Bye Bye General Motors

Little GTO, you're really lookin' fine
Three deuces and a four-speed and a 389
Listen to her tachin' up now, listen to her why-ee-eye-ine
C'mon and turn it on, wind it up, blow it out GTO

Wa-wa, (mixed with "Yeah, yeah, little GTO") wa, wa, wa, wa, wa, wa
(mixed with "Yeah, yeah, little GTO")
Wa-wa, (mixed with "Yeah, yeah, little GTO") wa, wa, wa, wa, wa, wa
(mixed with "Yeah, yeah, little GTO")
Wa-wa (mixed with "Ahhh, little GTO") wa, wa, wa, wa, wa, wa

You oughta see her on a road course or a quarter mile
This little modified Pon-Pon has got plenty of style
She beats the gassers and the rail jobs, really drives 'em why-eye-ild
C'mon and turn it on, wind it up, blow it out GTO

- Ronnie and the Daytonas

Pontiac is going out of business after 82 years. And General Motors is being taken over by the government.

Here at The Daily Reckoning's office in Paris, we are delighted. It's like being alive when extra-terrestrials finally come calling. Or when the Pope becomes a Mormon. We're getting to see things we never thought we'd see...amazing things.

It must have been about 1960. Our father traded in the old Chevy for a Pontiac. It was an old one - maybe it was a '54 or a '56. But it was heavier, more solidly built, and quieter than the Chevrolet.

A few years later, boys from better families bought muscled-up Pontiac GTOs and Grand Prix. We remember, when we graduated from high school, a friend bought a GTO. What a thrill it was just to go for a ride...and turn up the radio!

And then, it must have been in the early '70s, our old friend Doug Casey drove up in a shiny Pontiac Firebird. We still remember the sound of it...deep, resonant...a baritone of an automobile; it probably sucked an entire oil well dry each time it drove up to the pump. Global warming on wheels.

But now... Adieu, Pontiac...

And we can probably say goodbye to GM too.

"US to take majority GM stake in revamp," says the headline in today's Financial Times.

How about that? America's largest car company is going to be state- owned...nationalized...presided over by the federal bureaucrats.

It's just a part of the shift away from the free market and towards an un-free market. Free market capitalism has failed, say the pundits. Let's give the feds a chance.

Even Henry Kaufman, writing in today's Financial Times, says that the Fed's "libertarian dogma" prevented it from controlling the banks properly.

But the Fed is hardly a libertarian organization. It's a banking cartel. As a cartel, it looks out for its member banks - and doesn't hesitate to use state power to do so. There is nothing libertarian about it...and no dogma associated with it - except as Greenspan's eyewash - that is even vaguely libertarian.

The Fed colluded with member banks to fix interest rates. In so doing, it helped create the biggest bubble in credit the world had ever seen. It was a terrible thing for the average fellow - who was lured deep into debt by rising house prices and cheap credit. But it was a great thing for the members of the Federal Reserve cartel. Profits in the financial sector - notably, the big Wall Street investment banks - soared.

But bankers are vulnerable to too much of a good thing - just like everyone else. Soon, they made the classic Wall Street mistake - they came to believe their own hype. Not only did they gin up trillions of dollars' worth of preposterous financial instruments...they actually bought these debt bombs from each other.

This posed a grave danger to the nation's economy...and to the banking system. Henry Kaufman claims the regulators dropped the ball because believed they put too much faith in the free market. But the regulators were little more than front men for the banks themselves. After Alan Greenspan came Henry Paulson as Secretary of the Treasury. He was probably still replying to messages at his old address - HPaulson@goldman.com - when the crisis began. And the head of the New York Fed - now, U.S. Treasury Secretary Tim Geithner - was elected to his post by the very institutions he was supposed to be overseeing.

Neither of them was about to stop the party; they and their friends were having too much fun.

And now, the feds are taking over control of America's largest auto business...

"Consider the risk of General Motors" on the economy, says Strategic Short Report's Dan Amoss.

"If it goes into Chapter 11 bankruptcy, it has the potential to be very disruptive to the economy, despite administration plans for a 'surgical' bankruptcy. Bankruptcies are about as predictable as the weather on the Gulf of Mexico during hurricane season, especially in this type of economy."

Bill Bonner
for The Daily Reckoning Australia

Bye Bye General Motors, 10.0 out of 10 based on 1 rating

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