Last night, Treasury Secretary Henry Paulson announced the Troubled Asset Relief Program (TARP) will purchase all of the unredeemed 8-track tape players on the shelves of the nation's pawn shops, in an effort to unclog the credit markets.
It is hoped this move will free up credit in an important niche of the overall economy which looks to be poised for a big expansion in the next several years.
This segment of the credit market is currently hindered by a serious overcommitment to fixed assets that cannot be moved through the system. Our purchasing these assets will make it possible for our pawn shops to get back into lending, and allow customers in need to hypothecate their iMacs, iPods, and iPhones, for which there is still a ready market.
The Treasury Department estimates U.S. pawn shops currently have 13.4 million 8-track players in stock. The last such tape player to sell was in 1997. The TARP program has committed up to $40 billion, or approximately $3,000 per tape player, to make the purchases. When asked whether such a commitment was excessive, Paulson was adamant that the actual cost will likely be much less.
We are certain that at least 20% of these players have had the plug on the power cord replaced, and nearly half will have significant peeling of the woodgrain laminate on their cases. In either of these cases, we will not pay more than $500 for a unit. Further, if any player has duct tape anywhere on it, it will be subject to an immediate 20% reduction in the negotiated price. Our asset managers will be inspecting each unit for signs of Goo Gone usage to remove tape residue; any unit that is falsely represented as tape-free will be rejected, and the proprietor making such false representation will be prosecuted to the fullest extent of the law.
Reporters asked Paulson whether audio performance would factor into the calculation of values, with specific reference to the excessive wow and flutter that made 8-track players an undesirable audio format back in the 1970s. Paulson said it would not, because the Federal Government had plans to use many of the worst performing units in the Global War on Terror.
We have recently uncovered a large cache of unsold 8-track tapes by such artists as Barry Manilow, Air Supply, Terry Jacks, Morris Albert, and William Shatner which we can use with these machines. The CIA has already expressed interest in using these units at "Black Sites" around the world, and we foresee that we will be sending at least one player per prisoner to Guantanamo. The 8-track's wow and flutter problems are seen as an asset, rather than a liability to interrogation. Further, because the 8-track format is a continuous-loop format, interrogators can literally just "set it and forget it" and concentrate on shredding documents and recordings of past interrogations prior to facility closings in the next year.
Moreover, these units will be providing service to our nation's Social Security offices. We expect that overcrowding in the waiting rooms will be reduced by 75%. We can also use the same players with the office telephone systems to provide music during the time customers are on hold. Together, we anticipate these actions will encourage Social Security customers to use the Internet to conduct their business.
When asked whether the program might be extended to either quadraphonic music systems or Beta videocassette players, Paulson was adamant that it would not.
That would be foolish. No one ever wanted those, and unfortunately, the pawn shop operators who made investments in them will simply have to take responsibility for their bad decisions.