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Saturday, December 13, 2008 - Vol. 10, No. 297
In this Week's Editions
Monday: |
Lichtenstein Out-Maneuvers the IRS (once again)… |
Tuesday: |
Inflation on "Sale" as Deflation Dominates Global Markets |
Wednesday: |
Getting the "short end" of the Treasury stick |
Thursday: |
Now More than Ever |
Friday: |
Focus on Busted Credits and High Income in 2009
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Memoirs From inside the Fishbowl...
Dear A-Letter Reader,
With just a little bit more haggling, the ‘Big Three’ could soon be receiving their requested US$30Billion+ in free money. While at the same time, another half-million newly unemployed Americans wonder where their bailout will come from, and why exactly they’re paying good tax money to prop up a handful of huge, failing businesses…the benefits of which they’ll likely never see.
What a world!
Despite their banner year in 2007, GM still managed to rake in the single largest annual loss ever felt by an auto manufacturer…an estimated US$38.7 Billion. Of course it’s worth noting that Toyota sold the same amount of vehicles and managed to squeak out a US$17.1 Billion profit.
It’s also worth noting that GM has thus far fired over 34,000 of their American employees. While Toyota fired…none. Zero. Seriously.
So why are we paying good money to prop up a business that clearly can’t compete in the open marketplace? Because the auto manufacturers are playing hardball. They’re threatening to throw several million more job losses on the fire of deflation, stoking the inferno and possibly driving the economy into a downward spiral.
Put simply, Detroit is playing a good, old-fashioned game of “chicken” with Washington…and they’re winning.
In that respect, my hat should be off to Detroit for winning a dangerous gamble, right? Not really. In fact, not at all.
And that’s because government is a pushover compared to the market. To the market, those millions of workers are contributing to the inefficiency of the system. And as such they should be flushed out or restructured in Chapter 11.
But to the government, those are millions of votes. And in the grand popularity contest that is American Democracy, ‘saving’ jobs and winning votes will always beat out doing the right thing.
And that’s exactly what the Japanese did in the 1990’s, propping up ‘zombie’ banks and businesses to keep up appearances. It failed miserably there, and the policies have cost the country two decades of fruitful growth…so far.
If you want to know just how pitifully this is all bound to fail, just take a look at former Congressman Bob Bauman’s comment from Thursday. It’s a sobering reminder of the kind of government ours is beginning to resemble.
But enough of that. You could probably go the rest of your life without hearing more about the “Big Three”. And I don’t blame you; this is their worst run of advertising since O.J.’s six-hour Ford Bronco commercial back in the early nineties.
Instead let’s take a quick look back at the week in Sovereignty.
Despite their best attempts, the IRS once again failed to pierce Lichtenstein’s bullet-proof bank secrecy laws. I never cease to be amazed at the rigid sovereignty and vigilant defense of personal liberties found in this tiny principality. To see what I’m talking about, take a look at Monday’s edition.
And in our latest lies report, we reviewed the shocking history of government debt. If you’re not familiar with the “sticks-for-gold investment strategy” or the real reasons why Parliament was burnt to the ground, you should have a look at Wednesday’s edition.
And for the value investor in all of us, Investment Director Eric Roseman has been on a globe-trotting world tour, consorting with some of this year’s most successful asset managers and investors about what the future holds. You can read all of his insights in our Friday edition.
And on a more personal note, I just want to warn everyone that the gloves are coming off. I won’t be tiptoeing through the tulips in 2009, as I have this past year. I’m sick of watching these fools roll around like an elephant on roller skates, smashing markets, profits and jobs with reckless abandon. And I’m not going to hold it back anymore.
Instead I’ll be following all of the government’s wily interventionist policies and explaining how they’re all bound to fail. From an academic standpoint, 2009 promises to be a spicy year where the history books are revised and re-written. Sovereign Individuals will emerge from this crisis stronger than ever before.
But for those who simply take the word of media and government; those who buy into the ‘hype’…it promises to be catastrophic.
De Omnibus Dubitandum
Matt Collins
A-Letter Editor
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