WHAT WAS – WHAT COULD BE
By Neil George
Who really likes to live for the moment?
For most folks – we either love to reminisce about the past and what was – or we’re fixated on the future – and what could be if only this, that or the other thing would come true.
And when it comes to investing – this state of either fixating on the past or the future can end up costing you plenty in real money right in the here and now.
Too many of us look at our stocks and if they’ve been a winner – then we become too in love with what they did. And if they’ve been a loser – then we tell ourselves that if they just came back to our cost then we’d sell.
Of course – the winners of the past often become laggards in the future – just as the losers only get worse.
And then we just keep thinking wishfully of what might be in the future and try to look back at our past with rose-colored glasses.
This doesn’t just extend to individual investing – as it also is a fixation when it comes to economic policy.
For policy makers are always want to look back with answers to current issues from old playbooks – while continuing to divert our attention from pending problems with this concept by having us blissfully believe in what could be if only we go along with their plans for our tax money.
One prime example can be seen in what we’re already seeing in the rollout of what I see as the next market bubble in the making. And it’s called the era of the biggest government yet ever seen. With Uncle Sam turning into Uncle Sam Incorporated – we’re going to be experiencing a huge surge in direct government ownership as well as hundreds of billions to even trillions of dollars in Uncle Sam cash flowing to individual companies as well as whole industries.
And while we’ve seen some of the beginnings of this through the direct ownership stakes amounting to hundreds of billions of dollars in dozens of banks around the country by the US Treasury via the so-called Troubled Asset Relief Program or TARP – this program alone is just getting going.
The next mode is going to be in Uncle Sam’s Treasury buying into a host of other companies beyond the banks.
You’ve seen, heard and read about how General Motors and Ford want more cash from Uncle Sam. While they’ve already set up some 25 billion dollars to supposedly enable them to start building cars that customers might actually want to buy – these two companies already have fired up their lobbyists to push the Senate Majority Leader – Harry Reid (D-NV) as well as the Speaker of the House – Nancy Pelosi (D-CA) for even more cash.
These two are feeling their oats and thinking about how grand it was long ago when Uncle Sam ran various bits of the
And they want the US Treasury via its TARP deal to buy directly into GM and Ford as well as perhaps becoming the financier of auto loans.
GM of course is claiming that it’s doomed. That with the last quarter whereby it lost some more money at 2.5 billion the company is saying it’s cash horde is running out.
Of course – the media is just enraptured with this news. Even though if you look at the quarterly filings – you’ll see that the losses of GM have actually fallen by more than 6 times from the prior quarter and some more than 15 times less than the same quarter last year.
GM also says that it has some 16 billion in cash on its current books – but that’s not enough. It needs reportedly some 11 to 14 billion in working capital to operate. And the threat is that it will go bankrupt without a huge influx of Uncle Sam cash.
This company must think that we as voters are indeed rubes.
For what you didn’t hear from GM – or the media for the most part is that late last week – just as it was whining about going under – that it just cut the ribbon on a new manufacturing plant in Saint Petersburg, Russia.
That’s right – using its own capital and that of investors and partners – GM is building new plants and rolling out new cars in
And it doesn’t sound as dire for it as the media and politicos might want it to sound to us.
In fact – if you look at the sales figures for GM – you’ll see that exclusive of its new Russian division – in
But in Asia and
What gives?
Well, in other countries and other markets – GM is actually operating in the real world of designing and building products that the market wants and producing them in the real world of labor and regulatory conditions.
Where as back in the
So, it’s trying to spell out a dismal future for us to buy into that would mean no GM and countless thousands of unemployed workers killing our economy in the
And we’re buying it.
Meanwhile – what about the rest of the
These companies have all continued to bring in their own capital and have build and continue to expand or will expand their manufacturing in the
And their products sell.
So to GM – we should simply say – tough. Go fix yourself.
But that won’t fly in the current political landscape. We want to reminisce about how GM and others used to be. And we’re also keyed up to look to the future that’s being framed by lobbyists that would be horrifying without Uncle Sam’s cash.
Guess what this means?
Yep – GM is going to get its cash. And as for financing for GM cars – GMAC which is majority owned by Cerberus (headed of course at least officially by former US Treasury Secretary Snow) – it will more likely get US Treasury cash as well as credit from the other side of Uncle Sam’s financial division – The Federal Reserve Bank. This means that sooner than later – look for 0 percent down and 0 percent financing on giant lumbering SUVs on GM lots to come from Uncle Sam.
And of course this is just the beginning. And it would be too much longer – when someday we’ll look back at this move and wonder what were we thinking? And then we’ll hopefully be moving on to somehow get to a future again whereby Uncle Sam isn’t a partner in a seemingly endless streams of businesses and industries.
But for now – as it related to your investments – the here and now dictates that you need to continue to gear up to invest right along with Uncle Sam Inc.
This doesn’t mean buying GM perhaps – but it does mean eyeballing the increasing list of companies that are and will be getting big streams of cash – and from banks to defense contractors as well as healthcare insurers, alt-energy companies and even infrastructure companies – the future is being set up right now in the present. And why I continue to make my list of what you need to buy right now to invest alongside Uncle Sam Inc.
UPCOMING EVENTS:
World Money Show
In addition, just in case any readers are interested in having me address your investment or professional group please email me with ideas or suggestions at njgeorge@att.net or phone 314-616-3325.
Errors/Omissions: I always welcome being called on facts, figures and commentary from readers and look forward to your feedback. I can be reached by email at njgeorge@att.net.
