Americans To Bail Out Big Auto Companies

The good people of Detroit Michigan can rest assured today that there will be no bankruptcies at the Big Three. There may be just a Big Two left standing, but that’s a different issue. The key issue is that the US Treasury, which means the taxpayer, today’s and those in the future, is committed to a bail-out package.

Of course, this is called the Fed Commercial Paper Funding Facility that was announced Tuesday. But let’s not kid ourselves; the Fed is technically insolvent and operates today with the backing of the US Treasury.

Safe too is the Big Hog Daddy. Yes, the motorcycle production of Harley-Davidson is another beneficiary of CPFF.

Next up for bail-outs, I think, should be Brunswick Corp (BC), lest all US boat production float away to China and Taiwan. These are high quality jobs and America needs them. In any case, somebody better save it, or the “storied past” of this Cara 100 company will be one for the history books. The price has fallen below $3.00!

It’s only fitting that I keep BC in the Cara 100 however. The name fits, but so too does the fact that this well managed company, global leader in its industry, has fallen into hard times, not of its own doing but because of idiots who operate and regulate the US banking system. Surely this financial crisis was understood to be in the works. How many times did I write about out-of-control credit default swaps and why Henry Paulson was parachuted into the Administration in July of 2006?

At the end of the day, well-researched books will show Americans how right I was to talk of Paulson’s Folly. The writing was on the wall within several months of his joining the White House team.

That’s history too. Under the circumstances today, I think the CPFF is needed. However, it’s not just America being saved by the US taxpayer. As of today, the good people of Brazil, Mexico, South Korea and Mexico have been provided $30 billion each ($120 billion in total) in US Dollar banknotes.

Last time I saw that happen, $GOLD took off on a moon-shot. That was when practically the whole of Latin America went broke in the late 1970’s and early 1980’s. Every time, these countries came to Washington and the Fed stepped up to the plate, there was a home run for the Gold Sox.

Same thing is going to happen here, but only bigger. This time, the world (ex-oil exporting nations) has gone bankrupt. To be factual; let’s call it technically insolvent, which is to say that without printing more money the debts of most countries could not be paid. Heaven help them if interest rates were to return to long-term (historical) normals soon.

Only if the price of gold soars to multiples of its present price will the gold that is supposedly stored in Ft. Knox be sufficient to backstop the full faith and credit of the US Treasury. Many well known analysts have pointed this out.

For the time being as Don Coxe pointed out in July, the US monetary authorities have torpedoed commodity prices. But the Interventionists ought to know that what goes around will come around. In time, the marketplace will respond. As John Embry has stated, the cost of these humungous bail-outs will send the gold price to surreal levels.

I say the USD will be destroyed unless gold does rise to levels undreamed of except for people like Rob McEwen who believe that the price will soon be $2500 per ounce or more.

That will be the cost of saving Harley-Davidson (HOG), Detroit, General Electric (GE), Humungous Bank & Broker… and on and on.

Have the best day possible knowing you are paying for this mess laid at your feet by bankers, regulators and free-spending law-makers. A week from now, we’ll be back to the future. There will be change in Washington, but it will be like we are caught up in a time machine, no pace to go unless the path is paved with gold.

Subscribe by RSS Subscribe by Email