Three deuces and a four-speed and a 389
Listen to her tachin' up now, listen to her why-ee-eye-ine
C'mon and turn it on, wind it up, blow it out GTO
Wa-wa, (mixed with "Yeah, yeah, little GTO") wa, wa, wa, wa, wa, wa
(mixed with "Yeah, yeah, little GTO")
Wa-wa, (mixed with "Yeah, yeah, little GTO") wa, wa, wa, wa, wa, wa
(mixed with "Yeah, yeah, little GTO")
Wa-wa (mixed with "Ahhh, little GTO") wa, wa, wa, wa, wa, wa
You oughta see her on a road course or a quarter mile
This little modified Pon-Pon has got plenty of style
She beats the gassers and the rail jobs, really drives 'em why-ee-eye-ild
C'mon and turn it on, wind it up, blow it out GTO
Ronnie and the Daytonas
Pontiac is going out of business after 82 years. And General Motors is being taken over by the government.
Here at the Daily Reckoning’s office in Paris, we are delighted. It’s like being alive when extra-terrestrials finally come calling. Or when the Pope becomes a Mormon. We’re getting to see things we never thought we’d see... amazing things.
It must have been about 1960. Our father traded in the old Chevy for a Pontiac. It was an old one - maybe it was a ’54 or a ’56. But it was heavier, more solidly built, and quieter than the Chevrolet.
A few years later, boys from better families bought muscled-up Pontiac GTOs and Grand Prix. We remember, when we graduated from high school, a friend bought a GTO. What a thrill it was just to go for a ride... and turn up the radio!
And then, it must have been in the early ‘70s, our old friend Doug Casey drove up in a shiny Pontiac Firebird. We still remember the sound of it... deep, resonant... a baritone of an automobile; it probably sucked an entire oil well dry each time it drove up to the pump. Global warming on wheels.
But now... Adieu, Pontiac...
And we can probably say goodbye to GM too.
"US to take majority GM stake in revamp," says the headline in today’s Financial Times.
How about that? America’s largest car company is going to be state-owned... nationalized... presided over by the federal bureaucrats.
It’s just a part of the shift away from the free market and towards an un-free market. Free market capitalism has failed, say the pundits. Let’s give the feds a chance.
Even Henry Kaufman, writing in today’s Financial Times, says that the Fed’s "libertarian dogma" prevented it from controlling the banks properly.
But the Fed is hardly a libertarian organization. It’s a banking cartel. As a cartel, it looks out for its member banks - and doesn’t hesitate to use state power to do so. There is nothing libertarian about it... and no dogma associated with it - except as Greenspan’s eyewash - that is even vaguely libertarian.
The Fed colluded with member banks to fix interest rates. In so doing, it helped create the biggest bubble in credit the world had ever seen. It was a terrible thing for the average fellow - who was lured deep into debt by rising house prices and cheap credit. But it was a great thing for the members of the Federal Reserve cartel. Profits in the financial sector - notably, the big Wall Street investment banks - soared.
But bankers are vulnerable to too much of a good thing - just like everyone else. Soon, they made the classic Wall Street mistake - they came to believe their own hype. Not only did they gin up trillions of dollars’ worth of preposterous financial instruments... they actually bought these debt bombs from each other.
This posed a grave danger to the nation’s economy... and to the banking system. Henry Kaufman claims the regulators dropped the ball because they put too much faith in the free market. But the regulators were little more than front men for the banks themselves. After Alan Greenspan came Henry Paulson as head of the Fed. He was probably still replying to messages at his old address when the crisis began. And the head of the New York Fed - now, US Treasury Secretary Tim Geithner - was elected to his post by the very institutions he was supposed to be overseeing.
Neither of them was about to stop the party; they and their friends were having too much fun.
And now, the feds are taking over control of America’s largest auto business...
And more thoughts...
*** Swine flu is in the headlines. They say 149 people have died of it in Mexico. Hardly a world-changing event so far, but epidemics have to begin somewhere.
Governments are swinging into action. They’re checking their stocks of vaccinations... and threatening to ‘shut down’ Mexico City.
Major epidemics come along about as often as new imperial currencies. The French currency - the gold Louis - was the money of choice in the 18th century. In the 19th, it was the pound sterling. The US dollar dominated the 20th century, it took over at about the same time as the Spanish Flu ran wild. The epidemic of 1918-1921 killed 30 million to 100 million people. It was the worst ever.
But this flu seems to move too slowly to be a major threat. People are able to see it coming, and take precautions. The next major epidemic will probably move much faster. When you will see the TV news reporter drop dead in front of your eyes, you will know trouble is coming.
*** Yesterday, the Dow fell 51 points. Oil stayed at $50. Gold lost $5 to close at $908.
The mood of the market is fairly positive, at least as we hear it. The last few weeks have produced an upward trend on Wall Street. The press is reporting "early signs of a recovery."
Of course, the crisis has to end sometime. But it seems much too early to us. Remember, this is a depression, not a recession. It is not a pause in an otherwise-healthy economic model. This time, the model itself is insolvent. Americans cannot continue going further and further into debt in order to provide huge bonuses for Wall Street and employment for China.
It’s over. Fini. Caput.
It will take time to destroy the industries, investments and lifestyles that depended on the old model. And it will take even more time to find new ones.
Corporate earnings this year are expected to come in 35% below last year.
The insiders seem to realize that the game is over. They’re selling into this rally - the highest level of insider selling in two years.
*** Zimbabwe, as long-suffering Dear Readers know, is a monetary pace-setter. It led the world in inflation - with a CPI estimated at 230 million percent. And then, it suddenly took the zeros off its currency - leading the world in deflation.
The latest report from that benighted land tells us that the chief of the Zimbabwe central bank, Gideon Gono, has found even more novel ways to get his economy rolling. Ben Bernanke, are you paying attention?
"Zimbabwe’s central bank head admits robbing private bank accounts," says a headline. Need money? Just take it directly from accounts in the country’s banks. Of course, thanks to Mr. Gono and his friends there isn’t a lot of money in Zimbabwe’s banks. Who would keep money in Zimbabwe’s banks, unless they had to? Still, a few international aid agencies had significant accounts - which Mr. Gono cleaned out. He said he only did it because he had to, in order to keep the economy functioning. Besides, he’s going to put the money back just as soon as Zimbabwe gets back on its feet.
*** Finally, we cast a nostalgic look backwards at Argentina, where we spent our recent vacation. Newsweek reports that Buenos Aires seems untouched by the global financial meltdown:
"Take the city of Buenos Aires, capital of an economy built on the export of food and leather, and acutely sensitive to downdrafts in global trade. The sprawling old neighborhood of Palermo and its subsections "Palermo Soho" and "Palermo Hollywood" see new clubs, bars and restaurants opening weekly. Hip spaces are filled nightly with the young and sleek, including young American and European expats with funds to spare."
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