Well, you can imagine that I’m concerned that our new floor, after the financial bloodbath, will be about the same level as in 1932.

As the unofficial automotive historian around here, let me just briefly recount the top 8 new cars sales from 1928 through 1941, from the last full year of non-depression through the last full year of auto production before the war (numbers are approximate since Willys-Overland/Whippet numbers are only estimated)

1928: 3,163,156
1929: 4,027,036
1930: 2,477,533 (down 38.5% YOY)
1931: 1,761,665 (down 28.9% YOY)
1932: 928,648 (down 47.3% YOY)
1933: 1,447,018
1934: 1,846,811
1935: 2,338,218
1936: 3,301,406
1937: 3,398,569
1938: 1,697,151 (ouch! recession)
1939: 2,250,315
1940: 2,757,977
1941: 3,574,087

1941 didn’t even equal 1929’s level, when a month of 1929 already was in the depression

1941 did see one car line sell over a million per year (barely) – Chevrolet. The prior year that any company sold over a million per year was 1930 – Ford. In 1929, BOTH Ford and Chevrolet sold over 1.3 million (over 1.5 million in Ford’s case, actually).

So you can see, we have a significant amount of potential “drop” our current economy, using new car sales as a barometer, and gaging against the past.

Hope to God it doesn’t happen.

Revenue would imply money coming in. Cutting taxes would more or less require a cut in money coming in, unless you’re going to argue that the revenue is from reduced tax rates but a broader tax base, in which case I don’t think you can credit tax cuts as the engine for a significant chunk of the last eight years’ economic growth.

After the fiasco with the airlines, the PBGC’s recommendations have been more closely followed since everyone realizes that if there was round 2, it wouldn’t survive. That said, they legally haven’t been given any more powers. Should GM and Delphi not make the agreement, I can see it being a problem for them when they hold out their hand to Congress.

@Delphi:

Dead company walking. Well, not really. No cash to invest, divested of all known assets worth selling, no white knight. It will be Ch.7 very soon. This may be why GM is stalling on the payment. They may be hoping that Delphi ceases to exist so stalling a binding contract for $1.5B that they don’t have makes sense.

@Menno:

I think I agree with you, only at a much reduced volume. It irks me to no end to watch politico’s throw money and resources away like they don’t mean anything. But I also know that times are changing so I’m hopeful that with the current financial bloodbath setting a new floor, we’ll all be on much firmer ground in the end.

As they say, things have to get worse so that they can get better. Glad to hear you are saving money. Just make sure to invest some of it so that you can partake in the upswing when it happens.

You also make the assumption that imports are cheaper. Toyota and Honda models typically sell for more than the corresponding domestic model.

Now we all know the imports are cheaper unless you care to think about what the cars really cost.

Domestic Costs
cost of building car + social programs = your cost

Import costs
Cost of building car = your costs

Now when your old and feeble and every business you worked for is down the tubes and the US is bankrupt. Was the imported item cheaper?????????

Have a look at page 6: http://elsa.berkeley.edu/~saez/saez-UStopincomes-2006prel.pdf

Remember the 1990s? The economy and stock markets were roaring, the dollar was strong AND tax rates on the highest earners where much higher than they are today. The government was running a surplus when the current President took the oath of office and was actually starting to pay off a bit of the national debt. Market mavens were wondering what the implications of there no longer being regular treasury debt auctions would mean for a market which had become used to them as a basic peg. Now after seven plus years of “tax cuts are the answer to every question” we are swimming in red ink and the US dollar has plunged. Sometimes tax cuts are a good answer, but it depends what the question is!

While I could theoretically afford $488 extra per month for my wife and I, we’re pretty much the exception – especially here in Michigan. I’m one of those 10%ers who can and does pay off my modest credit card bills every month.

With an extra $488 per month outgo, we’d be cutting back and would not be taking vacations or going to restaurants much, and would delay things like house upgrades etc.

