Logan Flatt

Car Allowance Rebate System: Ford Bounces Back

<"What we call GM actually trades under the name Motor Liquidation Co. and its symbol is MTLQQ.PK.">

Um, no, what we call GM is a privately held company, majority owned by the U.S. government that does not trade in the public markets and therefore has no ticker symbol. See this important SEC Alert from July 14, 2009 make us all aware of this: www.sec.gov/investor/a....

MTLQQ.PK is a shell company still being liquidated in bankruptcy court. All it owns is environmentally contaminated land, old shuttered plants of little economic use, a 9-hole golf course in New Jersey, and over $140 billion in debt and liabilities. Those illustrious assets will be liquidated for cash but will come nowhere close to paying in full the creditors the billions they are due. Since all creditors must be paid 100% in full before MTLQQ shareholders see a penny in recovery, each share of MTLQQ is intrinsically worthless. Why shares of MTLQQ continue to trade above $0.00 is any sane person's wild guess. Insane people, meanwhile, trade the stock.

How to Save the U.S. Economy: Kill 1971's 'Floating Dollar' Experiment

Jaimster -

It's a novel idea, but it's based on a false premise: there is no such thing as "each American's social security". The U.S. social security program is a transfer payment scheme, not an insurance policy or a financial asset available to serve as collateral for credit lent upon it.

Through Social Security, the young work today to pay for the lifestyles of their retired elders today. Every pay period, money is simply expropriated from the younger generations' paychecks by the government and then the government turns around and redistributes those same funds in checks mailed to the elderly in the same or next pay period. Therefore, there is no asset accruing to the credit of the young upon which such a credit card could be based as collateral. They pay into a system today with no guarantee that the system will be there for them tomorrow.

In short, the young today simply will be dependent on the youth of tomorrow -- that is, if there are enough youth tomorrow to support the severely flawed transfer payment system that is U.S. Social Security. The actuarial models suggest that the entire Social Security system could break down as the "baby boomer" generation reaches its retirement peak and the elderly boomers absorb far more in payments than there are youthful workers having a sizable chunk of their earnings expropriated from them by the central government. More than likely, the central government will simply expropriate a larger and larger chunk from the youth over time. If I were younger I'd be revolting in the streets of Washington, D.C. at the prospect of such a dismal future created by this archaic 'New Deal' transfer payment program of yesteryear. For the young it's going to be more like a 'Raw Deal' program.

Finally, a credit card is not a great idea because a credit card only creates a financial liability for he or she who uses it. What the U.S. needs is more Americans owning financial assets that build wealth, not creating ever more financial liabilities or other obligations for themselves and the estates their families stand to inherit. It's a far, far better thing to be an owner of assets than an "ower" of debts!

A Million Bucks Ain't What It Used to Be

Please do not be misled - this essay is not about "the gold standard" per se. It is about official government policy to devalue a currency, the government's track recording in following its policy, and what you as a citizen living under the power of that government and using that government's debased currency as a medium of exchange, store of value, and unit of account can do about it (complain to your elected officials or switch currencies).

Please also note that gold was chosen here for two very important reasons: 1) gold was used by the government itself to value (and, in 1934, to devalue) its currency historically, and 2) human beings have chosen gold over all other alternative currencies for over 5,000 years (i.e., way before you, I -- and today's economic intellectuals and pseudo-intellectuals -- were born).

Just because gold is not "en vogue" currently (or, at least, since the early 1970s) does not change the fact that gold has historically been the global currency of choice among human beings far longer than any single government-backed currency has been the global currency of choice among human beings. Sure, yes, today, it's the fiat U.S. Dollar. But, before that, it was the British Pound (the 1800s). And, before that, it was....gold. Today, gold is so out of style that even Switzerland -- the gold-hoarding, ultraconservative Swiss Central Bank that doles out the Swiss Franc -- sold off all its gold reserves in 2005. Now, THAT must be the watershed event of gold's rejection as currency in modern times. However, the U.S. government, mysteriously, still holds the largest store -- over 8,000 tons -- of gold in Fort Knox and in the basement of the Federal Reserve building in New York (Ever wonder why this is so given that gold is so unfashionable today?).

