So after all the brinkmanship, the President stumped up the cash. But the bailout of GM and Chrysler comes with strict conditions. GM and Chrysler – and their workforces – will have to take deep cuts during the next three months, or the US Government will want its money back and GM will have to go bankrupt.
Essentially, GM and Chrysler have to use today’s Government cash – $4bn for Chrysler, rather more for GM – as a bridging loan to get themselves into something called ‘positive net cash value’ by March. Ask an accountant what that means.
This story has acquired all sorts of new angles since GM, Ford and Chrysler first went cap in hand to Washington six weeks ago.
For a start, Honda, Nissan and Toyota have shown they too are in the poo. They’ve cut production, given profits warnings and laid off thousands of people. Toyota hasn’t denied stories it’ll make a loss this year, the first time since the 1940s.
Most tellingly the new US plant for the new Prius has been idled before it’s made a single car. So the senators and congressmen – who told the Detroit bosses they were dunderheads because they didn’t have enough hybrid cars on the market – can now see that it isn’t so simple after all.
And while the Senate was turning down aid for Detroit, a lot of people suddenly remembered that several southern states had given generous aid and incentives to Toyota, Honda, Nissan, BMW, Mercedes and Hyundai to build their US factories.
As the dust settles, I’ll stick my neck out and say Ford and GM will make it.
Yes, in the US they’ve made ghastly mistakes in the past. Including pretty much abandoning the idea of making decent cars, and relying instead on the quick-buck profits of huge, shonky 4x4s. But they were turning the corner. Their cars were better, and even better ones were coming.
By six months ago they were already far further down the road to modernising themselves than most people think. They simply got hit by the credit crunch (caused by Wall Street bankers who were bailed out far faster).
But Chrysler? However I look at it, I just can’t see the point. It’s not a viable business. It was bought by venture capitalists who didn’t understand, and while they have money I can’t even see why they deserve a handout. It’s surely game over soon.
Best they can expect is a Chinese buyer will take the Jeep label off their hands.
It’s just ironic that sensible family car makers such as ford, chrysler, toyota e.t.c. are in or are going into trouble yet vastly expensive, luxurious car manufactures (bar Aston martin) haven’t really got into trouble. Not even Noble have got into trouble. Yet.
Have Ford got enough money without Government loans now?
Let’s hope GM and Chrysler can return to where they were going before the credit crunch – seriously looking towards the future and away from 4x4s.
“…vastly expensive, luxurious car manufacturers haven’t really got into trouble…”
They have, and they will. Think of many investment bankers do not have a bonus this year to splurge. The reason we haven’t seen a real effect yet is that the super-rich generally are able to ride out these times fairly well.
Topic in hand; Ford should be able to survive on their own, even without a bailout. Chrysler is finished.
GM is the one that no one is really sure about. Before everyone starts talking about 4×4′s and gas-guzzlers, the Big American 3 have huge legacy costs and insane benefits for the UAW. Toyota doesn’t suffer those. Furthermore, Toyota builds its cars in the yen and sells them in the dollar; it always makes money. GM and Ford? They don’t have this advantage.
I fear that GM will go down too, it should sell more cars than anybody and make some serious profits in 3 months to assure customers that it’ll be around after March and that their cars are a good investment. Otherwise it won’t sell any cars or make profit by selling cars and it’s game over. Sounds like a mission impossible to me.
I responce to Tom TG, I think it’s relatively simple that that the luxury car markets have taken less of a hit from the “credit Crunch”, remember the old Rolls Royce saying “If you have to ask you can’t afford it”, and that’s the very point, people who can buy these cars don’t need loans, they just buy them. where as, if you need a loan to get the deposit on your new Zafira you’re in the soup because the banks want charge a huge A.P.R. in hope that we will clean up for their mistakes.
Oh the cries of horror at the prospect of the Chinese picking up Jeep. I see Nissan/Renault possibly picking up the brand at firesale prices. But deep down, I’d kind of like to see Ford pick up the label. A far unlikely prospect, but if it stays a domestic US company, I’d prefer to see Jeep go there than GM.
Curious racer has a good point. The luxury end will live on as the “old money” types will continue to pay cash for their toys. The Blue collar workers who could get easy loans 2 years ago to buy the durge detroit was making are gone. Pitty as ford and GM has some good products in the Pipeline.
Tom TG, you say that, but BBC Breakfast were saying something about Jaguar cutting jobs or losing sales, or something…
I’m glad GM are ok. Now Vauxhall is safe, and the new Camaro can’t be stopped.
That bit about hybrids annoyed me though. They’re not green! And most American hybrids are V8 SUVs with some AAs strapped to the engine!!
