Sunday, May 24, 2009

Memorial Day Factoid and Comments


Sunday Forum: They died for you
Author RICK ATKINSON tells us 10 things Americans should know about World War II

The United States built 3.5 million private cars in 1941; for the rest of the war, we built 139. Instead, in 1943 alone, we built 86,000 planes, 45,000 tanks and 648,000 trucks.

DoctoRx here.

Comparing WWII conditions to today, there is now immense gnashing of teeth over the "depressed" new car sales pace of somewhat over 9 million vehicles yearly. The population is about 2 1/2 times that of 1941. The current depressed sales pace is more than 2.5 times the vehicle production pace of 3.5 million in 1941. So, where's the "Depression" in new car sales? In addition, there are vastly more existing vehicles already carrying people and things around now, and they last much longer than they used to. So, there should be less need now for new cars, not more.

If the country could survive building no passenger cars for almost 4 years back then, it can survive at a 9 million build pace now. And if society is serious about decreasing fuel use, the fewer new cars, the better.

The powers that be, which currently are the Democrats, have a problem. There is no war to absorb millions of the unemployed. Fixing potholes can go on only so long. Health care is already a large part of the economy, and the President opined yesterday on C-SPAN that health spending needs to be reined in, not increased.

Perhaps what America needs is a time out, a slowdown, a rest. Economic output for its own sake is a false God. Perhaps more time with friends, family and even alone would be better for the country than the obsession with "the economy".

The automakers for years have sold more vehicles than people could afford. They became finance companies first and manufacturers second. Thus the popularity of leasing. Thus the Ditech subprime subsidiary of GM's GMAC subsidiary. And so on. They were called the Big Three, but they were more part of Big Finance than the manufacturing sector. (And similar things were true of Caterpillar, John Deere and increasingly IBM. And GE has been a finance company first and other things second for many years.)

The past year or so has witnessed the essentially complete collapse of the American private financial structure. As we reflect upon the efforts and sacrifices of those who served the U. S. military tomorrow, we may question why the current and prior administrations have asked immense sacrifice from American taxpayers to keep the "system" going but have asked no sacrifice from those who lent massive amounts of money to the holding companies that happen to own a bank. None.

If the main purpose of the Presidency, Congress and the Federal Reserve is to spend whatever it takes to make bondholders whole while the nation groans, then this is no longer a government of and for the people.

America needs to get back to basics. As Yves Smith of Naked Capitalism has said, when it comes to helping Big Finance, Team Obama believes in the Big Lie. Basically, the Big Lie is that the "legacy assets" that Big Finance owns are "illiquid".

The truth is that whatever assets Big Finance owns are worth what their market price is, and they are not illiquid; Big Finance just hates the market price. If potential buyers of the securities won't pay what Big Finance thinks they are worth, then the public has no dog in that price dispute. Yet the President insists that the Public Private Investment Partnership (PPIP) must go forward, further risking an already actuarially insolvent FDIC, providing large taxpayer subsidies to Mr. Obama's main economic advisor Larry Summers' former employers in hedge funds as well as to Big Finance. After this disgraceful sham happens, the greatest looting operation perhaps in history will be more or less complete.

Being inherently cyclical, the economy will rebound and still responsive to money-printing, the current Depression having been caused by the many frauds from the housing-finance community and the Government-approved excessive leverage used by Big Finance. The looters and their enablers in government will claim victory, and the Potemkin economy based on transferring money from savers and borrowers into the pockets of the Big Financiers will have been saved from a fate worse than (name it) by you and me.

Have a happy Memorial Day.

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