Tuesday, March 31, 2009
I'm no economist, but all the machinations lately regarding the Big Three seem pretty odd.
I look at it this way. All the car makers are selling vehicles that cost a year's pre-tax pay. At least. That's been the constant since forever. They design them that way.
Problem, real people can't save up a year's pre-tax pay in the life of a car anymore.
So, nobody can buy a car without credit. Pretty much the entice cost of the car is on credit. You start looking at total cost of ownership, a hefty chunk of your income is tied up in your wheels, leading to another reason for that difficulty with the saving, leading to more reliance on credit.
Now, under cover of the Cult of Safety and the Cult of the Environment, the Big Three managed to choke off all competition in North America. The Japanese manufacturers managed to bull their way in to the North American market because they got big enough back home, and thus they became part of the gang.
This was done in collusion with the US and Canadian governments, who basically wrote regulations nobody but the Big Three could meet. This accelerated in the 1980's to the fever pitch we see today, when cars have to be engineered to nearly aircraft-level tolerances.
Which is how they kept the price point so high. Its artificial.
I built a quite nice little race car for myself. Took me 6 months, learn by doing. Capable machine, hardy, good roll cage, good suspension etc. All off the shelf dune buggy stuff. I currently have about $6,000 in it, give or take a couple hundred bucks. If I went with brand-new everything, I could have still done it for under $20k.
That's one guy buying retail, hand assembled in the garage. A proper facility could crank them out for sale at under $10k all day long.
But nobody can, because of the regulations. Which is kinda fascism. Watery version, but still.
Comes the perfect storm of credit crunch, oil price and having the wrong cars tooled up. BANG, sales fall off a cliff, the Big Three can't crack their nut this year. Bush gives them a loan, to keep the scam intact. But its a big nut.
Now we have Bary, messiah of The West. He wants to run both sides of the scam at once. He wants to make the rules AND the cars, to his specifications, to please his supporters. Full on fascism.
So if I'm right about that, in the next little while we will see Government Motors shifting over to very expensive, very small hybrids and electrics to meet stringent new US EPA regulations and take advantage of brand new gas guzzler taxes. Add scrappage regulations to remove the backlog of used cars in the wrecking yards and dealerships, and you've got car Nirvana.
A government issue Volksmobile that extracts the maximum possible dollars from the populace, makes the big political donors happy, keeps the dinosaurian manufacturers stumbling along a heartbeat ahead of insolvency, and keeps those unions cowed and compliant.
Next up, household appliances and consumer staples.
And to keep it all sliding smoothly, John F'ing Kerry is out there yesterday keeping the assault rifle ban alive. Gotta protect the Mexicans, y'know. Well, the Mexican government anyway. Car plants down there to keep safe.
Whole thing seems kinda crooked to me, know what I mean?
Update! Courtesy of Kate at Small Dead Animals, this missive from The Corner. New regulations were already released, same day The One fired GM's CEO.