judge will decide and s/he won't prefer one group of same-class creditors over another.

But lo and behold, the judge did allow payments to junior creditors. TimmyG rigged the results of Lehman's bankruptcy so that the gummint would get money that it wasn't entitled to. That really irritated a bunch of those senior creditors and they want their money back. They are relying on the same creditor laws that apply to all of us, laws that TimmyG ignored when he made the loans and when he got some of the gummint's money back.

TimmyG's NY Fed lent Lehman $46 bil without any security. $46 bil is a LOT of money, at least here in Cottage Grove, Oregon. TimmyG's Fed's loans were behind all sorts of secured (and under-secured) creditors but he wanted to be paid ahead of them, in total disregard of the bankruptcy laws. In bankruptcy you get paid according to your creditor status. TimmyG's Fed's status was, well, think Confederate bonds.

I also wrote in the same blog, after TimmyG told us that the auto bailouts were really just loans and they were going to be repaid:

Now Chrysler is bankrupt and we have whatever creditor status we (the US gummint) are allowed, probably not "secured creditor" status because there was nothing left to secure our loans or otherwise give us a priority over other lenders. Since we were likely the last major lender, our money is just gone. Gullible junior creditors lose big time in most bankruptcies.

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Getcher new cars, hot new cars here, buy 'em now!!!

In my March 31 column I wrote:

Next up: Bailout loans get paid out as purchase incentives for suckers who buy cool new cars they can't afford. You heard it here first.

Really, I didn't want to be right, to be able to see that the bailouts are and always have been a government Ponzi scheme in reverse. But it wasn't that hard. In my April 30 column I also wrote:

The new spin is that the NEXT Chrysler loans must be repaid before Fiat completely takes over. Fiat? See my March 29 column. "New" taxpayer money will be repaid in that case, but not ALL taxpayer money. Fiat will get to keep the "old" money. It's a Ponzi scheme in reverse, paying off new investors with old investors' money. BernieM is smiling. We've been reverse-Madoffed. Hide the kids.

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We've had Cash-for-Clunkers and we're living through the predictable (and predicted) aftermath. Same for the bailouts. Now we're rolling out of bed, naked and ashamed, and TimmyG and his posse are still passed out all around us with big grins on their faces. We've been used and we know it. We could have said "No, don't do that, I'm afraid of the consequences", but we didn't. We went along because it seemed like a good idea at the time and besides, all the cool kids were doing it.

The Chicago Mafia always relied on its customers to like and want what it was doing to them.

Still does.

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Vote early and vote often.
Al Capone

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