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-- Posted Monday, 22 November 2010 | Digg This Article | | Source: GoldSeek.com
Rick’s Picks Monday, November 22, 2010 “Phenomenally accurate forecasts” Last week’s financial headlines offered a study in contrasts. On the ostensibly sunny side of the news was the explosive evacuation coaxed forth by the General Motors IPO. Economic optimists must have rejoiced at this spectacle, oversubscribed and charged with hubris as it was. Just like in the good old days, speculators and Wall Street bunko artists couldn’t get enough of a bad thing. Or are we perhaps being unfair to GM? At best, we’d say the jury is still out, given that it has taken $50 billion worth of Federal largesse to elevate the once-mighty automaker from basket case to dubious recovery story. Nowhere in the torrent of stories about the IPO was there even a word about the actual cars that GM builds. Not that this would be a concern on Wall Street, with its idiot savant’s focus on the deal itself. For the record, though, we’ll mention that the latest Consumer Reports is not exactly gung-ho on GM’s, um, product. Although the company has made strides in engineering and quality, notes the magazine, it still has a ways to go to catch up with foreign competitors. (And let’s not even mention the Volt, a GM hybrid that looks like it will take every bit of a planned $7000 subsidy to move the car out of the showrooms.) So if the hoopla-and-hubris surrounding GM was last week’s “good” news, what was the bad? In case you missed it, a bankruptcy-in-progress that will eventually dwarf GM’s took another small step toward the abyss. We are of course referring to the latest bond sale by the Golden State -- a $10 billion debacle that drew such a tepid response that California was forced to cancel yet another offering this week of $267 million of debt. Too bad they don’t have a Federal Reserve to take up the slack, since sucking up $10 billion worth of the wishfully named “revenue anticipation” notes would have been just chump change had it been done Bernanke-style. Come to think of it, California may have laid the groundwork for just such an experiment when, earlier this year, Sacramento paid its employees with IOUs. Why not simply issue more such IOUs to buy its own bonds? This would almost exactly mimic what the Federal Reserve has been doing through its “quantitative easing” Ponzi scheme. An added plus is that the tactic might spur some public discussion of quantitative easing itself, possibly enlightening the mumchances, mysophiliacs and groveling poltroons who bring us the news each day. Business reporters, pundits and columnists seem not to understand the process of quantitative easing too clearly, since, as far as we are aware, none has even bothered to ask the question, “How does the Fed pay for all of that Treasury paper it has been buying?” Isn’t it time they looked into this? *** Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2010, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Monday, 22 November 2010 | Digg This Article | Source: GoldSeek.com
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