Posted on 26th January 2013 by Administrator in Economy |Politics |Social Issues
As I was driving in Norristown today, I came to a stop light and glanced over at a Used Car dealership on the corner. When I saw this sign, I laughed out loud. It is surely a sign of the times. Thank you Ben Bernanke. This will surely end well.
It is important to remember that government interference always means either violent action or the threat of such action. Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom.
— Ludwig von Mises
napari says:
Theres something really messed going on.
The reality is the feds have not printed money. Only the treasury can do that. What the feds have done is created credit! What we have is about 10 trillion in credit floating around and about 1 trillion in physical cash. If the credit bubble popped the remaining physical cash would become VERY valuable in a heartbeat! Can anybody say yes I’ll be happy to pay you $500.00 for that $5,000.00 Fender or Gibson? Like it or not in a cash shortage people liquidate expensive toys first for pennies on the dollar.
I’m just biding my time and waiting I’m a patient man…cash will be king again…if only for a short while
Hot debate. What do you think?
5 
4
26th January 2013 at 3:40 pm
napari says:
hey admin…if you get a chance would mind explaining to me how to implement an avatar? I have one I’d like to use as my signature.
ty sir Jim!
Like or Dislike:
0 
0
26th January 2013 at 3:44 pm
Administrator says:
napari
I’m clueless with that stuff, but Avalon has instructions she can post. I’ll ask her to post it on this thread.
Like or Dislike:
0 
0
26th January 2013 at 4:27 pm
Chicago999444 says:
What?? You never saw a sign like that on a used car dealership before Ben Bernanke? You must not get around much.
These types of dealerships that advertise this way have been around since I was a very little child and that was a LOOOOOONG time ago, like in the supposedly blessed 50s. My father, having bad credit and a worse driving record, purchased the wares of dealers like this. What they do is, go to the big car auctions for dealers and scoop up all the cars especially “luxury” brands, that the good dealers don’t want because they are damaged in some way- they have been repaired after bad wrecks, or they have cracked engine block, or something. The cars are worth totally no more than the down payment they make the customer pay, which used to be about $600. They know perfectly well that most of their low-end customers are not going to make all the payments, or maybe even any payments at all, after they take the car off the lot. These types of dealerships have always operated in our ghettos and are usually where the famous “welfare Cadillacs” come from. After the dealer has found a patsy to take the car for the $600 or whatever “down payment”, he bundles the super-high-interest loan up with a bunch of others and looks for someone to sell all this “bad paper” to. In the meantime, the loser who bought the car makes one, two, maybe three payments if even, than leaves the car after it dies (usually within a few months of purchase) or he commits a crime while driving it.
It is an old, old business.
Like or Dislike:
1 
1
26th January 2013 at 5:57 pm
Appalachian Trail Deblazer says:
Chuck Berry says it best!
http://www.youtube.com/watch?v=sehRjN0jJqE&feature=youtu.be
Like or Dislike:
3 
0
26th January 2013 at 8:10 pm
AWD says:
Admin would look pretty fly in one of these
The government has gotten in on the usury game. Lots of cash to be made, why shouldn’t the criminals in Washington be deprived of the benefits of our financialization society?
Chi town has a point. Interest rates on these loans are probably 89.9%.
Well-loved. Like or Dislike:
8 
0
26th January 2013 at 8:37 pm
Outtahere says:
Don’t forget that it was reported not long ago that about 50% of all new car sales are now sub-prime loans being made to people who would not normally qualify for such a loan; another debacle in the making of course.
http://www.zerohedge.com/news/will-we-never-learn-subprime-auto-loans-accelerating-again
More of our infamous “recovery”. If all of this was not so pathetic it would be funny. I mean REALLY, you can’t make this shit up!
Like or Dislike:
2 
0
26th January 2013 at 9:39 pm
JIMSKI says:
As most here know I run a general auto repair shop with a high end European slant. We can work on everything but for most high tech shit we have better coverage for BMW and MBenz Than Honda and Toyota. We have an in house credit card by CFNA. Credit first is another name for a well known TBTF bank.
I have gotten approval on $1900 Invoices after 2 credit cards and the check service says FUCKNO. I had a kid in the University of Cincinnati with no job who put down his NO SHIT ALLOWANCE FROM MOM AND DAD get approved for a $1000 Bill. There is no longer any linkage between credit worthiness and authorization.
Puke
Well-loved. Like or Dislike:
7 
0
26th January 2013 at 10:17 pm
Makati1 says:
The banksters, and everyone with a few brain cells that still work, know that the game is about over. The first domino is teetering And it is going to take down the whole banking/financial system when it falls. They also know that there will be no rebuilding it later.
It’s like when the last property has been bought when you play Monopoly and now the players are just circling the board trading rent money until it all finally ends up in someone’s hands along with all of the properties. The players (banksters/corporations/countries) are still all betting that they will be the winner. Climate change, over population, more expensive energy, and the internet has now limited how many times around the board they can still go. Not enough rounds left for anyone to win but the players are all people who cannot accept a loss or afford one without joining the 99.9% so they keep on playing…faster and faster…until…plop!
Like or Dislike:
4 
0
26th January 2013 at 2:50 am
OF says:
From Monty….
