The Third TV

As I recently wrote, the world finally got fed up with the incompetence of the United States leadership of Paulson, Bernanke, Cox, Bush, and our Congress. Therefore, the world has moved forward with a plan to unfreeze credit markets. Make no mistake, these efforts will be successful. Unfortunately, that is the smaller of the two problems. Just because you have the ability to lend does not mean that you will lend. In addition, the lending horizon has changed because many borrowers will no longer have access to easy credit and that is the rub.

The entire problem is predicated on Joe Smith buying his third TV. Not the first, not the second, the third TV. Consider this example: Because Joe wants his third TV, an extra salesperson has to be employed at BestBuy ($25.75 as of 10-10-08), and another store has to be built by BestBuy to house the extra employee. An additional truck has to be used to deliver the third TV to BestBuy. An additional dock worker has to be hired to bring in the extra TV, which was delivered by the extra ship, which was leased to bring in the third TV. In addition, another factory had to be built in China to make the third TV, and another worker at Corning ($12.37 as of 10-10-08) had to be employed to make the glass to send to the factory, to install in the TV, to put on the ship, to put on the dock, to put on the truck, to deliver to the store, to give to the person, to sell to Joe Smith, who wants the third TV. You get the idea. In addition, a clothing store, a dry cleaner, a restaurant, a grocery store, a movie theater, and a shopping plaza, all spring up for the people who serve the man who wants to buy the third TV. All is well as long as Joe Smith can, and will be able to buy, the third TV. God help us if can’t buy the third TV, or if he won’t buy the third TV.

Till next time,

Bill

P.S. – Long the banks: UYG (large banks), NYB and FNFG (regionals.) Why not. The problem is solved, right?