Consensus usually indicates a serious mistake.
Lesson, What Lesson? GM – 61% owned by We the People - is buying AmeriCredit for $3.5 billion in order to give un-creditworthy customers a chance to end up in hock to them. It's part of their plan to expand their market by 'qualifying' buyers who haven't the resources to buy a car. Sound familiar? GM once owned GMAC which owned DiTech which was a giant in the sub-prime mortgage business. GMAC – through it's subsidiary Ally Financial – is into Uncle Sam for over $50 billion. How much do you think we'll lose on this new deal?
House Address: Sales of existing houses fell only 5.1% in June, y/y, mostly because of the lingering effects of the buy-a-house bribery. Available inventory was up 4.7% y/y at nearly 9 million houses. Median prices were up 1% y/y.
Myth: “Investors make estimates about all the potential profits down the road of a particular company, and price the potential growth or decline in a stock accordingly.” Maybe once upon a time, but today there are no investors, only speculators, gamblers. A stock is priced solely on the bigger fool theory, grounded in the delusional belief that the days of cheap credit continues. It does not; half the credit available in 2007 has disappeared and with it all hope for our credit-based economy.
Facts Not In Evidence: The shared delusion that China is “stuck with US treasuries” and must continue to support US fiscal foolishness ignores China's slow, stealthy but certain shift to strategic commodities, industries, and assured access to primary resources. While we may be able to fool ourselves, fooling the Chinese takes more subtlety.
We Have A Winner: The 'flation battle is over. Deflation has won on points.
Social Security's Bottom Line: One out of three Americans has no retirement savings. Fully half of all Americans have less than $2,000 set aside for retirement. Tell me again about doing away with Social Security or cutting the funding levels.
Smoke, No Fire: Unemployment claims are stuck at 460,000 again this week. Seasonally adjusted insured unemployment remains at the 4.5 million level. Congress finally got around to extending the unemployment benefits for the long-term jobless.
The Odds: When they tell you about the miracle of shale gas, remember that the “100 year supply” is what's possible – as in having a 10% chance of happening. The supply that's at least 50/50 probable only adds up to a 25 year supply. Salvation ain't what it used to be.
Inertia: We've already put enough CO2 in the atmosphere to guarantee a 3 foot rise in sea level by mid-century – even if we completely stopped emitting carbon dioxide today. But it wouldn't stop there, for in the half-century after that the effects of the carbon we've already put into the skies will keep on warming the earth and melting the ice and heating the seas, so the rise will be 6 to 9 feet by 2100. And more after that. But we are not going to stop, today or any day soon, so these are modest estimates. The gift that goes on giving. For centuries.
Oops... Governor Jindal, in an attempt to save Louisianan's oyster beds, had giant valves on the Mississippi opened to flush BP's oil back out to sea. Worked to some degree, but they forgot that oysters don't tolerate fresh water – the full impact of the oyster die-offs will last for years, far longer than the damage from the oil would have.
Porn O'Graph: Lost and Found.