The big issue stays tho: they’re not selling cars, nor will they. If Jon Dole knows GM might still go down head first, he won’t buy a Chevy. ‘Cos if in five years’ time he needs parts, the company might not be around anymore. And that same John Dole can’t get a loan for a new car right now anyway, like Curious already said. Nope, it’s still brown trouser time, bail out or no.
About RR: remember that RR is owned by BMW, as Bentley is by VW. Neither is sleeping well at night.
Finally I understand that lyric by the Floyd: But only if you ride the tide and balance on the biggest wave, you race towards an early grave. That might have been about GM now.
happy birthday hammond !
oh dear. the Big three, bar a few of ford’s later projects and some in the GM pipeline, are failed companies. The US claims to be a free market, meaning that unsustainable companies should be left to die off, no matter the cost.
One of the best synopsis on the current auto status. No one else mentions that lines of credit dried up. The US automakers squandered their ability to float bonds and tap capital markets (becoming ‘junk’), so they can’t bank themselves as they could in the past. The japanese still can, but everyone is bleeding profusely.
Prius, for example, are stacked up at the dealers and on the docks here. Even with $1.65/gal (.29 cents GBP/L) gasoline, no one is buying *anything*. This ‘bailout’ is only the first of a several; without improvements in sales, it’s simply the dole.
Daimler killed Chrysler, not the vultures. Cerebus got caught by catastrophic timing with a product line devoid of cars to meet the market change. They paid $6B for something Daimler paid $48B a few years earlier and thought they had a bargain. Now they need to pull a rabbit out of the hat.
Maybe all the small car companies (such as Noble) get by because they dont spend 15,000,000,000 dollars a second on R&D. There is only 1 type of person who wont feel the pinch and it isnt the rich man, its the poor man who had no money anyway.
Freddy, the US is a ‘free market’ in the same way we have ‘freedom of speech’ – it’s true to an extent, but there are limitations that not all of us agree with.
Paul Horrel – Your idea of good economics are what has driven the worlds economy into destruction. I feel sorry for you, I really do!
Anyone who thinks we’ve lived in a Free Market economy over the last 5 decades is dillusional. it’s all the governmental intervention with interest arets and so on that has fuelled this disaster, and your trusting them with your money to make car companies work? This will be a disaster!
These companies need to fail. If the US, and other countries continue along this line we are heading into a depression, and a worse one than the 20s at that!
You say they are now building good cars? eer.. no… if the market isn’t buying these cars, not matter how many stars they get in whatever magazine they simply are not profitable. The car industry as a whole needs to re-think, die in areas that need to be killed off, and start over.
Baling out companies is not the way forward and creates untold damage in other areas!
I’m more likely to believe someone working within the industry with a grasp of syntax, spelling and grammar. Whilst bailing out companies might go against the basic principles of a laissez faire free market it’s very hard for a government to sit back and allow hundreds of thousands of working class citizens pay for mistakes they had no say in.
I’m curious to know, why bail out all the banks and some car manufacturers? When in essence every time the construction industry gets absolutely no help at all? And this is the biggest employer in every country around the world? No construction No nothing any where!
It’s tricky, if the banks fail everyone suffers the backlash, it’s much the same with the car industry. I live in Birmingham and the (eventual) collapse of Rover didn’t just screw over the production line workers, it took down hundreds of smaller firms that supplied parts and couldn’t afford to retool their entire production lines for non-existent contracts. It’s much the same with the other car plants in the midlands that have been lost over the last few years. The construction industry is harder to help as it employs far greater numbers of temporary staff and sub contractors. A car plant is one organisation that employs thousands, and supports thousands more elsewhere, imagine how many companies are involved in building a stadium or office building. The best thing the government can do to help construction is to commision large projects, so the good news there is that we’ve got the olympics and commonwealth games coming. I can’t see that shifting many micras or defenders though, so the government has to intervene directly.
J.Stevens you seem to complete ignore a fundamental fallacy – A Government can not create jobs. It can only take the resources from somewhere else and dump them in another place.
Let me explain is simple terms with good grammer or without so you can understand!
A man owns a shop and a thug comes along and brakes the glass and runs away. Oh no the shop owner cries, and a small crowd gathers. One man by the name of S.Jevens suddenly starts talking to everyone and actually suggests that this is a good thing. Why? Because a local glass shop will have a sale, and the local street cleaners will also get a job. In fact it appears this broken window is a good thing creating jobs for the local economy.
