Category: Economy

Auto Warriors

auto industry

There’s too much negative news in Michigan these days.  Let’s see …

  • The Michigan State budget deficit is now $1.3 billion.
  • Residents of Macomb County get to pay higher taxes.
  • MEA’s cooking the books.
  • Want more government transparency? Well, only if you speak bureaucrat-ese.
  • C’mon, politicians don’t want transparency.  With more transparency, how would they continue getting away with voting against our state?

So before even bringing up the auto industry, let’s watch this funny video from The Onion (below the fold). Sometimes, you just gotta laugh at it all.  At this point, laughter may be the only way to keep your sanity intact.

News concerning the auto industry is dismal at best.  The government, with it’s incredible track-record of inefficiency, waste, and failure, is commandeering our beloved car companies.  They’ll be forced to make tiny, little “green cars,” that nobody wants, and Michigan will end up in a far worse situation than we are now.  It’s sad.

After soaking up billions in “bailout” dollars, Chrysler is officially filing for bankruptcy and merging with Italian auto maker Fiat.  And oh, goodie! The Obama Administration will bedictating what kind of cars Chrysler will have to build! As noted in The Detroit News:

The company will offer fewer trucks and a lot more cars … There is a market (for smaller cars) — you could look at the Mini or the Smart car — but, if you add all of it up, it does not make a profitable Chrysler.

Let me sum it all up for you.  Detroit is going to go from making fabulous cars like this:

Making matters worse, it appears the federal government is going to do the same thing to General Motors!  I mean, really … Will GM soon stand for ‘Government Motors’?

What the future holds for Michigan and our Motor City, nobody knows.  The federal control of General Motors is game changer:

How is a company like Ford supposed to compete with Government Motors- whenever they produce a better car, they have to worry that the government is going to subsidize cars produced by GM- or let’s say the Ford F-150 does really well- maybe the government will get upset and pass laws that make the Ford F-150 ‘environmentally’ incorrect? There are conflicts of interest all over the place with this arrangement, and no one is going to win.

No one, no country, has ever nationalized an industry in this manner- it is shocking. Not only that, but the deal that the government is forcing GM to take is also a mobster deal- the banks (who GM owes money to) and the shareholders (who invested in GM by buying its stock) get nothing out of this deal, and instead ownership of the company goes to the labor union and the government. This is organized looting of private companies by mobsters.

And all of this for what? To produce cars that are not competitive?

These sure are strange days, my friends … strange days indeed.

 

 

Facts You Should Know Before Selling Your Gold

Have you noticed the big increase in advertising, by companies hoping to buy your gold?

I have, and it concerns me.  I don’t want any of my fellow Michiganders getting the short-end of the stick.

You see … There’s a reason for the increase in this type of ad. It’s more than just the fact so many people are struggling in Michigan today too.  Gold is going up.  In other words … it’s a good time to be buying gold.

 

WARNING:

It’s totally understandable if you find yourself stuck in a position where you must sell your gold.  Hey … we do what we gotta do in times like these.   So if you find yourself in that position, just make sure you visit a few reputable, local jewelry stores.  You’ll find the majority offer a reasonable price.  But make sure you steer clear of anyone wanting you to mail your jewelry to them!

Now … if you don’t really need to sell your gold now, you just want some extra cash … don’t do it! We’ll get into why in a minute.

Whatever you do … DON’T SEND YOUR GOLD IN BY MAIL TO ANYONE!

A company I see advertising a lot right now, is Cash4Gold. How it works, is … you call in and talk with a salesperson who proceeds to send you a “refiners pack.” This is for you to put your jewelry in to have it mailed to the company.  Once your jewelry has been “inspected,” you’ll get a call from your salesperson, in which they’ll offer you a ridiculously low price.

Since few are willing to accept such a low price, the salesperson then “negotiates” with you, and (finally) “agrees” to a higher price.  Now you feel good because you got the price up, but the problem … you still got much less than you deserved.

ShoeMoney has a great post on the whole Cash4Gold scam! He posted an entire email from a former Cash4Gold employee.  Make sure that you read ShoeMoney’s post!

Here’s more from MSNBC:

“I had some gold I was going to sell anyways so I was thought I would keep track of the details for insurance in case of loss and to give (Cockerham) the information for one of his articles,” Kutz said. So before he mailed the jewelry to Cash4Gold, he took it to a local pawn shop and received an offer of $180. “I really didn’t think I would have a problem with the amount before I did it. I was more looking at it from what I could get locally and then from Cash4gold as they advertise paying higher amounts,” he said

Kutz said Cash4Gold sent him a check for $60. When he called and balked at the offer, it was increased to $180. He then sent the evidence to Cockerham.

“This tells me (consumers) should never accept Cash4Gold’s first offer,” Cockerham said.

 

Inflation & Gold:

As we’ve discussed before, we are set to enter a period of high inflation. Take a look at the following chart for a second, then, I’ll explain why.

st louis fed money supply
Let me ask you a question … if you had a one-gallon balloon, how many gallons of water could you pour into it before it burst?  Or, if you were building a house of cards, how high could you build it before it collapsed?  Of course, the laws of physics will answer the questions for you. The balloon will burst, and the house of cards will eventually fall to the floor.

The above chart illustrates the annualized 13-week rate of debt monetization by the U.S. Federal Reserve. Never in the history of central banking has so much debt been monetized in such a brief period of time.  We are lurking uncharted waters.

The huge spike in debt monetization you see on the chart (which started last fall), is going to impact the value of the dollar.  Unless the entire history of economics is repudiated, the dollar is going to fall.  Inflation.

When we think of inflation, we tend to think in terms of the prices on stuff we buy going up.  This, however, is a bit of an illusion.  What’s actually taking place, is our dollars are getting diluted, thereby lowering the value of each existing dollar.  Because of it’s reduced value, it takes more dollars (today), just to buy the same stuff as before.  It’s the same things as watering down a drink.

In our fiat system, the government gets to print money at will! This is the moral and literal equivalent to a counterfeiter who prints money illegally. By simply printing money, they reduce the future purchasing power of our current U.S. dollars.  The higher prices we end up paying are the result of an increase in the money supply.

People get hurt by this willful dilution of our money too.  Those who get hurt the most are those living on fixed incomes, people who save their money, and the poor.  Savers lose because the money they saved is worth much less than it was when they first saved it away. People on fixed incomes and the poor get hurt due to their limited incomes continue to buy less and less.

Now, investors buy gold primarily as an inflation hedge. This means when there’s an expectation of inflation, the price of gold goes up.  Here, take a look at the following chart.  The green line is the price of an ounce of gold, and the red line is the money supply.

As you can see, the price of gold trades in concert with the money supply.  Looking back to our previous chart for a moment, we can see that the recent (and massive) upward spike in the money supply, still has yet to work itself through the economy.
The Moral of the Story:

The dollar is going to lose a significant amount of its value, which will drive the price of gold even higher.  In other words … that’s the reason so many companies are buying expensive TV commercials and offering to buy your gold.  It’s going up!