It's hard to believe that our government could have done as many boneheaded things as it has done since I wrote my last entry. Yet the infamy of September 7, 2008 may now be lost amid the early days of what could become the Greater Depression.
Yes, you read that right. I want anyone reading this to realize that right now credit lines are being closed for major corporations. Given that most major corporations and most small ones operate from their credit, the closure of credit lines is starting to suffocate the economy. GMAC shut down the credit line of Bill Heard Chevrolet dealerships, the largest Chevrolet dealer in the United States with annual sales over $2 billion and dealership locations across the US south. This credit line was shut down in August. In September, the Heard family shut their doors on every dealership they have. That's about 3000 people out of work right there. That's $2 billion in annual sales lost to GM via one of their oldest dealers. Bill Heard was founded in 1919, lasted through the Great Depression but was done in by this oncoming Greater Depression.
Other corporations either have been confirmed to have lost their credit lines, such as McDonald's, or rumored to have lost their credit lines, such as HEB grocers.
Those of you who think that the 451 page boondoggle that the Senate passed last night will change anything significant are believing in unicorns. I won't argue with someone who is that economically illiterate but the Senate bill does nothing other than allow Paulson to make his friends whole again at US taxpayer expense, right before the entire global economy goes to hell.
There are lots of issues at stake here and other people, ranging from Mike Shedlock's Global Economic Analysis blog to The Automatic Earth cover these issues better than I do. But I want to ask you something very direct, personal, and not abstract at all. What are you going to do if HEB, Kroger, and other major grocery chains shut down due to lack of credit? Oh yeah, the government will send in the National Guard and distribute emergency foods. Do you like that stuff that FEMA hands out? Have you ever tried most of it? It's... not that good and I am being generous here.
If you do not have at least 60-90 days of canned and dried goods on hand, then you are probably in trouble. And all that 60-90 days will get you is through the initial turmoil to where you become a ward of the government, possibly for years to come. But hey, that's the choice that you made. Of course not having 60-90 days of food supplies may mean you lose some pounds in the 1-4 weeks before government relief shows up in your area. Maybe you lose lots of pounds. Maybe you starve?
Likewise, are you going to have a job if credit shuts down? Will you even get paid? Will your bank allow you access to your funds or not? You are still going to owe money to people and have bills to pay. Wouldn't it suck to have money in the bank that you cannot reach while you are foreclosed and thrown out of your home? Think it can't happen? It already did in the 1980s in Texas and the US south during the S&L crisis and this is thousands of times bigger than the S&L crisis.
In short, your preparation options right now, today, are very narrow but you still do have the choice of doing something as opposed to nothing. So, are you going to do something or are you going to see how long you can fast? Better make your mind up soon. Credit lines continue to lockup worse and worse for the fourth straight day. At this rate, in another week it will be shut down altogether.
Balloon Dog (Orange): The Art of a Health Care Deal - What a health care solution space looks like to our highly transactional President.
6 hours ago