The chances are that clunkers' schemes either helped buyers with little choice (like your correspondent) or simply caused some buyers to advance their purchases. Lombard points out that a similar French scheme in the mid-1990s was followed by a halving of car sales.
This only adds to my worries about the Weekend at Bernie's aspects of this recovery (and kudos to "Hedge fund guy" who first used the analogy). The Japanese spent much of the 1990s propping up their economy and sticking sunglasses on its face; every time they let go, it slumped again.
Tuesday, September 15, 2009
Weekend At Bernie's Economy
Buttonwood:
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5 comments:
It's a sad think, cash for clunkers: http://www.autoblog.com/2009/09/05/report-cash-for-clunkers-leads-to-shortage-of-destruction-derby/ dave.s.
thing, I meant thing... dave.s.
An interesting exercise would be to go back to September of 2001. In the wake of the attack, the Now Exceptionally Little 3 offered a deal to "Get America Rolling Again." Free 3 or 5 year financing on any car as long as they used Ford Credit, GM credit whatever that was called -note the tense and Chrysler Credit. People bought cars -in large numbers- without finance charges. Now well, where are Ford Credit, Chrylser Credit and GM credit? True it wasn't just this scheme that brought all those finance arms down or if they are still in existance - made them into paraplegics , but it certainly helped. In fact there was a time when the top auto execs openly admitted this scheme was a big mistake.
Then another exercise would be to look back a few summers ago when GM and maybe the other 2 joined in - after awhile all the failure just became too much to recall the really smashing individual ideas of failure-anyhoo, GM, because of their mistakes after 9/11 decided not to offer free financing but maybe some whacky pricing of years gone by? Or some ridiculous guarantee? Anyway, sales shot up through the roof for one month and the papers were filled with the top execs crowing about how they were regaining market share. And they extended the offer for another month or two. Yup. Whatever.
Then 4 months later they had filled car lots with units they could not move.
I dunno. One of the GM guys who had to write the deal - actually crunch the real numbers to make Congress fork over the cash last winter was my neighbor for 14 years. We are/were friendly and he would always give me the wheels within wheels, if he had any. The night before his proposal was to go before Congress I was walking the dog, and he was returning exhausted from the office. I knew whatever plan was going to be submitted had to be finished as it was due first thing in D.C. in the morning. I just simply asked, "Will it work?"
"I don't know. Nancy Pelosi is making it hard. She's putting too many environmental conditions on the cars. We can't make a profit."
I just nodded. The proposal was accepted. GM was bailed out. Since then the UAW forced GM to commit to building the mandatory lawnmowers that will pose as cars here in America with UAW workers who are still earning the same exact per hour rate they earned prior to the bailout (the exceptionally small concessions O made them make, came in the form of perks, only. Funny how the only salary he has no problem with in America is that of the UAW - always considered the gold standard of Union salaries in America thanks to Walter Ruether but I digress ). If the cars had been built in China as they were supposed to, then there was a chance due to a cheaper workforce that GM would have turned a profit on them. But profit must not be the main goal of the bailout...
It was my guess that the cash for clunkers was the payoff to GM for agreeing to the demand of building the future lawnmowers in America.
I don't think GM or the car Czar have figured out yet how GM will become profitable again or merely maintain the market share it had 5 months ago. I think but could be wrong, the cash for clunkers scheme benefited MORE - as Buttonwood's own choice proves- the car companies that were not bailed out.
Highly amusing how when Obama tries to help out the car companies he owns, he actually helps the competition....and using taxpayers' dollars to do so makes it a laugh riot...
Just wait to see what he does to health care. I fully expect I will be going to Cuba for annual checkups...
Mrs. P
LA!
Just went and looked at my old paper and look -my neighbor was right!(Don't fall for thinking these are anything new - this is what my neighbor was talking about as it's all decided in advance):
http://detnews.com/article/20090915/AUTO01/909150399/White-House-set-to-unveil-new-fuel-efficiency-standards--tailpipe-limits
And you may recall I once told you Bob Lutz was the guy to watch. He's nuts. Really. A former Marine fighter pilot who helicopters to work every day unless O banned his helicopter. If anyone can help GM it would be Lutz. Lutz's main trouble really is perception which GM did enough damage to itself over the decades but Michael Moore's efforts must never be forgotten:
http://detnews.com/article/20090915/OPINION03/909150320/Howes--Maximum-Bob-leads-GM-marketing-charge
And then the front page of the Detroit News has a photo of the French lawnmowers that will soon be able for retail...
Mrs. P
Hey, I'm not doone yet. Look at these new photos of the City of Detroit - driven proudly into the gorund by the Democrats for the last 40+ years all the while screaming "Racists!" at hard working and higher than ordinary tax paying folks like Mr. P...
http://www.sweet-juniper.com/2009/07/feral-houses.html
If God were a blogger, these houses would be a visual analogy to GM and Chrysler's true state...
Mrs. P
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