Why the automotive industry's good times could end in a crash

[Stevearino]

The uncomfortable fact is that the U.S. economy is and has been based on consumerism which is not in and of it self bad but to base 70% of your economy on the idea of people just buying stuff they don't really need is pretty crazy when you look at it. I don't know if it is possible to keep that up. It used to be you would make or have someone else make the things you needed. Now the entire thing is based on buying a bunch of crap continuously and all on credit. And as far as the Government spending money foolishly, try to close down a military facility that we no longer need with the prospect of an entire region that depends on that facility going down the tubes.  All government money is paying somebodies bills. The whole thing has been a shell game for a while.

[Mike DC]

       
Businesses don't prove their health by saying, "We're colossally in debt, but look how much we spent on frivolous wasteful stuff this year!!!"

Why isn't earthquake or hurricane damage good for our economy?  It makes us spend money to rebuild, doesn't it?  



Consumption is not a measure of economic health.  The idea is ridiculous.

[odcics2]

Guess I'll be the first to mention the answer to the problem of "where the money is going".

Overseas.

Any time you buy something made elsewhere, there goes your money.

Can anyone list the biggest companies vacuuming up our dollars ?   

   

[HPP]

Well, almost all oil in the world is bought and sold using dollars, so that were a big % of it is.
This shows the different money supplies.

http://www.google.com/imgres?imgurl=http://static.safehaven.com/authors/hewitt/8030_d.png&imgrefurl=http://www.safehaven.com/article/8030/composition-of-the-us-money-supply&h=225&w=224&tbnid=DOsuxe3duJt2aM:&zoom=1&tbnh=160&tbnw=159&usg=__zLvK2dGzoFWXAcRMcxpQBPbgVWA=&docid=XXUvSPEuodQjxM&itg=1

[Ghoste]

Getting off topic but yeah, we did it to ourselves.  Everyone that ran to Wal Mart for falling prices, every union leader that held the company by the throat, every exec that decided teaching them a lesson by building plants offshore was smart, everyone that bought a product made somewhere else, including me, has contributed to this.

[el dub]

everyone buying a foreign car.

[Mike DC]

 
Middle America had the manufacturing jobs in the first place because they were being cheap-labor-outsourced from the cities.  Those jobs had been in the cities after being outsourced from Europe before that. 

Now it's outsourced to China & SE Asia.  As their middle class rises it will probably get outsourced to somewhere else.  Maybe Africa, or India. 

It's a continuing cycle.   

[stripedelete]

You can't forget that at the end of WWII we were the only game in town until the 80's .

After that our economy has been based on cheap credit and consumer debt.  Which takes us right back to the article at the start of this thread and his point about 72+ month auto loans.

As mentioned earlier, this will drive the repetitive cycle of boom bust for our lifetimes.

[1974dodgecharger]

You can't forget that at the end of WWII we were the only game in town until the 80's .

After that our economy has been based on cheap credit and consumer debt.  Which takes us right back to the article at the start of this thread and his point about 72+ month auto loans.

As mentioned earlier, this will drive the repetitive cycle of boom bust for our lifetimes.

oh well what can you do  obviously voting does not count......whoever you put into power always does the opposite, the the more a leader lies, the better chance he/she gets into position.

[Ghoste]

Actually my opinion is that America had the industrial jobs because Adolph and Winston destroyed the entire industrial base of Europe.  The in our greed to live the American dream as Wall St. suggested we handed everything over initially to Japan but even that wasn't good enough, and China swooped in after the return of Taiwan.

[stripedelete]

You can't forget that at the end of WWII we were the only game in town until the 80's .

After that our economy has been based on cheap credit and consumer debt.  Which takes us right back to the article at the start of this thread and his point about 72+ month auto loans.

As mentioned earlier, this will drive the repetitive cycle of boom bust for our lifetimes.

oh well what can you do  obviously voting does not count......whoever you put into power always does the opposite, the the more a leader lies, the better chance he/she gets into position.

There is nothing anyone can do.   

[Mike DC]

 
Cold-War-era America was riding the wave of a whole bunch of really long-term historical factors coming together.  We had learned to extract lots of resources from the earth and use them, but we hadn't used up all the "low hanging fruit" in the planet's supply yet.  We had learned how to profit from tearing up the environment but we hadn't really torn it up yet.  We had been industrializing for 100 years but it was finally trickling down to people's everyday lives.  Everyday lives were getting the benefits but the problems caused by all this lifestyle change had not developed yet.  Etc.

We need to stop asking "what went wrong in the last several decades?"  We need to start realizing that the several decades before that were a freak set of circumstances.   

[stripedelete]

 
We need to start realizing that the several decades before that were a freak set of circumstances.  

Careful! That makes heads explode.  

fixed

[HPP]

 
Cold-War-era America was riding the wave of a whole bunch of really long-term historical factors coming together.  We had learned to extract lots of resources from the earth and use them, but we hadn't used up all the "low hanging fruit" in the planet's supply yet.  We had learned how to profit from tearing up the environment but we hadn't really torn it up yet.  We had been industrializing for 100 years but it was finally trickling down to people's everyday lives.  Everyday lives were getting the benefits but the problems caused by all this lifestyle change had not developed yet.  Etc.

We need to stop asking "what went wrong in the last several decades?"  We need to start realizing that the several decades before that were a freak set of circumstances.   

You know, I've often wondered if these factors combined with two world wars created a scenario where the economically powerful middle class is more of a historic anomaly than a sustainable form of civilization. Since the classic Roman times and up to 1945, history tended to have pretty clearly and narrowly defined lines of income/social status. Those lines became much broader with all of the prior 75 years of industrialization and 4 years worth of mandated savings, gross resource consumption, and pent up demand that developed out of WW2. From 1945 to around 1995 that economic power grew and peaked and is no slowly being eroded away to conditions similar to those that existed 100 years ago. I don't doubt that the trend will continue until we have a obvious ruling oligarchy (IMO it already exists, we just don't readily see it due to the democratic veil).

[Mike DC]

   
IMO history makes it very clear - having a good/fair middle class not people's "natural" condition.  Leave us to our devices and we will not gravitate toward it.  We will not create it.  If something creates it for us then we will eventually tear it down. 

It takes other factors to cause it.  Unusually wise planning by unusually noble & powerful rulers, a sudden explosion of prosperity, war factors, etc. 
 

[stripedelete]

Good catch HPP.  Completely forgot about the our emerging "Ruling Class".

[odcics2]

everyone buying a foreign car.

After a house, this is the biggest expense. Over one's lifetime, possibly the biggest. 
Say bye bye to our lifestyles as long as trillions go over seas....