Economic Armageddon Is Coming
economy, Favorites, Inflation, Insolvency, Investing Thoughts Tagged with: Economic Collapse, Investing, Welfare States
Jan
03
2013
The US and other modern industrialized nations are headed for economic collapse. Political excesses created unwieldly and insolvent social welfare states in every modern democracy. The notion of providing for those who cannot or do not provide for themselves has limits. As Lady Margaret Thatcher expressed the problem:
The trouble with Socialism is, sooner or later, you run out of other people’s money.
The Political Problem
Those dependent on the welfare state are unaware that their benefits are not sustainable. Most believe tomorrow will be like today and the checks will keep coming from Mother Government. Political power was gained based on promising these benefits. No politician will risk his position by trying to reduce them. No democratic society has ever rolled them back via peaceful political means.
Governments in the developed world are out of money. They can either cut back the welfare state or attempt to fund it by ever-increasing taxes. The latter route represents economic suicide as increasing taxes destroys the economy. The former route represents political suicide. Dependency, once accepted as a way of life, cannot be cured without jeopardizing the existence of government and society.
The Extent of The Financial Problems
The financial hole dug by most social welfare states is too deep to get out of. The finest turnaround manager in the world, unconstrained by politics, would be unable to remedy the problems. The mathematics of the problem are just too far gone. Radical cost-cutting and proper economic policies can no longer work. Hope and change may work in a political campaign, but slogans carry no weight against the iron laws of arithmetic.
The world is on the verge of massive sovereign defaults. To appreciate the enormity of these problems, see Welfare States R.I.P.
The best resolution of the problems would be to default on the unsustainable promises and debt. While not honorable, it is the only option that can reverse the inexorable debt death spiral that is destroying all welfare states. Without a liquidation of excess liabilities, economic growth cannot resume and economies will shrink and eventually implode. Japan, more than two decades into its economic purgatory, has managed to stall the implosion but not avoid it. The US and other countries are on the same path.
Welfare states have become zombie economies. These “walking dead” are shells of what they once were. A failure in one probably produces a domino effect that dooms all.
Two course of action can be pursued:
1. The Economic Solution
This solution requires that government spending be brought into line with revenues and held there (or below) for a lengthy period of time. That requires reneging on many social promises and possible sovereign debt defaults. A depression would occur. Homes would be foreclosed and businesses closed.
Wealth, defined in terms of physical assets, would be re-allocated. New owners and uses of assets would result. So, too would a complete cleansing of the cancer that prevents economic growth. The economy would be traumatized, but recover rather quickly so long as government refrained from intervening. Pain and suffering are inevitable. Civil unrest is probable and so is the risk that government(s) could be overthrown.
This solution is horrible in every sense but one — it is the better of two alternatives.
2. The Political Solution
There is no political solution, although that will not stop politicians from pretending there is. “Pretend and extend” is all they can do. Intervening with additional stimulus and more printed money buys some time, but worsens the economic problems. Problems and distortions are made bigger, requiring even more adjustment when they inevitably occur. Pursuing this strategy flirts with currency destruction which would destroy the savings and fixed incomes of the middle class.
The end result is the same as the economic solution — a complete and total collapse of the economy. The difference is that the collapse is more severe and that many may be destroyed in a hyperinflationary blow-off. Since 2008, the money supply has almost quadrupled. Most of that money lies dormant in the banking system. Had it been loaned, we would have massive inflation today. Instead, it sits there like dry tinder awaiting a spark to ignite it.
The Road Ahead
The productive world has allowed its wealth to be squandered by profligate politicians and their governments. Unsustainable welfare states (Ponzi schemes in a sense that even Ponzi himself could not have imagined) consumed capital rather than allowing its re-investment and growth. Without capital growth, real wages must shrink and that is exactly what is happening today.
The world is in for a long period of stagnation, retrogression and conflict. The next hundred years could very well be referred to by future historians as an Economic Ice Age.
Short-term, this generation cannot avoid another Great Depression. The proverbial butterfly flapping its wings in Greece, Spain or other places could be the catalyzing event. On the other hand, it might be possible that the form of Japanese purgatory that much of the world has entered could be sustained for a decade or so.
Protecting Yourself
The changes coming are going to destroy people and fortunes. Some entrepreneurial types will stay ahead of events, protecting or even increasing their wealth. Most people, however, will be caught off-guard, trusting investment methods and guidelines that worked in a sane world but no longer work in the new world.
The economy and society could end up in ashes. What is impossible to predict is the route that leads to this point or how long it takes. Knowing an apocalypse lies ahead is not enough. Knowing what lies between here and there is the difficult issue for those trying to protect their wealth.
The period ahead is not a time to be aggressive. Preserving your wealth is apt to make you a relative winner in terms of what is coming. But be careful when you measure wealth. The dollar is no longer a reliable numeraire. Wealth measured in nominal dollars is likely to grow as a result of inflation. Wealth measured in terms of purchasing power, however, is the critical measure. Maintaining the purchasing power of your wealth will be difficult to do.
Soon I will be announcing a new website that will deal with investing in front of approaching doom.
Well-loved. Like or Dislike:
6 
0
26th January 2013 at 4:24 am