A Tale Of Two Car Companies

Guest Post by Eric Peters

Here’s a tale of two start-up car companies: Elio Motors and … Tesla.hurray Cronyism!

One execrable, the other admirable.

Elio is developing a low-cost ($6,800 to start) very high mileage (80-plus MPG) commuter car.

Tesla builds expensive toys.

This – the building of toys – is not of itself an execrable activity. Lamborghinis and Porsches are toys, too.

They are expensive, impractical things.

As is the Tesla – including the new Model 3. It’s expensive ($35k to start; probably closer to $40k once all is said and done) and impractical. Not a car for cold places or long trips … unless you don’t mind long waits.

Not that there’s anything wrong with that… if that’s what you’re into.travesty

Lambos are also finicky and not good for very much except going very fast and advertising that you’ve got funds.

The execrable element is that Tesla expects you to pay for its toys. Not for yourself. But so that other people – affluent people – can play with them.

It’s exactly like giving – being forced to give – your orthodontist a fat check so he can go out and buy a new 911 or Gallardo.

Elio, in contrast, merely offers its cars – which you’re free to buy or not. And if you don’t want one, they’re not gonna force you (via Uncle) to “help” other people buy one.

So, which one gets the press? The adulation of the press? The seal-clapping encomiums on Today and Good Morning America and such?

How many people have even heard of Elio Motors?

How many have not heard of Tesla?crony pals

The reason for this disparity is easy enough to grok:

Tesla makes collectivism sexy – and that makes Tesla popular with collectivists.

Selling the Green Agenda has not been easy because it seems pretty dreary. Pay more for shittier things. But the Tesla looks good. This allows preening.

It is quick – which allows bragging.

And – so they say – it is green, too.

This renders cost no object.

It doesn’t matter that the entire venture is a Jenga castle of crony capitalism; that every “sale” entails an extortion payment extracted from a real car company – a “carbon credit” that is “sold” to offset the less-than-Teslian characteristics of functionally viable but “greenhouse gas” producing conventional cars… that it is necessary to bribe even rich people who have money to burn on toys with thousands of dollars of tax write-offs (the costs for these written off onto the backs of those who pay the taxes) in order to complete each transaction.fanboi

No. The Tesla is a long-legged, G-string-wearing planet-saving sex machine… and can do no wrong. Sense is blind to the realities behind the flash in the same way that men’s reason is often blinded – and their judgment impaired – by a hot piece of ass. No matter her liabilities.

The Elio is not sexy. It is a thumb in the eye to everything the Tesla is and stands for.

It is practical; an ideal city car/commuter car well-suited to Froggering around in busy urban traffic and which can be parked pretty much anywhere a motorcycle fits.

It is cheap. A new car for just under $7k – or about half the price of the typical economy compact sedan and about a fifth the cost of a Tesla 3.

Which also means it costs less to insure.

Most of all – and unlike the Tesla – the Elio is economical. Eighty-plus MPG renders the cost of gas a near-irrelevance, even if it doubles. And makes the Tesla look ridiculous, if the criteria is economy.

Or even “saving the planet.”

How much less energy goes into making an Elio? It does not have hundreds of pounds of lethally noxious chemical batteries that required Earth rape to obtain. Nor does it depend upon C02-producing utility plants for its motive power.

But most of all, it is a car that many people could simply write a check for – that is, bought outright, no loan. No debt. And that is anathema to the Banksters who run the country and who push Teslas via the media they own, the bought-and-paid-for parrots who read the Tele-e-Prompters and know what the Talking Points are.fanboi2

Can’t have people not chained to beefy monthly payments for the next seven years. Can’t have a car that doesn’t include multi-leveled kickbacks of other people’s money (i.e., “incentives”) to make each “sale.”

The Elio is sane.

A car ideally suited to every consideration of our times.

The Tesla, insane.

It touts the fact that it uses no gasoline, so no worries about the cost of gas. But you pay (with “help” from Uncle) $35,000-plus to “save” on the cost of fuel.

It touts performance – quick acceleration. But if its ability to accelerate quickly is used much, the car’s range is reduced a lot. What good is a quick car that can’t go very far?

But it’s sexy – and it’s “green” – and that makes it politically appealing, even if it’s utterly ridiculous as an economic proposition, absurd as a machine and noxious as as an example of the most grotesque manifestation of crony capitalism I’m aware of – exceeding even the effrontery of the ethanol lobby.

Cue the Zapruder film….

Bad Karma

What if you build it – and they don’t come?fisker lead

Send the bill to the taxpayers!

