Auntie Entity for President

Ob*ma continues working his magic on the stock market. As I write, the Dow is down about 30 points.

I’m not sure why I keep citing the Dow. It’s a somewhat narrow index. The S&P contains a bigger number of companies, so it is presumably more reflective of the state of the economy. I guess citing the S&P on a blog is a waste of time, though, because most people don’t know what it is.

Someone or other has put out a list of troubled companies. I’ll cut and paste part of the article.

A lot of big, well-known companies are in danger. On the list: Advanced Micro Devices; AirTran; AMR (parent of American Airlines); Chrysler; Duane Reade; Eastman-Kodak; Ford; General Motors; JetBlue; Krispy Kreme; Palm; R.H. Donnelly; Reader’s Digest Association; Rite-Aid; UAL (parent of United Airlines); Unisys; and US Airways.

That doesn’t disturb me too much.

1. AMD makes silicon chips. I don’t think we’re in any danger of running out of those.

2. Airtran, AMR, Jetblue, UAL, and US Airways don’t bother me, because airlines go broke all the time. The industry is crowded, and people keep getting into it anyway, thinking they can still make a profit. I’m not sure why they do this, but it is a fact of life.

3. Chrysler, Ford, and GM overpay for labor, they are badly managed, and they make boring products, so they need to fail. One of the important functions of the free market is to get rid of dead wood so better companies can move in.

4. Duane Reade and Rite Aid operate drugstores. I would guess that they are getting hammered because of the presence of better companies like CVS and Walgreen’s. The drugstores are still here. They just have different signs out front, the service is better, and the prices are lower.

5. Krispy Kreme makes grade B- doughnuts, and for some reason, people got the crazy idea that this was an important and unique product line. A retreat to sanity was inevitable.

6. Eastman-Kodak? They still exist? Do they even have a purpose now that every electronics firm in the universe is making digital cameras?

7. The problems at R.H. Donnelly do not upset me, because I have never heard of R.H. Donnelly. I hope they don’t supply something really important, like oxygen.

8. Reader’s Digest. Replaced by the Internet. Like your daily newspaper.

9. Unisys. That’s a tech, isn’t it? Techs fail. No news there.

I suppose all sorts of bad companies are going to get spanked before Obama is finished working his economic miracle, in which he will bring North Vietnam-style prosperity to the misguided capitalists of the United States. The streets may one day be filled with panhandling Pointy-Haired Bosses.

Too bad Obama won’t be among them.

If you’re still in a Geithnerian dither about buying a gun, you better snap out of it. Life may be very weird in the depression. Stuff you can afford to have stolen now may be more important in 2011. It may be possible for Obama to outlaw the sale of all truly useful guns. He’s already trying. But outlawing possession is much harder. It’s good to have what you need before the bans go into effect.

The other day it occurred to me that wealth may be redefined over the next year or two. For example, right now, a Manhattan condo is a concentrated bit of wealth. A lousy little apartment two hundred yards from a violent ghetto may be worth seven figures. Will that be true when Americans start using their yards to grow vegetables? Maybe five acres of farmland will be more desirable. I think people in suburbs and cities will envy everyone else. The best situation, probably, is rural land twenty or so miles from a city. Close enough for trade. Far enough away for security and a relative degree of freedom.

Some people say gold has no intrinsic value, and that it may be worthless in the future. I understand the argument, but I think they’re wrong. Gold only becomes worthless in very strange situations, like those involving lifeboats and concentration camps. Paper money represents promises, and promises are only as good as the institutions that make them. But gold is gold is gold. We will always need currency; it’s stupid to think an economy can run on barter. Imagine trying to run a store, where everyone barters. It would take five years for ten people to check out at the groceries. “I need these corn flakes. Here is a cord of firewood.” “We don’t need firewood.” “Okay, here are fifteen pairs of shoes.” “Sorry, we don’t take Crocs.” “How about this small block Chevy?” “I guess that will do. How do you want your change?” “Chainsaws and diesel, please.”

That’s barter. It does not work on the kind of scale you need to keep an economy running. You’d have to take a forklift with you every time you went to the mall. No, you’ll have to have currency, and if paper money loses its power, currency will mean coins, and coins will mean precious metals only. And there are only two of those that matter. Gold and silver. I very much doubt we’ll have platinum coins. It’s hard to melt, for one thing.

Stones will lose their value. They already have. The value of precious stones is artificially maintained. Those stupid diamonds women insist on receiving are not rare at all; when a man is forced to spend $20,000 on a rock, the vast majority of the money buys nothing except a fiction maintained by a greedy cartel. It’s the single dumbest buy most people make in a lifetime. Well, after an expensive wedding. You have to love the way people celebrate their devotion by starting their lives with five figures’ worth of new debt. Idiocy.

I think if I got married, I’d suggest a modest ring and some bullion. Romance is romance, but flushing huge sums of money down the toilet is only romantic to the stupid.

Here’s another thing: you can’t melt stones down into standardized coins.

Useful possessions will have increased value, but that doesn’t mean gold won’t.

I think a lot of things that are valuable now will be relatively worthless in a couple of years. Antiques. Luxury vehicles, including cars, motorcycles, aircraft, and yachts. Art. Most collectibles. I expect Las Vegas to have very hard times; who will want to fly to a far-off city to lose money, when people are standing in line to get free soup? I think this is a scary time for cruise ship operators and people who run resorts.

It’s an interesting time to be alive, and it’s fun to try to make predictions. It’s fun now, I mean, because things haven’t gotten really bad yet. Later it won’t be fun at all.