The Great Depression Online

Great Depression Online Archive Issue:

The Chance of a Lifetime?

Great Depression Online
Long Beach, CA
December 05, 2008

Inside This Issue You Will Discover…

*** Good Old Fashioned Flattery
*** A Value Subtracting Proposition
*** The Chance of a Lifetime?
*** And More

Good Old Fashioned Flattery

Two weeks ago, if you remember, the kingpins of Detroit’s Big Three flew to Washington in their classy corporate jets expecting a $25 billion bailout.

Congress demurred.

Following the rejection Ford CEO Alan Mulally told AP “I think we learned a lot from that experience.”

What exactly they learned Mr. Mulally failed to specify.  But if you consider their actions to be a key indicator, it appears what they learned is that now’s the time to double down with some good old fashioned flattery.  For this week they returned to Washington – now driving hybrids and feigning humility – and begged for not less money; but more.

~~~~~~The Nicolas Darvas Story~~~~~~

“How a Full-Time Dancer Rocketed His Trading Account From $25,000 to 2 Million Dollars And How You Can Do The Same In Only 15 Minutes Per Day.”  Amazing secrets discovered by Nicolas Darvas can identify significant market price moves before they happen. Learn all about it here: The Nicolas Darvas Story.


That is, $9 billion more…or a $34 billion package bailout deal.

“Humbled and fighting for survival, Detroit’s once-mighty automakers appealed to Congress with a retooled case for a bailout as large as $34 billion Tuesday, pledging to slash workers, car lines and executive pay in return for a federal lifeline.”

A Value Subtracting Proposition

But will the flattery or the $34 billion be enough to salvage the American auto industry?

Not if they keep having months like November.  Good grief.

U.S. auto sales plunged 37 percent in November to their worst level in more than 26 years, dashing expectations that this dismal year for vehicle demand had found a bottom…

“The Detroit carmakers were among the worst hit, with GM’s U.S. sales falling 41 percent and Chrysler LLC’s dropping 47 percent.”

No amount of restructuring, worker cuts, vehicle brand and plant reductions will do any good if no one’s buying.  In this respect, a bailout may just delay the inevitable collapse of the Big Three rather than resurrecting them to their former glory. 

It’s no doubt that people will one day get the itch again to go buy cars again.  Yet, by then, the American brand may no longer exist.  Or what’s left may be a government manufactured clunker that costs more to produce than people will pay.  In other words, a cars mere production will be a value subtracting proposition…with the tax payer picking up the tab for the difference.

The Chance of a Lifetime?

We noticed on Thursday that the yield from a 10-year treasury note was at 2.57 percent.  We had to blink twice, for we could never remember seeing it so low.  Then with a quick review of a historic chart going back 46 years, we discovered that we’ve never seen it so low…because it has never has been so low.

What does this mean?  We don’t know what this means.  Do you know what this means?

Does it mean stocks are now really cheap?  Does it mean stocks are now really risky?  We conjecture a guess that the answer to both of these questions is “yes.” 

The latest buzz word to describe the recent market phenomenon is deleveraging.  In short, leveraged investors have been selling stocks in bulk to repay their loans.  And as the stock market has tanked, money has flowed into the perceived safety of U.S. Treasury Bonds.  

But with all the shenanigans going on between the Treasury Department and the Federal Reserve that perceived safety may soon be exposed as a fraud.  Moreover this recognition could be abrupt and in mass.  And subsequently money would rapidly exit treasury bonds…with a good part of it going into the stock market.  

Here you have a heck of a speculation…if you’ve got the stomach for it.  In fact, this could be the chance of a lifetime.

Yet all stocks are not created equal…some will go through the roof, while others will disappear forever.  That’s why our friend Paul Tracy has put in hours of painstaking research to uncover the Top 10 Stock Picks for 2009 -- stocks poised for massive gains from the next flood of money into the market.  Check it all out, plus much more here: Top 10 Stock Picks for 2009.


M.N. Gordon
Great Depression Online

P.S.  You may have read this book or even heard the intriguing story about a young ballroom dancer name Nicolas Darvas who traded $25,000 into 2 million dollars within just 18 months by using the stock market.  His story was so amazing, on May 1959, the Time Magazine devoted almost a full page in its business section to the extraordinary stock market story. But here’s the kicker, Darvas remarked it wasn’t so much how much money he made that surprised him but rather the ease with which he made it.  Discover the amazing secrets of Nicolas Darvas here: The Nicolas Darvas Story.


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