The auto industry needed to be bailed out in 2008, and how has that worked out for Detroit? Today, in anticipation of the next crash, the later the bigger, so the sooner the better, Detroit is being bailed out in advance. Subprime loans on autos are rife, so people are goosing USA economic numbers buy picking up cars they will never pay for. Looks good short term, soon America will be awash in cheapo repos. Hold off on that purchase, cash will be king.
Cheap credit and politics also crowds out innovation in the auto industry. Picked winners are advanced, true innovation is suppressed:
What more, better, cheaper faster might we have had if we had not diverted so much time talent treasure to welfare for millionaires and billionaires? We'll never know until capitalism finally caves in, which gets closer every day.
We get a glimmer of what is possible from relatively free market, like Hong Kong, where mass transit is privately owned. Where there is separation of business and state.
Feel free to forward this by email to three of your friends.
Cheap credit and politics also crowds out innovation in the auto industry. Picked winners are advanced, true innovation is suppressed:
But even these egregious windfalls do not begin to compare with the gifts showered on Elon Musk by the money printers in the Eccles building. Tesla has stayed alive only because it has been able to raise billions of convertible debt in the Wall Street casino at yields which are the next best thing to free money. In short, it has been burning massive dollops of cash for years and replenishing itself periodically in capital markets which are rife with momo speculators flying high on cheap carry trades and the Fed’s buy-the-dip safety net.
During the spring of 2014, for instance, it raised $2.3 billion of 5- and 7-year money at interest rates ranging between 25bps and 125bps. That’s right. This company is a red ink spewing rank speculation, but the money printers have enabled it to raise cash that costs virtually nothing on an after tax basis. Call it free money for the Telsa bonfire of the vanities.
What more, better, cheaper faster might we have had if we had not diverted so much time talent treasure to welfare for millionaires and billionaires? We'll never know until capitalism finally caves in, which gets closer every day.
We get a glimmer of what is possible from relatively free market, like Hong Kong, where mass transit is privately owned. Where there is separation of business and state.
Feel free to forward this by email to three of your friends.
2 comments:
John---without the state, there might not have been an auto industry at all, since the public road system has been created by sequestered or coercively diverted capital. The hampered market always deals with the "situation on the ground" and gives us the best result possible given the imposition of non-consensual factors.
Yes, highlighting the urgent need to dismantle the state and return to the peace and prosperity and justice of anarchy.
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