Monday, November 10, 2008
(Cont'd from above)...

Jim (cont'd):    What I care more about is the notion - full of hubris - that GM can be ignored... I mean, that the stock's going down... don't pay any attention to that... I mean, it's okay. I mean, we think we can rally big, and rally big like China did, despite the possibility that GM is going down, let alone Chrysler and Ford?...

I've got news for you!...

We cannot have a sustainable rally in this country, until GM, Ford and Chrysler are saved!

What's truly ironic is that the same people who want to push the GM folks on the breadlines are often the ones who are thrilled that we're allowing AIG to get $168 billion... so the "western world" gets saved...

And that's the problem...

There are two components to getting the western world out of this mess... credit and jobs.

By bailing out AIG, we're making it so most of the bankers and brokers in the world don't go under. That's the credit... as the decision by the Federal Reserve Bank of New York, under incredible, untouchable, no fingerprints, Tim Giethner, rumored oh heavens... to be the next Treasury Secretary... to euthanize a still struggling Lehman... gave the government no choice but to bail out AIG.

This rogue insurer turned out to be at the fulcrum of the world's financial stability, because it made so many guarantees to bond holders that you're now paying for it, because they couldn't afford to pay them by themselves.

Now, of course, what's really important for these Easterners, who are telling you to give the GM guys the business... what's really important for these Easterners is that the payoffs to AIG have allowed the preservation of the bonuses... [sarcastically...] Oh man, we need those bonuses man, because then we're going to end up having to go to IKEA...

We're preserving the bonuses and the dividends of those who work on Wall Street so that we do not have to be - in the end - KMart shoppers... No way... no way around it... that's what the AIG bailout is really about.

But it's not credit, or the bonuses or the preferreds that banks issued that are on the line with GM. It's jobs. 3 million of them. 3 million if GM and Chrysler go under. A low-ball figure. If you don't save jobs, then you can put all the money into the system you want. Nobody's going make a loan to a guy that doesn't have a job. That doesn't happen.

That's why it's hard for me to believe that the market can rally - and rally big - until we resolve GM, Ford and Chrysler... and they're all of one piece, believe me.

Now, mind though, under no scenario, can I imagine that GM's common stock, that you're trading right now, be worth anything. You can keep hearing that "GM is only worth $1.8 billion"... but that's only looking at the common stock. Have I not taught you to look at the whole balance sheet?... There are $68 billion in GM bonds out there... that stand to take over, or be canceled, after any equity is crammed down, so forget the common stock. It is pure rank speculation of the worst kind... Remember, you scratch off the thing at the newsstand... a share of GM comes up...

When you consider that many of the bonds are trading at 30 cents on the dollar and yielding 35-65%, you can't expect the company to be worth anything down the road...

What truly matters - the reason why we can't let GM or any of the not-so-big-anymore of the three fail, is that so many things will go wrong if unemployment spikes here. The major reason why people skip on their mortgages isn't because the value of their homes went down, which is what's happening now... It's because they lose their jobs...

Read my lips... Millions of people will lose their jobs, as the industry goes under... the auto industry. Credit cards? Huge defaults coming. Consumer spending? Plummeting... It turns out that the Wall Street gangsters do a lot of spending at Cartier on 5th Avenue and Tiffany on 5th Avenue... but the rest of the country needs to spend it at Wal-Mart and Family Dollar...

So far, the Bush administration has saved plenty of bonuses, but nothing Bush, Paulson or Bernanke have done has saved a single job. In my view, we can't continue to stiff Main Street by continually bailing out the banks, and leaving ordinary workers - like the ones at GM - defend for themselves. It's just not possible.

Okay, you may not care about the job losses... you may think it's right... Darwin!... Hey man, Darwin, he's the man (referring to the occurring attrition that goes with a natural evolution of things)... Hey now, wait a second... "social Darwinism!"...

You may say over and over again that they make the wrong cars... that they're losing money... that they're dopes, that they're morons... You may say that it's a moral hazard to save these guys... that, unlike the masters of the universe, who trade all day, hard over their desks... looking at glass screens from 9:30 to 4... that these lazy stumble bums out in the Midwest, who just guide transmissions into gas guzzlers... you may say that they should be stomped on!...

I say, give me a break...

How the heck can it be a moral hazard to bail out these auto workers, who make $70,000, allegedly doing nothing, when it's just fine to give $25 billion to the banks, where the chieftains make $70 million a year for losing billions, and don't put a single transmission into a car?

Here's what I say...

If you want the stock market to go up and stay up... maybe, perhaps one day, you'd like to retire... maybe perhaps you'd like to see your 401k not cut in half again... you don't want GM or any of these companies to be obliterated. Listen, if you want no retirement, and you want to ruin your life savings, man let's just go down and give them the business!... But, if you just want to keep AIG alive, for a better and more orderly moment, because there's got to be so-called "justice" that the rich Easterners want meted out, be my guest...

Until then, unless you want an unlimited bear market, like the one today, where we open up 200, and then nosedive 273 points... the $500 billion Chinese stimulus package that pushed up the world's forces will not help. You want GM alive, even if not well, and you want some of those $70,000 jobs, like we're guaranteeing to the bankers who make $70 million, to stay.

I think Obama understands this. I think his team understands it... saying the autos need a bailout... because Obama's opinion now counts, unlike the guys whose opinion caused trillions in losses and now blame those nasty, lazy auto workers for not being able to work... because, well, they're a bunch of jokers [sarcastic]...

Bottom line...

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Jim's comments AFTER the interview:     If you're rooting for GM or the others to fail like so many of my buddies, okay... many of the rich East Coast types this weekend... then you're rooting for a bear market... and an economy with double-digit unemployment. You may think you're rooting against the unions and labor royalty, but you're really just fighting against your own 401k...

[verbatim recap]

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