* BMAC - a reader writes in that the new GM/Americredit (ACF) should be called Barack Motors Acceptance Corp. Very nice. I will say again that I think it is ridiculous that GMAC needs a captive subprime lender, so they can stuff bad loans into this subsidiary. Apparently, I heard little fall-out, concern, or rage about this would-be merger. In fact, I am still upset about last year's stuffing of GM's bond holders, in favor of the unions and the government. In support of my view, a reader writes in with the following comment about the GM/Americredit situation:

"I could not agree more and had identical reaction when I read the story. ACF was a primary beneficiary of GMAC's retrenchment and were adequately servicing this niche of business in a suitable risk/reward ratio benefitting their shareholders.   There seems to me to be no reason why GM gets to use my tax dollars to buy this company so that they can now turn around and reach for deeper credit where I will have to use more of my tax dollars to bail them out (or not get ones I already used paid back) if the world turns and/or err in credit decisions.  This is why you don't bail out enterprises in a free economy.  Worse, there is no one else even discussing this deal in the mainstream media.   This is why I want all of these career politicians and the Socialist in Chief out of office". (end of readers comment)

Until Obama took office and started doing some wild things, I never thought that the government could muck up the works so badly. But here we are, with the Obama administration presiding over one bad law after another. All they can do is claim that they inherited this mess. In fact they did, but instead of cleaning things up and putting the country on a path to a sustainable future, all they have done is to put more uncertainty into the future by failing to address the deficits, and by passing legislation with simplistic sales pitches. Check out this 3 minute clip which is the White House's interpretation of the just signed into law, Financial Regulation Law:

Video HERE 

How ridiculous is this presentation. Putting the word casino on the front of a bank, amongst other things. In light of the GM/Americredit deal, it appears that only the government will now be able to make bad decisions, which we, the tax payers will be on the hook for.

Along the lines of how socialistic the Obama administration is, and how little actual experience in industry which Obama and his cabinet have, a reader sent in this set of facts:

"Here is a chart which shows past presidents and the percentage of each president's cabinet appointees who had previously worked in the private sector - you know, a real life business, not a government job? Remember what that is? A private business?

* (Teddy) Roosevelt - 38%
* Taft -              40%
* Wilson -            52%
* Harding -           49%
* Coolidge -          48%
* Hoover -            42%
* FDR -               50%
* Truman -            50%
* Eisenhower -        57%
* Kennedy -           30%
* LBJ -               47%
* Nixon -             53%
* Ford -              42%
* Carter -            32%
* Reagan -            56%
* GHWB -              51%
* Clinton -           39%
* GWB -               55%

And the Chicken Dinner Winner is, you guessed it: 

* Obama - 8%

* This is the guy who wants to tell YOU how to run YOUR life! ONLY ONE IN TWELVE in the Obama Cabinet HAS EVER HAD A JOB.

*YEP, EIGHT PERCENT! and as Rick says: 'Have a nice day!' " (end of readers submission)

Okay - so I read this, and thought, how can that be possible, I mean only 8% with real work experience outside of government. So I decided to go through the list of cabinet members and other with similar rank, and can tell you that the list consists of lawyers, and politicians for the most part. The closest thing to private industry work experience which I can find out of the following 23 people, including Obama himself, is a few years of consultancy work, by only 2 people. And these jobs were when they were starting out in their careers. In other words, they were grunts, and did what they were told, and then proceeded to find work in the less challenging government sector. By the looks of it, Obama's percentage of top advisors with actual private sector work experience, other than being a lawyer, is 0.0%. Here is the complete list of Obama's top cabinet officials:

- Barack Obama - community organizer, lawyer and politician

- Vice President of the United States: Joseph R. Biden - lawyer and politician

- Department of State: Secretary Hillary Rodham Clinton - lawyer, first lady and politician

- Department of the Treasury: Secretary Timothy F. Geithner - 3 years working for Kissinger Associates (Henry Kissinger) and then the rest in government

- Department of Defense: Secretary Robert M. Gates - armed forces and CIA

- Department of Justice: Attorney General Eric H. Holder, Jr. - lawyer, DA, etc_

- Department of the Interior: Secretary Kenneth L. Salazar - lawyer, political; staffer and politician

- Department of Agriculture: Secretary Thomas J. Vilsack - politician

- Department of Commerce: Secretary Gary F. Locke  lawyer and politician

- Department of Labor: Secretary Hilda L. Solis - political staffer, public service and politician