Twice.

This is how you make money in the New America. Well, the green America.

Don’t earn it.

Steal it.

The “business model” is simple enough: Glom on to a politically high-fashion issue – electric cars, for instance. Then obtain government (meaning, taxpayer) “help” to fund their design and manufacture. When no one – or not enough – people buy your electric wunderwagen, simple declare bankruptcy and walk away.

With your pockets full of other people’s money.

Then, when the smoke clears, do it again.

This is exactly what electric car company Fisker – which produces (well, produced) the $110,000 Fisker Karma – did.

Continue reading “Bad Karma”

WHY STOCKS WILL CRASH IN TWO CHARTS

“Things always become obvious after the fact”Nassim Nicholas Taleb

“Facts do not cease to exist because they are ignored.”  – Aldous Huxley

The S&P 500 currently stands at 2,126, fractionally below its all-time high. It is now 300% above the 2009 low and 34% above the 2008 and 2001 previous highs. Most people believe this is the new normal. They are comfortably numb in their ignorance of facts, reality, the truth, and the inevitability of a bleak future. When the herd is convinced progress and never ending gains are the norm, the apparent stability and normality always degenerates into instability and extreme anxiety. As many honest analysts have proven, with unequivocal facts and proven valuation measurements, the stock market is as overvalued as it was in 1929, 2000, and 2007.

Facts haven’t mattered, as belief in the infallibility and omniscience of Federal Reserve bankers, has convinced “professionals” to program their high frequency trading supercomputers to buy the all-time high. If central bankers were really omniscient and low interest rates guaranteed endless stock market gains, then why did the stock market crash in 2000 and 2008? The Federal Reserve’s monetary policies created the bubbles in 2000, 2007 and today. There was no particular event which caused the crashes in 2000 and 2008. Extreme overvaluation, created by warped Federal Reserve monetary policies and corrupt Washington D.C. fiscal policies, is what made the previous bubbles burst and will lead the current bubble to rupture.

Benjamin Graham and John Maynard Keynes understood how irrational markets could be over the short term, but eventually they would reach fair value:

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” – Graham

“The market can stay irrational longer than you can stay solvent.” – Keynes

Graham’s quote reflects the difference between hope and reality. This explains the ridiculous overvaluation of Amazon, Shake Shack, Twitter, Linkedin, Tesla, Google, and the other high flying new paradigm stocks. Story stocks soar because the herd believes the stories peddled by Wall Street and company executives. Five of these six stocks don’t have a PE ratio because you need earnings to calculate a PE ratio. In the long run the market will weigh the value these companies based upon profits and cashflow. It is the same story for the market as a whole. There is no question who is to blame for what now amounts to a three headed hydra of bubbles poised to burst.

Continue reading “WHY STOCKS WILL CRASH IN TWO CHARTS”

Tesla: Bonfire of the Money Printers’ Vanities

Tesla: Bonfire of the Money Printers’ Vanities

By David Stockman, Former Director of the Office of Management and Budget

David Stockman needs no introduction, but I’ll give him one anyway. He’s a former US Congressman who, upon assuming responsibility as Ronald Reagan’s budget director in 1981, became the youngest presidential cabinet member of the 20th century.

Following a 20-year career on Wall Street, David is now an outspoken critic of government stupidity. He argues on behalf of outdated notions like a balanced budget, free markets, and for the government to just plain leave us alone.

Below, David shares a scathing financial analysis of Tesla… and that’s putting it nicely. He argues that Elon Musk’s company is a crony capitalist creation that owes its very existence to government handouts and bailouts.

Dan Steinhart
Managing Editor of The Casey Report

Editor’s Note: This article was originally published in Casey Daily Dispatch’s Midweek Matters. Click here to receive Casey Daily Dispatch in your mailbox.


The trouble with the money-printing madness in the Eccles Building is that it generates huge deformations, misallocations, and speculative excesses in the financial markets. Eventually these bubbles splatter, as they have twice this century. The resulting carnage, needless to say, is not small. Combined financial and real estate asset markdowns totaled about $7 trillion after the dot-com bust and $15 trillion during the 2008-2009 financial crisis.

Yes, the Fed has managed to reflate this cheap money bubble for the third time now, but the certainty that it will splatter once again is not the issue at hand. What gets lost in the serial bubble-making process of modern central banking is that vast real resources—labor, capital, and materials—are misallocated owing to mispricing of stock, bonds, and real estate during the bubble inflation phase.

