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3/30/09

GM- Government Motors

The Government effectively runs GM now and today the news arrived that they fired the CEO. The President of the United States also announced that hereafter the US government will guarantee the auto warrantees of that company.
I have a question, since they are standing behind the warrantees, who will decide what's covered?
I suggest all repairs on all parts and labor for all cars forever.
(As long as it is performed by UAW workers of course)
Another benefit would be, if they are purposely manufactured poorly, all the repairs will stimulate the economy!
Good idea?

3 comments:

Brian said...

Yep we're screwed. At least that's what Jim Rogers thinks. Me too.

Exclusive Interview: Jim Rogers Says If He Were China, He Would Scale Back On Buying US BondsBy Grace Cheng on January 15, 2009 | More Posts By Grace Cheng | Author's Website
In this DailyMarkets.com exclusive, I spoke by phone with legendary investor Jim Rogers who
made his fortune with the Quantum Fund, a hedge fund he co-founded with
George Soros in 1970. Over the next 10 years, Quantum gained 4200%
while the S&P 500 index rose about 47%.
He is also author of the best-selling books “Hot Commodities”,
“Investment Biker” and “Adventure Capitalist”. Rogers, who created the
Rogers International Commodities Index (RICI) in 1998, is one of the
most closely watched investors. If you are fed up with the Fed, you are
not alone. Recently, Rogers said that Paulson and Bernanke should resign for keeping “zombie banks” alive as they should be allowed to fail.
His uncanny accuracy in predicting the recent commodity bull run as
well as the financial crisis has made the media, as well as private and
institutional investors, sit up and listen to what he has to say about
the markets.
Grace Cheng: Do you think the period of forced liquidation has ended or does it still have a ways to go?
Rogers: I’m sure it has not ended. It certainly has not ended for
many asset classes and it probably has not ended for most. It may be
over for a few things but it still has a long way to go.
As you’ve said many times, the US government is printing a
lot of money right now, when do you think inflation will come around
and bite us?
Rogers: Well there is inflation now in many things. There’s
temporary deflation in raw material prices and in some property. But
throughout history, whenever you’ve had gigantic printing of money and
spending of borrowed money, it has always led to higher prices. Unless
something is dramatic, it’s going to happen again. When I don’t know.
It’s already happening in some things. I don’t know if you’ve bought
any sugar recently or some other things, prices are up and that will
continue and it will get worse.
You’ve been bullish on commodities for a long time, recently you said you’re buying the Rogers Metal
Index. Do you think that the Obama stimulus plan will create more
demand for commodities?
Rogers: Well of course, anything that causes a revival of economic
activity causes a revival of demand for everything including
commodities. I mean if you’re gonna build bridges you’ve got to build
them out of something you cannot build virtual bridges you have to
build real bridges, etc.
You’ve said that over the long term, the US dollar is doomed. What are your thoughts on the British Pound?
Rogers: More doomed. It will disappear sooner. If it weren’t for the
North Sea, the British Pound would have already disappeared. It’s more
doomed. The UK has been exporting oil for 26 years; within the decade,
the UK will be a net importer of oil again, and they have nothing else
to sell to the world once the oil dries up.
Do you think China will scale back on buying US bonds? And if that happens, how will it affect the US economy and the US dollar?
Rogers: Well if I were China, I would scale back. If I were
everybody, I would scale back. The US bonds yield virtually nothing,
the dollar is a flawed currency, inflation is coming, higher interest
rates are coming. I would think everybody would be scaling back
including China. We’re going to have higher interest rates down the
road because somebody’s gonna scale back. If not China, Japan or Korea,
or who knows, somebody.
You’ve been buying Chinese stocks for many years already,
now that China’s economy is doing badly and exports are decreasing
significantly, what sectors are you looking at in China?
Rogers: Agriculture, water treatment, people who build power
generation, people who build infrastructure, tourism. Many areas of the
Chinese economy will continue to do well no matter what happens to the
world economy. Many will suffer; anybody who sells to Wal-mart (WMT: 52.57 0.00 0.00%) or retailers in America is going to suffer, others will do extremely well no matter what.
My last question, on a personal note, do you miss traveling around the world for fun like you’ve done several times before?
Rogers: No, because now I have two little girls and they’re more fun
than anything. I hope someday that I will travel around the world with
them for fun. But at the moment, watching them grow up and helping them
grow up is more fun than anything I can imagine.

Leah said...

Yes, I'll take one of each.

Silverback Trader said...

Good post Brian. I hope Rodgers ia wrong, but I suspect he is right. I'm sure he is right about the inflation.