It seems the human acceptance of currency by government decree is all the rage these days. But, just because gold feels old fashioned to you in 2008, doesn't change the past 5,000 years. It all depends on your view of whether or not human acceptance of currency by government decree is an evolution of human behavior or a devolution of human behavior. I suggest that if you are not educated in these matters, you should educate yourself and then come to your own conclusion about human evolution or devolution in monetary policy matters. I for one think it better to err on the side of devolution at this time.

16 Stocks That Are Paying My College Tuition

A very misleading title to this article. It appears that little to no tuition is being paid for in cash at the present time by means of holding these equity securities. I would recommend re-posting this article with a more accurate title; for example: "16 Stocks in Which I Am Speculating In the Hope of Having a Pile of Cash By the Time My Student Loans Come Due".

GM: Expect More Short Covering

To clarify, Tom meant to say old GM BONDHOLDERS (i.e., NOT shareholders) will initially own just 10% of the company. Old GM shareholders should be wiped out upon the bankruptcy court judge's decree.


On Jun 10 10:13 AM TomWilkinsonatGM wrote:

> I won't comment on the specific activites you mention, but just a
> reminder for your general readers that current GM stock will become
> stock in the "old GM" should the 363 sale occur as expected, and
> old GM will be wound down in a chapter 11 process. The "new GM"
> that will emerge will be owned largely by the U.S. government, Canadian
> governments, and UAW VEBA. Old GM will initially own just 10% of
> the new company.
>
> All of this is detailed in the court filings at gmcourtdocs.com,
> and in extensive SEC filings available on our investor site.

A Letter to Warren Buffett

Uh, I think you may have misunderstood that the letter was not actually written by Mr. Fuld...

Treasury Bailout of GSEs: Laissez-Faire In Serious Jeopardy

"It is NOW time for congress to use their constitutional authority to manage the US dollar."

Setting "weights and measures" for the U.S. Dollar would be even better. Remember when the U.S. Dollar was fixed by federal law at 1/35th of an ounce of fine gold? That was as recent as 1971. When Nixon took the U.S. off the Bretton Woods system on August 15 of that year, the value of the dollar was allowed to float in relation to gold (and most major currencies around the world then became unpegged and floated in relation to the U.S. Dollar). Now, in 2008, we have a dollar fluctuating around 1/1,000th of an ounce of fine gold. That's a -96.5% change in the value of the U.S. Dollar since 1971 largely because We the People have allowed career federal politicians and their handmaidens (i.e., the Fed, the Treasury) to go hog wild with printing, spending, and borrowing the U.S. Dollar like drunken sailors on shore leave over the past 37 years -- all at our request or indifference.

It all has to stop some day - either we can revamp the entire system before our personal incomes and wealth buys us ever less and less food, shelter and clothing, or the system will finally collapse in on itself forcing us to start all over when the dust clears with a new monetary system (the "New Dollar"?) probably based on a gold and/or silver standard with no fractional reserve banking, just to keep the politicians from printing more currency than the country has in gold and/or silver reserves and getting out of control again. Besides, after a total collapse of the old (today's) Dollar system, what other countries would want to hold or trade in our new currency if it wasn't backed by some fixed universal value like a fixed number of ounces of gold or silver? The U.S. government's "full faith and credit" would stand for nothing at that point and Fort Knox in Kentucky and the Federal Reserve Bank of New York (where our 8,000+ tons of gold are stored) would be our country's only saving grace as a foundation for a new monetary system.

Or, we can just sit idly by and possibly witness the U.S. over the next 50 to 100 years become the new Zimbabwe where the (fiat) paper currency is now most valuable as a toilet paper substitute. Let's hope we as a country come to our senses about our current monetary system and our profligate printing, spending, and borrowing long before we reach the "T.P." breaking point.

Four High-Yielding Canadian Oil Income Trusts

I was fortunate to have purchased a large chunk of Canadian Oil Sands Trust (COSWF) back in 2004 thanks to the great oil and gas research that Kurt Wulff, CFA puts out at his website at mcdep.com. My fund still holds it today and has done very well as a result. Kudos to Kurt.