Hummer Turns Chinese
Don't back down from the rally and, no, you're not paranoid.
Greetings from New York, where I drive the first Chinese car brand in America. Yes sir, for the first time I'm actually ashamed of my semi-ironic SUV purchase. In fantastic bury- the- news fashion, the government and other GM figure heads announced a completed deal to "sell" 80% of the former military industrial truck manufacturer to the Sichuan Tengzhong Heavy Industrial Machinery Co. for "undisclosed terms" widely leaked to be $150 million with 20% going to Lumena Resources Corp, run by probably-not-as-evil-as-he-sounds Li Yan.
Li Yan didn't comment but is presumably enthused by his diversification from sodium sulphate, used in detergents, glass, high-tech weaponry, and pharmaceuticals into a company that makes tank-like cars that allow a corporate parent to follow the turn-by-turn moves of the capitalist swine customers through the On-Star system. Hummer owners thus diversify from "owners of a struggling American brand" to "owners of the first Chinese automaker to sell in the US". And you folks were mad that Walmart (WMT) had destroyed American manufacturing.
In it's first effort at propaganda, my new overlords announced that current Hummer management would "stay in place", ironic since the second propaganda item was that Hummer HQ was moving its office to a suburb north of Detroit. China has dedicated all of $9.4 million to the move near, but not quite in, struggling Detroit itself. Li Yan and his pals may inadvertently fly over the ancestral home of American auto manufacturing, but they'll land in tony northern Detroit, a suburban area for urban flight for headquarters and executives of struggling American companies for decades.
In other news of questionable merit:
- Our pay Czar investment is paying us back in spades as Ken Fienberg and previously obscure henchman Neil Barofsky are digging up the fake outrage over $168 million paid in retention bonuses by American International Group (AIG). Among Barofsky's angry statements were gems such as: "Just because the retention packages were legally binding doesn't mean there weren't alternatives [to paying the contractually binding contracts]" and "(The New York Fed) didn't think $168 million was a big deal (compared to the 1,000 times larger $180 billion bailout)". Mr. Barofsky specifically cited the $7k to $20k bonuses paid to file administrators, kitchen assistants, and a mail room assistant as egregious.
- Speaking of payments that also make the $168 million in bonuses look like a spit in the bucket, TARP special investigator Barofsky seems entirely ignorant of or apathetic toward the 100 cents of every contractually obligated dollar which was paid by AIG to Goldman Sachs (GS). Two conclusions: 1. The "Little Guys" who can't possibly fight the government with $7k to $20k bonus money better cancel this and last year's Christmas. 2. Goldman is going to report an impossibly huge quarter tomorrow.
- The dollar is cheaper now than it has been at any point in over a year. The bearish case has been well and truly established by a switch from time honored "benign neglect" of the greenback to "malicious neglect" in the form of multiple trillion in stimulus. It's so bad that AIG's greedy mailman couldn't buy a beer in France with what's left of his $7k after he buys fake passports for himself, his spouse and their five children in order to flee Mr. Barofsky's governance by angry mob policies. For what it's worth, I'm setting aside gold, in the form of the GLD and Oil, in the form of the USO to have some spending power to flee after DC or Li Yan reads this column.
- As a thought experiment, take a dry mouthed spit or two into an empty drinking glass today. That fluid is, in fact, about 1/1,000th of you. Are you like me and the NY Fed in regarding such volume as negligible? If so, send all of last year's pay to special investigator Barofsky care of Goldman, you selfish cur.
- Someday this rally is going to end, but I wouldn't trade that way. Figure out a way to play, whether by lowering your position sizes (as I ruefully did in Gap (GPS) and Target (TGT), which are both trying to stage breakouts today) or "hiding" in currency hedges such as multinationals (I'm long McDonalds (MCD)) or the aforementioned ETF proxies for the prices of gold and oil. Despite concerns over most everything ETF, the USO has been my largest position and non-tradable long since I prematurely took gains across the slate in early June. It ain't broke so I'm not fixing it.
- With that, have a safe and happy afternoon, Minyans. Remember: You're not paranoid if a co-worker calls DC to report your pinko spitting into a bucket "thought experiment" this afternoon and you feel as though you're being followed by the Czar or his henchman tonight. My advice is simply to run with the feeling and drive straight off the grid. With any luck, you'll reach asylum in Beijing's new outpost near Grosse Pointe, Michigan.
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