In other words, the few of us who could afford to pay the $488 a month per couple would be spending less, causing the economy would slow down, etc. and no doubt, the idiots in Washington would decide to spend yet more tax money to try to “put people to work” and so the circle would start again. My taxes would go up yet again, we’d tighten our belts, etc. infinitum ad nauseum.

yankinwaoz, the United States did not dry up and disappear during the great depression (well, okay, some of the midwest kind of did, in fact). Great Britain didn’t fall into the ocean when it lost it’s empire. The dirt under the Roman Empire simply changed names and leaders, broke up into smaller nations and changed over time, likewise the Soviet (dis)Union.

More to the point, the Weimar Republic sort of survived the hyperinflation of the early 1920’s, as did most of their people.

Same thing with the United States – if we have the extreme misfortune of hyperinflation, stagflation, some kind of economic recession or depression or economic catastrophe, something resembling a nation or nations will come out the other side of it.

It’s just the extreme deprivation and hardship between then and now that’s got a lot of people concerned.

GM, Ford and Chrysler are but symptoms of a disease of ineptitude, greed, and general idiocy which plagues humanity and always has, and it’s not just the United States which is sick.

In fact, Britain is actually in worse shape than the US, with even higher debt (individually), a potentially even worse housing situation, a lower birth rate, their own massive problems with cultural misfits (in their case, Islamicists, as much of Europe, instead of Illegal Aliens here in the states). And now Mainland Europe is also getting (economically) ill, especially southern Europe and ironically, Germany.

But what really sets off the alarm bells in our country is the prospect of having the banks collapse due to so many foolish ponzi schemes with people’s money; derivatives, etc., and lending money to folks who can’t or won’t pay, on top of the fact that the US only provides for about 1/4th of it’s own gasoline and diesel fuel needs, imports about 3/4.

Those are all MAJOR issues which the politicians are hardly addressing.

It’s not like we haven’t been warned – anyone else remember Ross Perot, 16 years ago? How about Ron Paul?

It has? Where? When?

Most people are in a bloodbath financially.

Most people not ONLY can’t afford an extra $200/month/household, they are NEGATIVE with credit card debt, lost equity in housing, etc etc.

Google for statistics on credit card debt. How many people pay off their balance every month ? 10%?

This is not sustainable.

Much of what you said I agree with, but I must point out that the SS trust fund is vaporware. It exists (in the form of bookkeeping entries) because Uncle Sam credits the trust fund for SS taxes collected. But he immediately substitutes IOU’s for the cash, which he spends on all sorts of things. For a long time the income greatly exceeded the outgo, so the trust fund grew (it held more and more IOU’s). At the point when SS outgo exceeds income, the trust fund begins to shrink. That is, the trust fund starts cashing in some IOU’s. And that is the turning point (or moment of truth for Uncle Sam), not later when the trust fund is eventually depleted. Cash flow is the crucial issue.

Every time an administration (D and R) has tried to deal honestly with unfunded entitlements, the opposition (D and R) has used demagoguery to strangle reform in its cradle. In just a few years, however, first Medicare and then Social Security will demand more realistic discussion.

“Look at the airline industry. It has been deregulated to death. .. Almost no one is profitable.” Yet Southwest has prospered and grown. Is it a case of an aviation Toyota competing against Pan Am-like Detroit?

But thanks for reminding everyone that the business cycle has not been repealed. We’ll always have ups and downs. No economy can go through life only inhaling.

How exactly?

We are the 3rd most populated country on the planet. We are one of the largest countries on the planet in square miles. We have the largest economy, largest military, largest ag producer, and large everything in almost every metric. We are blessed with a nation that almost owns its own continent and has long coasts and harbors on the planet’s two major oceans. We have the longest undefended borders in the world. We have zero chance of any nation invading and taking over.

Where exactly does something that big go and hide?

Even if all the other nations on the planet decide to not sell us oil starting tomorrow, we will survive, probably better than the rest of the world will.