- Department of Health and Human Services: Secretary Kathleen Sebelius - lobbyist and politician

- Department of Housing and Urban Development: Secretary Shaun L.S. Donovan - public service & politics

- Department of Transportation: Secretary Ray LaHood - teacher, public service and politician, political staffer

- Department of Energy: Secretary Steven Chu - researcher, nobel laureate and professor

- Department of Education: Secretary Arne Duncan - educational advocate and administrator

- Department of Veterans Affairs: Secretary Eric K. Shinseki - military

- Department of Homeland Security: Secretary Janet A. Napolitano - lawyer/politician

** The following positions have the status of Cabinet-rank:

White House Chief of Staff: Rahm I. Emanuel - history on the staff of various politicians

- Environmental Protection Agency: Administrator Lisa P. Jackson - EPA and NJ DEP

- Office of Management & Budget: Director Peter R. Orszag - Brookings Institute and govt experience

- United States Trade Representative: Ambassador Ronald Kirk - lawyer, politician and lobbyist

- United States Ambassador to the United Nations: Ambassador Susan Rice - mgt consultant for McKinsey for a few years in early 1990s, then politics and Brookings institute

- Council of Economic Advisers Chair - Christina Romer - education 

Yup - these are the people who we are relying on to get us out of this crisis. They are all do-gooders, and have spent most of their life trying to get other people to elect them to office so they can tell us what we should be doing. I do not doubt the intentions and public service contributions that any of these folks have made, but is this the administration we voted for? Obama promised change, and it is happening, for the worse.

And along these lines, a reader who is not in the financial business, writes: 

"Rick: I have been fascinated by your blog.  It has caused a epiphany. I had always thought that the market was intended to be the machine of commerce. That the influx of capital was essential to the process, and that stock was only way to finance the large corporate entities.  That the buyers of stock were risking money because of some belief that the various entities would succeed in their endeavors giving the owners of stock a good if not great return. I was wrong.   Apparently the purpose of the market is to give people something to do during the time when there is a gap between football, baseball and basketball.  I understand and believe that monetary policy should be studied for its effects on the general welfare of business, its specific effects on my field and the economy in general.  

I also want to understand what the idiots in government are thinking and why they are right or wrong, but the blog brought into focus that the actual buying and selling of stocks and commodities would be just as good in the hands of Nathan Detroit, Nicely Nicely, Sky Masterson and Jimmy Burke (who really knew how to fix a game). (The first 3 were in Guys and Dolls, and were notorious for running rigged gambling games, and the latter engineered the Lufthansa/JFK airport heist and was featured in the movie Goodfellas). Since the success or failure of a ball game really affects no one (not even the players), it is a tempest in a teacup.  On the other hand the market is like a gladiator event, and winning or losing actually affects thousands (if not millions of people).  

Keep sending this stuff.  It goes well with a bottle of wine, a bunch of cocktails, or your favorite vice.  It kicks the crap out of ESPN.  The fact that you make it all sound of doom and gloom makes it more exciting. It's like watching a movie where the hot chick is about take out the garbage and you know that the slasher is hiding in the bushes next to the garage.

- (name omitted)

PS - I've moved 10% over to GOLD." (end of readers comments)

* A colleague who read this comment yesterday, sends over:

"great perspective - hilarious - worst of all, it is an accurate description of the markets today. Plus, it is not enough to have Freddie & Fannie, now we have GM/AmeriCredit - just call it BMAC - Barack Motors Acceptance Corp. 

And by the way, The slasher is government and the hot chick is the taxpayer". (end of comment)

* Trading points: Stocks: Yesterday I presented my idea that stocks are likely going to continue their correction upwards, before the next wave of selling commences. To a large degree, I am relying on the break of an overhead trend-line. The alternative is that this trend line is a false signal, (which does happen from time to time), and the markets are going to begin a dramatic free-fall really soon. This alternative is based on an Elliott Wave interpretation that the markets are going to begin a dramatic 3rd wave crash. Once this happens, the market will have at least one period when it drops 13% in 8 trading hours, on par with the period of maximum downside acceleration in October of 2008. I still believe such a crash is coming, just the timing of such is up for debate. 

In any event, while I am positioned with short dated calls in the trading account, I have longer term puts and short positions in my main investment accounts. If the S&P starts dropping dramatically, and takes out 1053, and then 1010/1020 previous lows, chances are that the dark scenario is playing out. Your energies should be focused on selling stocks on the upside, and setting up for a very ugly period into the fall.