Missing the bigger problem

Re: Wow! -- daugface8
Posted by NOVAgent , Wed, Nov 19, 2008, 15:17:29	Post Reply	Top of Thread	Reviews by NOVAgent	First Amendment Message Board	Main BigDoggie.net site

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GM & the rest of the "big three" aren't the only ones that have been experiencing drastic declines in vehicles sold. I saw the other day that Toyota (which overtook GM as the world's biggest auto manufacturer) has seen sales drop by 30 percent in recent months. I suspect many people believe that if GM goes bankrupt (Ford doesn't seem to be in danger of doing so) then folks will simply buy more Toyotas, Fords, and other brands. However, as I just pointed out, ALL of the manufacturers are dealing with the double whammy of lower demand AND lower ability to obtain financing for what customers DO come through their doors - even people with pretty good credit are having trouble getting car loans.

The larger problem here is that an ever increasing number of people can't afford to buy a new(er) car. Even among those who can, there is extra caution before taking the plunge. Compared to the 1970s, the typcial American (and family) has a best (and often LESS) experienced stagnation in take-home income and therefore buying power - but costs of everything has gone up. For fifty years or so now, the vast majority of working Americans have made between 20k-40k. Compare what house/rent payments were when you were a kid, and then grocery expenses for a week, as well as utilities, insurance, car payments, etc. and look at what they run now. Most folks on this board are much better off of course, but take a look at the local paper for an idea of rent in average/so-so neighborhoods, payments (and insurance) on a four or five year old car, etc.

Remember when a couple hundred a month was considered an extravagent car payment? I sure do. Nowdays, even for a late model used car they'd laugh you out of the dealership. Well, maybe not - instead they'd stretch it out into a six or seven year loan where you'd be "upside down" for four or five years and totally f#cked if you had an accident & hadn't purchased "gap" insurance.

Look, I understand that businesses have to make money or they can't stay in business. At the same time though, business in general, with considerable (and bi-partisan in the last 30 years) help from the govt. has been driving down wages for working Americans. With all the new types of credit (including the concerted marketing effort to get folks to use their homes as ATMs - the home equity loan business was built on the concept of shifting costs of cars and college into your mortgage so you could get the interest deduction you lost in Reagan's tax reforms) that were being offered, we built one helluva credit bubble. However, like any stock market bubble, it was bound to burst at some point.

Now, it's becoming increasingly clear that the "fundamentals", or perhaps more accurately the FOUNDATION of our perceived economic might was more sand than concrete. Unless and until we have an economic strategy that promotes good paying jobs, we are going to have a tough time just keeping things from getting worse - and getting better will be nothing but a fantasy.

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