Imagine tomorrow, or n days after, that Tesla opens down one day 50% or more. The reason won’t really matter. Even if it is a year or the next. It could be that the government regulators finally grow a pair and end the casino games of the big boys, (unlikely), or Model S and X fall of the cliff as the global reality sets in, with its disproportionate productivity gains going to the rich, as it has for decades.
Why then will it be so surprising when the rich boy toys for Silicon billionaire’s go the way of pets.com? This could happen for instance when $1 billion dollar losses (per quarter) eventually just can’t be funded since that wouldn’t include the cash flow that Musk’s universe needs to match his poker table promises he so gladly makes because he knows its other people’s money. Tesla won’t certainly fail because some people in power won’t want it to because we as a society can’t afford for it to continue as it is.
Perhaps Tesla will fail because some investors reject the Space X bailout that has been floated to save Tesla’s bacon by Musk valiant and deliberately misleading bankers at Morgan Stanley, who are no doubt working on the details of such a bailout that implicitly has the US government backing, just in case.
What will bring Telsa down is something more direct. Tesla will not work because it can’t, not as is. Musk is lying about the economics. Musk is lying about demand. I know because I looked at every country that pulled his subsidy, just have many have, as well as studies that look at the impact that the subsidy has consumer behavior. I know this because Telsa’s are actually not that great of a car. But more so, Tesla and Musk are lying because batteries don’t scale, and he’s known it all along. Musk, the bankers, and some on Wall Street are the ultimate insiders. The joke is going to be on everyone else that doesn;t know this, eventually. Some will be deserving casualities , and they could afford a good joke. Others won’t be so deserving, and they would no have connected the bigger implications of just how our society is run.
Speaking or writing in such a manner might seem smug or like a free option, because granted, to me it sometimes seems like it is. But for me its therapy, and maybe it will eventually be for some others when the chit hits the fan. Of course, the question is really how can you know? How can anyone be so sure? And this is why I like to write about Tesla. I am not so sure, but I am sure that there is something very wrong with Tesla and frankly, America and I think Tesla is telling us something about America even deeper and it is not a pretty picture. There is a long game but I want to at least consider why naysayers get bowled over. Skeptics of Tesla I think seem to stand for nothing. I think the thinking goes if Tesla goes down then what. What do the scientist, the children that want to go to Mars one day, the green movement that sees a symbolic leader…. in some, I think the people stand for Tesla, despite its rickety fundamentals, because Tesla stands for something. But so do treasuries, and the 2 the year 2020 TIPS (Treasury Inflation Protected Securities ) that pay 0 interest rates to savers. Those TIPS stand for nothing, as in the rate of return investors can receive from the government when inflation is accounted for.
The US deficit, itself related to this TIPS deficit, also stands for something. The US federal deficit on annual basis is enormous. This is the case despite one of the longest economic expansions in US history. The money printing to sustain this is annual fiscal red ink at over $500 billion a clip, and that is with zero interest rates.To me, the symbolic message of this is a lot different than anyone seems to realize. The US government is bankrupt. It cannot pay investors an interest rate that is commensurate with the risk they are forced to take. This also means the US government, as a symbol of American governance, ethically, monetarily, and as a physical entity is not only bankrupt but unable to face up to the American people and tell them this truth. If that is not the case, then I think the US government should do something better with that money than handout tax incentives to Tesla, itself a structurally bankrupt enterprise living one government aid. But what could the federal government do one might ask the cynic and the skeptic?
Well, lets think back to what a $500 billion dollar annual deficit means per American. The figure, when divided by the roughly 300 million people that live in this country, works out to be a potential payout of about 1500 dollars a year for every man woman and child in America. But that figure gets even better if we think about if from a family point. There are just over 100 million households in America. Per family, what this works out to be is $3,600 dollars.
If one thinks our government isn’t able to redistribute this kind of money to those deserving or undeserving, we only need to look at the $7500 dollar a year tax credit that goes to ever Tesla buyer in the US, whom obviously don;t need that money since every Tesla since its inception cost twice the average of any other car. Of-course means testing, or giving this money out to families who need it the most, would have an ever bigger impact. For instance, if the top quartile of Americans on income were cutout, ie those making under 100,000 dollars a year in family income, the $3600 dollar payout would go to almost $5,000 dollars for every family that could use it most. But even if every american family recieved this money, it is nothing to sneeze at, especially if it contributed to growth and confidence in the American consumer.
For instance, take the $3600 dollars that every American family could be entitled to and tie that figure to GDP growth from here on out. Furthermore, lets assume that the US can grow GDP at 2.5% for the next 10 years year.
By 2028, that number would be worth $4622 dollars per family. If perhaps by some miracle the US would see a renaissance in growth and we could have sustained 3.5% growth, the figure would be $5,100 dollars per American family. If you really want to peaks people’s fantasy and tie the figure to something more sophisticated such as say net-worth , and exclusive of the top 25% quartile income, in 2028 that figure would be almost $7,000 dollars per American household. If growth were to continue for 20 years, means-tested etc, each American family could be entitled to $10,000 dollars income per year. That figure is almost equal to what the average social security check is today.
Americans though seemed to have lost all common sense and suffer from collective Stockholm syndrome. In Tesla, America has its metaphor.
The cynic though won’t matter in the end because I think Americans don;t want to be told you can’t make it. It is the wrong perception. America has a whole can be a much better place. It can be better than Presidents who don’t want to hold office and whom fan the flames of Neo Nazi white supremacist protesters just as it can be better than, yes, hedge funders destroying Puerto Rico, or Silicon Investor eggheads like Peter Thiel, who would rather spy on Americans, trade cryptocurrency and Runoff to New Zealand when the seeds of our own destruction have already been sown. Americans can also be better off than the politics of divisiveness that Barack Obama used, with his exhortation to punish those who vote against their interest, rather than sending a positive message to unite behind those that think of America’s interest. America, in a sense, is divided, lost, confused, like it has never been before. Every now and then though, like the Weinsteingate, where American women of power have stood up against the hidden power players in the movie industry, hope emerges. There are better political solutions than the ones America has. There are better ways to create green cars and a green economy. Evidently the market can’t solve everything, and neither can governments. But smart leaders can show the way. Elon Musk and Tesla are not one of them in my opinion, and I am more unbiased than you might think. I wanted Tesla to work, it has not. He lied. Let’s move on. Skeptics, perhaps, to beat Tesla, and even if Tesla beats itself, will eventually have to find something to stand for.