During the bust phase, of course, these excesses are written-down on financial statements and often liquidated entirely on an operational basis. But that’s just the problem. These bust-phase corrections amount to deadweight losses to the economy—a permanent setback to growth and societal prosperity.

The Wall Street casino is now festooned with giant deadweight losses waiting to happen. But perhaps none is more egregious than Tesla—a crony capitalist con job that has long been insolvent and has survived only by dint of prodigious taxpayer subsidies and billions of free money from the Fed’s Wall Street casino.

Not surprisingly, the speculative mania on Wall Street has reached such absurd lengths that Tesla is being heralded and valued as the second coming of Apple and its circus barker CEO, Elon Musk, as the next Henry Ford. Indeed, so raptured were the day traders and gamblers that in the short span of 33 months between early 2012 and September 2014, they ramped up Tesla’s market cap from $2.5 billion to a peak of $35 billion.

Continue reading “Tesla: Bonfire of the Money Printers’ Vanities”

BUY A TESLA, GET A FREE CASE OF MARSHMELLOWS & A FIRE EXTINGUISHER

Let the spin begin. You gotta love $70,000 Obama subsidized green machines that spontaneously burst into flames and can’t be put out with water. What’s not to like? I’m sure those batteries are wonderful for the environment. At least you’ll feel good about the earth as you and your family are incinerated. CNBC with breaking news from Jimmy Cramer. This is a buying opportunity. They are selling 20,000 cars per year and the stock should surely be selling at $200 per share. Wait until they make profits. Meanwhile, you can roast those marshmellows on the turnpike.

Car-B-Q: Tesla Admits Model S Inferno Started In Battery Pack

Tyler Durden's picture

Submitted by Tyler Durden on 10/03/2013 07:54 -0400

In what can hardly be encouraging news to all the cult members holding the priced to immaculate conception Tesla stock, the unverified YouTube video clip posted yesterday showing the Tesla Model S aka “the safest car in America” (how is that kickbacks-for-awards thing at NHTSA going anyway?) engulfed in a flaming inferno, has just been authenticated by Tesla, and what’s worse not only was there indeed a fire but it originated in the worst possible place: the battery pack. Where it goes from worse to worst is that once on fire (the car, not the stock) “water seemed to intensify the fire.” It remains to be seen if the new and free car option: “Spontaneous Combustion” will have a similar effect on the company’s stock.

From AP:

A fire that destroyed a Tesla electric car near Seattle began in the vehicle’s battery pack, officials said Wednesday, creating challenges for firefighters who tried to put out the flames.

 

Company spokeswoman Liz Jarvis-Shean said the fire Tuesday was caused by a large metallic object that directly hit one of the battery pack’s modules in the pricey Model S. The fire was contained to a small section at the front of the vehicle, she said, and no one was injured.

 

Shares of Tesla Motors Inc. fell more than 6 percent Wednesday after an Internet video showed flames spewing from the vehicle, which Tesla has touted as the safest car in America.

 

The liquid-cooled 85 kilowatt-hour battery in the Tesla Model S is mounted below the passenger compartment floor and uses lithium-ion chemistry similar to the batteries in laptop computers and mobile phones. Investors and companies have been particularly sensitive to the batteries’ fire risks, especially given issues in recent years involving the Chevrolet Volt plug-in hybrid car and Boeing’s new 787 plane.

It gets better: just as the Fisker Karma was found to have a Gremlin-like attavism toward water, especially in the aftermath of Superstorm Sandy when underwater cars would suddenly catch fire, so the Tesla S

In an incident report released under Washington state’s public records law, firefighters wrote that they appeared to have Tuesday’s fire under control, but the flames reignited. Crews found that water seemed to intensify the fire, so they began using a dry chemical extinguisher.

Yeah, when water “intensifies” a fire, you have a big problem, safest car in the world award notwithstanding. The bad news continues:

Firefighters arrived within 3 minutes of the first call. It’s not clear from records how long the firefighting lasted, but crews remained on scene for 2 1/2 hours.

 

Tesla said the flames were contained to the front of the $70,000 vehicle due to its design and construction.

 

“This was not a spontaneous event,” Jarvis-Shean said. “Every indication we have at this point is that the fire was a result of the collision and the damage sustained through that.”

Ironically, every one has already made up their mind about what caused the fire, even though “There was too much damage from the fire to see what damage debris may have caused, Webb said.”

In other words, let’s come up with anything that prevents the stock from getting obliterated now that the most overpriced car company in the world is suddenly the recently bankrupt Fisker Carma.