Wednesday, December 3, 2008

Auto Makers

Detroit is doomed.

We can slow the rate of change initially maybe, but that is about it.  

And can we finally stop deluding ourselves about the VOLT electric car?  If it was anything near what many believe, GM would be worth more than Exxon.  Instead, it is worth less than Kmart.

It would be cheaper for the U.S. Federal Government to just BUY Toyota (market cap $96B) and Honda (market cap $72B) than to fix G.M, Ford, and Chrysler... they are going to need well over $150B before this is all said and done.

And it will NOT change the fact that we are running out of fuel to run our domestic fleet with.  THAT is the issue that needs to be addressed.  Problem is, the last politician that brought that up got fired (Jimmy Carter), so don't hold your breath.

The deflation problem might get solved in 3 months or 3 years, we will have to wait for more data.  Here we are, heroically saving a patient with a heart transplant.  Problem is, he needs a lung transplant, too, and we are running out of lungs.

The 10 year collapse has begun in earnest.  There will certainly be an ebb and flow of the economic tides during this period, but make no mistake:  We cannot bailout ourselves past the coming oil shortages, and we cannot make any headway whatsoever on the alternative fuel front while the credit crisis drags on - and drag on it will.  (The Port Authority of NY and NJ received NO BIDS for today's offering.  Gee, I wonder why?  Would you buy bonds in high tax and spend states that depend on the financial services industry?  Not unless you had rocks in your head.)

But if that is true why is Oil going down?

We only need Oil if we have a growing economy... have you seen one of those around lately?  If one shows up again, or tries to, Oil will once again cross $100 with ease.  The only way Oil crosses $200 and then $300 is when REAL shortages develop.  The U.S. economy will have continuous collapses if it exports $500 Billion + in exchange for Oil.  When the VOLUME of Oil imported goes down, the price can be maintained at those lofty levels - and not before.  Keep your eye on imports.

Good Luck!

Mentatt (at) yahoo (d0t) com


bureaucrat said...

Part #1 .....

While I'm glad you seem to agree on the "deflation" thing now affecting our economy (everyone is now throwing that word around -- it's now trendy), there seems to still be no admission to the MASSIVEMASSIVEMASSIVE amount of speculation that ramped up the price of crude to $149 a barrel in the first place. You have to imagine: all these whiz kids (like Jeffers once was) who have borrowed hundreds of billions and now have to invest it in something that appreciates, something that makes them look like savants. How about the S&P 500? Too boring, too 1990s. Well, how about that mystical world of commodities? Hey, yeah! We'll make a billion and show everyone how smart we are. And so they bidded up everything "commodital": oil, natural gas, crops, metals, etc., etc, and now the crude price is coming down when the speculation ran smack into a deflationary recession. However, there is still LOTS of oil being burned in America -- only a 5-10% drop in demand so far. In Chicago, cars and trucks are going on their merry way. The price of oil may be important, but it's the quantities that I'm watching.

bureaucrat said...

I'll do part #2 -- Why the Chevy Volt may actually work out -- tomorrow

tweell said...

President Carter's response to the energy problem was to create the Department of Energy. Aside from the employment of bureaucrats, what has that department done to justify its' existence? Carter deserved to be fired for many different reasons, and the Department of Energy is one of them (a minor reason, but still on the negative side).

bureaucrat said...

(CNN reports today that the Energy Dept spends most of its time and money on nuclear weapons management in one form or another, not energy issues.)

bureaucrat said...

Ok, part 2 -- why the Volt (if it ever gets built) may be helpful ...

First, the bad:

The problem with electric cars has ALWAYS been the batteries. Gasoline has 80 times the energy pound for pound of lithium batteries, and diesel 250 times. Physics and chemistry make batteries really bad transportation fuel source. They also don't like cold much.

With so many people parking on residential streets, how are they supposed to charge their Volts? Reall long extension cords?

If GM can make these damn things for $40,000 or less, it will be a miracle.

Now, the good:

Studies show 75% of people drive 40 miles a day or LESS. A decent battery that can go 40 miles per chargeup could do the job for most people.

We have some extra elecrical capacity that was built up in the 60s & 70s for all the factories that were never built (went to China), and some of it is still there.

The plug-in hybrid/Chevy Volt would be charged up at night when electricity demand is lower.

Plug-in hybrids would require a lot less maintenance.

Greg T. Jeffers said...

The problem with the "75% of people drive less than 40 miles per day" argument is, (and this is VERY politically incorrect):

Most people do not matter in our economy. It is the 10% most productive that produce the vast perponderance of the goods and services. The bottom 50% produce about 10% of GDP.

My apologies in advance to any who are offended. I did not create "Paretto's Law".