Ode to the Auto Feo, Part III – Lemon Discovery

8/25/2011 Portland, Oregon – Pop in your mints…

Oh Bank of America, how far you have fallen.  Today, B of A took a hand out that they allegedly do not need from Warren Buffett’s group.  For this ‘unnecessary’ $5 Billion of capital, B of A is paying 6% per year, a higher rate than many Americans are paying on their mortgages.

What a brilliant move, and one that should give equity holders just enough time to get out while they still have some pocket change left.  Brilliant for Buffett, we mean.  For B of A shareholders, it is simply the latest bungle by management who are naturally overwhelmed by the sheer magnitude of the bank’s compost pile that it calls a balance sheet.

Like a compost pile, B of A’s assets should be allowed to disintegrate and be spread around organically to provide fertilizer for enterprises that actually contribute wealth to society.

In its current state, B of A as an entity is not only cannibalizing itself and its shareholders, but also nearly anyone that it comes into contact with.  As such, the term’s of Buffett’s deal have allowed him to go into the toxic mix with a biohazard suit on.  Berkshire should be shielded from the eventual collapse, albeit as a secured creditor.

But enough of B of A’s present woes, we have been relating a personal anecdote which may help readers understand the origins of what will be a spectacular slow motion collapse of B of A. 

At a minimum, we hope you get a laugh at our expense.

You can catch up with the Ode to the Auto Feo, Parts I and II by clicking on the following links. 

Ode to the Auto Feo, Part I –  The Birth of a “Need”

Ode to the Auto Feo, Part II –Optimism and Desperation are Poor Bedfellows

Our story continues:

We climbed into what our delusional mind had now identified as a BMW X5 smiling from ear to ear.  No, it was not perfect but the vehicle was powerful.  It felt like it was reliable and had been well cared for.  Heck, the A/C even worked and had recently been charged!  We were feeling extremely good about our purchase.

That feeling was soon to pass.

No matter that the Iranian had us call his brother to let him know we were purchasing the car.  Presumably it was to arrange a ride home but in retrospect it appears that there was a “family” debt that needed to be settled and the proceeds from the sale were of great interest to the brother.

For our part, we had to call our brother in law to arrange a ride home.  We drove our find back to Portland from Gladstone to pick him up, still in awe of our good fortune. 

Then, it began to fall apart.

The Illusion is Shattered

Not literally, of course, but the mental construction of the BMW X5 and more importantly the vehicle’s reliability were quickly demolished as we watched the oil pressure drop, the check engine light go on, and the temperature gauge quickly approaching the red line.

“What is going on?  This car was working flawlessly until now…”  We thought to ourselves.

“Are we seeing things?”

Our mind attempted to pass it off as an optical illusion.  After rubbing our eyes and focusing our mind, we turned off the A/C and reluctantly turned on the heater on that warm summer evening in a vain effort to regulate the temperature.

Then the car stalled.  In vain, our mind made another attempt, an appeal to the supernatural.

“Perhaps the car is possessed,”

We dutifully exercised our authority in Christ to cast out demons from the lifeless mass of the Isuzu.

The Isuzu, for we would never again see the vehicle through our rose colored glasses, started up and again we were off, albeit at a slower pace and with the heater running.

When we arrived at his house, we were concerned.  Maybe this car wasn’t worth $1,300.  Maybe it is just scrap.  Even so, we held to the hope that, if we could just get the vehicle home, it would serve its purpose to take us the 1.5 miles necessary for our daily commute.  We let the car cool off.

Upon exiting the vehicle, we noticed a small but very important defect that had escaped our eagle eye during the inspection:  The driver side door’s keyhole was a hole, as in, there was space where one would normally expect to insert the key. 

Now we were flabbergasted.  All of the other defects were somehow excusable because for the most part they had been invisible and had for whatever reason not manifested themselves during our inspection.  This one, under the circumstances, was humiliating.

Oh, how we wish we had heeded the spousal veto!

We went to the front door of our brother in law’s house a mere shadow of the conquering hero we had been just 30 minutes before.

We felt we had just thrown $1,300 down the drain.  It was not so much the sum that bothered us as the fact that we had allowed ourselves to become enamored with the vehicle and in the process had allowed ourselves to be blinded to its obvious faults.

After twenty minutes chatting with our sister, enough to let the vehicle cool down, we were off to Gladstone.  The sun had long since set and the blackness matched our darkening mood.

Our brother in law attempted to cheer us up. 

“This is a great car!  You don’t really need the lock on the door and once you get it home, it should serve its purpose.”

His words of encouragement sustained us for the next painful part of our all night journey, bringing home our error in judgment to show to our loving, supportive, and rightfully skeptical wife.

We doubt such fear struck the board of Bank of America as they reported Countrywide Financials mortally wounded loan portfolio to their shareholders for the first time.

 Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 25, 2011

Copper Price per Lb: $4.08
Oil Price per Barrel:  $85.06

Corn Price per Bushel:  $7.30  
10 Yr US Treasury Bond:  2.24%


Gold Price Per Ounce:  $1,759 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.5%!!!   UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average:  11,207  TO THE MOON!!!

M1 Monetary Base:  $2,033,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,478,200,000,000 YIKES!!!!!!!