Sorry to burst the bubble of all the American haters on the planet, but we aren’t going away, today or tomorrow. We will be swinging a big stick around for a long time. So get use to it.

In regards to China owning so much of our debt: “Borrow a little from the bank, the bank owns you. Borrow a lot, you own the bank.

Yes, I understand that, but two of the reasons given for the recent strength in US manufacturing were the low USD and relative strength abroad. Now with both those conditions reduced, we should expect US manufacturing to fall which should hurt us. And these came before the Frannie bailout, although it was expected and might have been factored in. I know Spain and England have big housing issues like us, but I don’t think the rest of the world has anything like the housing overhang we do and they’re not even in our league in the reckless use of credit cards for which the piper will have to be paid soon. And I haven’t read about precarious conditions for overseas banks, while we have several banks going under each month it seems plus the likes of Lehman tottering.

I left out hedge funds. And I’m hearing talk about a Fed cut instead of an increase in the FOMC meeting after next. This should absolutely hurt the USD but isn’t.

jmo: “The US has about half the debt load of Germany, the UK or France, and about 1/5 the debt load of Japan.” Moreover, those countries–along with most of Europe, Russia and China–will soon face demographic calamity. By 2015, new calculations show, Europe’s population will not only be aging, it will be shrinking despite current immigration levels.

America has succumbed to the great temptation of democracies: using government to give ourselves goodies. However, though our population is aging, fortunately our birth rate is still sufficient to replace ourselves. Young’uns pay their elders’ Social Security and Medicare. What’s that, you say, you have no kids? Well, get busy!

It is assumed that the baby boomers will bankrupt social security.This may not be so. If you look at the stories about how many boomers are planning to work beyond retirement age the impact may not be so great. I am one of the oldest boomers, 62 this year. My wife and I own a small business and do not plan to retire at all. What we do plan is that after age 70 to spend less time at the business and let the employees do more of the managing. As an aside, if something happens to us, the business will go to the employees.

It is always easy to see the bad that exists. It is harder to find the ways to change what is happening. During the great depression, there were programs to put people back to work. The infrastructure in the country is in need of repair and updating. Take the money that is being spent in Iraq and spend it here on new roads, new electrical grid, new nuclear power plants. Whoever is elected president is going to get the troops out of Iraq. We might as well use the money for our well being.

The economy will recover. The demand for products is building up while things are bad. When the housing market stabilizes, things will take off again. There will always be booms and busts. We just have to be smart enough to remember this and not believe the shysters that say there will be no more busts. and for those that believe in no regulation, this is what happens in a totally free market. The greedy are willing to screw over everyone else if it lines their pockets.

Look at the airline industry. It has been deregulated to death. When deregulation happened every airline had to match the prices of the lowest cost carrier. They had a race to the bottom and you see the results. Almost no one is profitable. The bailout the automakers are asking for have a precedent. The airlines got a bailout a few years ago. It did not help much, did it.

We all have to remember that we are all citizens of what I think is the greatest country on earth. If we could put aside the partisanship and remember that, we could accomplish great things. Actually we already do accomplish great things, but we could do better.

What puzzles me is why the USD has gone up recently. When Canada had their high debt/GDP time, their dollar was in the .6x range relative to the USD. The USD was tanked until the Euro guys said they were slowing and the USD had jumped about 10% since then despite HUGE clouds on our horizon. Makes no sense to me. I think somebody’s screwing with things. We’ll see how this and oil and other issues settle out post election.

The recent gain in the dollar occurred when the poor economy spread from America-only to world-wide. That is, the dollar fell partly due to the poor economy in the US versus the rest of the world, but once the rest of the world got as bad as the US, the dollar went back up (or more like currencies in the rest of the world fell; same thing).

The US has about half the debt load of Germany, the UK or France, and about 1/5 the debt load of Japan.

Japan’s debt is twice it’s GDP while ours is only 40%.

Yet gold dropped to $742 today, down about $100 in less than two weeks.

Can anyone spell “manipulation” and “conspiracy”?