.comment-link {margin-left:.6em;}

Born at the Crest of the Empire

Tuesday, March 31, 2009


...because, unlike banking, we all think we understand the car industry....

(If it was that easy, it'd already be done.)


  • I think that is about half the reason for why the auto industry is being treated so differently than the financial.

    I think the other half is more subtle on one hand, more blatant on the other.

    The auto industry is built around physical things, machinery, plants, etc. Bankruptcy will not make those things disappear, they will be absorbed and used for something else. Probably a new car company. The importanat thing is that the overall value of those things will still exist, just under a new form and name.

    The financial industry, on the other hand, is built upon pieces of paper. If people suddenly decide those pieces of paper are worthless, that value just plain vanishes. And more and more, it is looking like that paper is worthless. But no-one wants to deal with the consequences of that.

    The emperor has no clothes, and we cannot afford to admit it.

    By Blogger OpenMindedRepublican, at 8:00 AM  

  • I tend to agree.

    Also, the fact that the auto industry is physical is part of the reason people can get their heads around it.

    This morning, I was wondering about the whole "did you come on a private jet, sir" moment of the first auto hearings. If that hadn't come up, would the feeling towards the autos be different? Or did it come up because the Autos are perceived differently?

    By Blogger mikevotes, at 8:10 AM  

  • The whole private jet thing loses me a bit, mostly because I have a friend who is a private pilot. He explained the economics of private jets to me a few years ago, they make more sense (and cost less) than you might think.

    I think a lot of the attitude towards the automakers is based on the perception (and I think reality) that these are not sound companies that just happen to be in trouble. They were barely keeping their heads above water when things were good. Fixing a temporary problem is one thing, propping up a perennial loser is another.

    By Blogger OpenMindedRepublican, at 8:23 AM  

  • I agree. It always seemed like a nothing to me. With the amount these guys get paid, it makes sense for them not to sit in airports for an extra 2 hours on every leg of every flight.

    AQnd, my stance on the autos is this. I really wouldn't mind seeing them fail, get cannibalized or whatever. I just don't think we can let it happen right now.

    (Unfortunately, their low floating boats are more likely to sink in storms like this. When times are good, they can scrabble by. So, I don't know if we can hope for a "good times" failure.")

    By Blogger mikevotes, at 8:30 AM  

  • I think the medium term fix is to subsidize the approval process for new cars. The cost of getting a car approved through all of the safety regulations keeps any but the most powerful companies out of the marke. We do not need a big three, four, or seven. We need a small twenty or thirty.
    Safety regulations were and are necessary, but they have distorted the market so far that it is barely attached to reality anymore.

    By Blogger OpenMindedRepublican, at 8:36 AM  

  • That's an interesting point about the smaller companies, especially as we're on the verge of changing the fuel cycle to electric, hybrid, or gerbil powered, or whatever.

    We're at an innovation point, and we'd do better to have more people taking their shot.

    (However, do you have any numbers to say that getting a car through safety regulations is onerous or a significant portion of a car's expense? I'm not challenging you, I have no idea, but I haven't ever seen that anywhere.)

    By Blogger mikevotes, at 11:07 AM  

  • I'm basing that on a piece I read a while back critiquing a new car companies proposals.

    This person said that it took about a billion dollars to release a new car. He sounded like he knew what he is doing. I'm on break, so I can't do research right now.

    Most of the new companies are releasing their stuff as 3 wheeled 'cycles' to get around this, which does back up the idea.

    By Blogger OpenMindedRepublican, at 11:43 AM  

  • Uou don't have to hunt it down. I'm not that much of an arguer or a "need to be right" person.

    Really, I think what I was asking is whether there was some number you had heard or whether that was based on some spare piece of deregulatory propaganda. Hosting a blog, you never really know where people are coming from, you know?

    Just as a counterargument, Tesla released that REALLY cool lithium electric, and there's no way they could have spent a billion.

    So, I'm guessing that billion to launch is broad, research, marketing, testing, safety, and everything.

    By Blogger mikevotes, at 1:51 PM  

Post a Comment

<< Home