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Posts Tagged ‘Ford’

More “Cash for Clunkers” Nonsense From Obama Stimulus Gimmickry

September 2nd, 2009 Comments off
In a previous post I dubbed the Obama administration’s “Cash for Clunkers” program as really being “economics for dummies.” The sales results tabulated by Bloomberg for the period of July 27 through August 24, coinciding with the implementation of “Cash for Clunkers,” exposes the banal irrationality of this taxpayer-subsidized boondoggle.

 

The program actually did stimulate auto sales-for Detroit’s foreign competitors. Toyota, for example, saw an increase in car sales of 6.4%. Among domestic manufacturers, however, only Ford saw a gain, rising by 17%. But what about Chrysler and General Motors, which are only still in business due to government financed life support.?

 

 

Even with “Cash for Clunkers,” Chrysler sales dropped by 15% and GM sank by 20%. And this is supposed to have been a “successful” economic stimulus program? If so, what in God’s name would have been considered a failure?

 

For More Information on “Global Economic Forecast 2010-2015” please go to the homepage of our website, http://www.globaleconomiccrisis.com 

 

 

 

 

 

 

 

 

 

GM Is Toast

May 16th, 2009 Comments off
During the Texas oil bust of the 1980s, a major real estate developer told me, “I thought I was in the real estate business, only to discover I was really in the oil business.” His comment was made as the collapse in the price of a barrel of oil inflicted massive collateral damage on all segments of the Texas economy. Similarly, the executives running the world’s major automobile companies, including those based in Detroit, have learned that they were actually in the subprime mortgages, credit default swaps and financial derivatives business.
In previous posts I have commented on the strategic miscalculations and erroneous management decisions made by General Motors and its domestic competitors as contributing factors towards their imminent demise. However, it is the Global Economic Crisis, driven by financial chicanery engineered largely on Wall Street, that is sending GM, Chrysler and possibly Ford to a rendezvous with the undertaker. While U.S. politicians, who have shoveled trillions of taxpayer dollars into the hands of reckless Wall Street firms and banks with virtually no strings attached, enjoy lambasting Detroit and the auto unions for their supposed misdeeds, a recent statistic adds ambiguity to this generalization. In April, Toyota, considered to be the best run auto company in the world, actually had a sharper drop in U.S. auto sales than GM, which is teetering on the edge of bankruptcy.

In desperation, GM has announced it will dump 1,600 domestic dealerships in the short-term, and ultimately eliminate 2,600, reducing its total dealership franchises by more than 40%. This is only part of an array of measures designed to reduce operating costs. More auto assembly plants will be shut down; additional layoffs will be undertaken while remaining employees will see their wages and benefits shrink further. However, in the wake of the financial storm that is wrecking the global economy, these last ditch and desperate stratagems are almost certainly doomed to failure. In the next several weeks GM will file for bankruptcy protection, shed several of its brands, and accelerate the death spiral that it is now locked in. With unemployment surging, not only in the United States but throughout the world where GM has significant market share, and credit essential for auto purchases being denied to consumers-macroeconomic factors that are far more relevant to the auto industry than brand elimination and dealership disposal-the extinction of General Motors as an industrial corporation seems all but certain. Possibly brands such as Cadillac or Chevrolet may survive independently or be absorbed by other auto manufacturers, but the behemoth known as GM is destined for the scrapyard of history.

While Teddy Roosevelt was completing his second term as U.S. president in 1908,the first GM automobile was manufactured. In 1954, General Motors saw its 50 millionth car roll off the Detroit assembly lines, at a time when more than half a million Americans worked for GM. Now, at death’s door, GM has announced that its dwindling workforce will shrink by a further 38%, reaching a planned level of 38,000. That represents a reduction of 93% from the 1954 employment figures!

The financial and political elites who dominate policymaking in America seem unperturbed. They apparently prefer having companies exist that engineer exotic financial derivatives than a manufactured product that is assembled by a skilled, well-compensated workforce. However, even with this melancholy certainty in front of us, I will always imagine a ride in a 1957 Chevrolet convertible as being infinitely more romantic than cruising the lanes on foot with a pocketful of securitized subprime mortgages. So, America, where does the economic road ahead lead us?

Rest in peace, General Motors.

 

For More Information on “Global Economic Forecast 2010-2015” please go to the homepage of our website, http://www.globaleconomiccrisis.com 

 

 

 

 

American Economy In Freefall

December 12th, 2008 Comments off

What began as a financial crisis in the U.S. housing and mortgage market has metastasized as a virulent global economic cancer. The U.S. economy is imploding, and taking down much of the world with it. In a tsunami of financial panic, central banks across the globe have been slashing interest rates to virtual zero, while simultaneously borrowing and printing trillions of dollars, which are being injected into failing banking systems.

With global financial arteries clogged, the economies of the planet are now cratering, with the United States economy in particular imploding at an alarming rate. A concrete example of this is the impending bankruptcy of the American automobile industry, which directly and indirectly represents the core of what is left of the domestic manufacturing industry in the United States. Ford, Chrysler and especially GM have told the U.S. government and its elected representatives in no uncertain terms that unless the government injects untold tens of billions of dollars into their virtually empty coffers, those companies will go bankrupt in a matter of months. GM has even indicated it could be forced to shut down within weeks.

With a federal budget deficit that has grown from the hundreds of billions to the trillions of dollars, where is the U.S. Treasury going to get these vast funds for the industrial bailout requests that are now piling on? Perhaps soon the retail sector of the American economy will be coming to Capital Hill, hat in hand. However, an infinite series of bailouts is not a solution to the global economic crisis.