Now that’s your way of thinking. Unfortunately what you fail to recognise is the invisible opportunities lost. The shop owner was going to buy himself a new suit but unfortunately he can no longer afford it. A suit making business has now lost a potential customer, and the fabric company that supplies them has lost out to.
This is the ‘broken window fallacy’. Sorry to patronise but you really should get a grasp on basic economics.
To bail out these companies is only diverting resources from somewhere else. The governments DO NOT have any money. They are either printing it (creating inflation) or borrowing it (creating debt resulting in higher taxes)
This bailout is not a bail out at all.
Rover didn’t have a good company and rightly failed. GM etc… need to fail. they are bad businesses. Creating debt and inflation will not help anyone. These businesses need to fail so entrepreneurs can buy up all the old factories and equipment and create more sustainable jobs in the future.
The fundamental fact that’s been ignored is the reason GM is in trouble. They are a car company that’s only made maybe 2 good cars in 20 years. Their sales figures in the states have been down for quite some time. And the Volt is as good as gone still. No amount of money can save the car that should save GM, because they’ll just re-route the money to buy new jets after the big bad congressmen made them sell the old ones. seriously, the CEO’s saying they’ll work for a dollar a year might as well say “fire me, i don’t need money and have no clue what i’m doing.”
I found out where the Stig lives! And have photo to prove it! Bangsaray, Thailand!
oh yeah?
q;hq:g;dbv:f; n:kfhre:glh:fgergerg
^^
That’s not the Stig! Everyone knows he hasn’t got any fingers to type with!
They (Governments) should go after every CEO that paid themselves a hugh bonus over the last five years and give it all back to the people who had to take loans to buy cars and houses in the first place.
There is a big difference between perception and reality, and this short article is one of the best I read on the subject.
GM sells more cars than any manufacturer(with the possible exception of Toyota), so it is not a matter of them making cars no one wants to buy. GM has more hybrid models for sale and biofuel-capable vehicles on the road than any other manufacturer, so it is not that they are behind in green technology. The Cadillac CTS and the Corvette VR1 are fantastic higher end cars,the type of cars I think Paul Horrel was reffering to when he suggested US manufacturers were starting to turn the corner , but considering the number of cars GM sells overrall, they can’t rely exclusivley on the high end of the market. These two cars are great for the money in the US at least. But with all of this they are and will continue to be un proffitable because of the silly UAW contracts and too many dealerships (7000 GM 1700 Toyota in US). A managerd Cap 11 Bankruptcy would be the best thing for GM. It would fource the UAW and dealerships to face reality, and remove some of expense of the 65 billion in debt GM has. If you are the major unit seller in your industy and barely profitable – your problem is primarilly cost not sales. Banktuptcy will remove costs leaving a more profitable subtainable company.
how cool would it be if tg did a race in a nissan gtr between stig and a current F1 or WRC Driver?!?!?
djrusa: Obviously I adore the ZR1 but that wasn’t what I was referring to when I said GM is turning the corner. It’s the Volt, the Epsilon-platform cars (new Insignia and its US and global cousins) and the various hybrods. Stuff that’s got good relevant technology for these difficult days.
The problem with bankruptcy is this: would you buy a car from a bankrupt car company? Would you be sure it’ll still be here in 10 years time? If you don’t have that confidence you won’t buy it because you’ll think the used value will plummet. GM needs the conficence of American buyers right now, even more than it needs Government help.
I’m sorry you don’t see the value in Chrysler.
Its not the company’s fault that Mercedes bailed on them leaving these new guys on the block holding the bag. Chrysler has some decent products on the market these days. Its too bad they aren’t getting a fair shake from critics like you. I’m driving a 05′ Dodge Magnum SXT Special Edition and its been a good car! I’ve put 72k miles on it and it still runs great and gets 25 mpg with premium fuel. I feel bad and think it was the wrong move to drop it for the journey, since no one was building anything like it except Mercedes anyway. Now Toyota has something similar not to mention Ford and GM had something they were considering as well.
Volvo had the XC70 now for a while and the Magnum could’ve played in that field over the next few years, since they offered it in all-wheel drive too. Chrysler’s 300C is still hanging in there too, not to mention the Mini-van has a huge loyal following still.
Chrysler deserves a chance to prove they can still compete with Ford and GM. All things considered, Chrysler has probably waisted less
money then GM or Ford of late, considering all the products they have to compete against.
Saying a company needs to fail is one thing, but what about the workforce? It would be socially irresponsible for elected officials to allow hundreds of thousands to fall out of work and into the care of the state in such financially unstable times. The loans will cost the government less than the benefits needed later. Also, a government can create jobs, that’s a very simple task if money is no object. Governments have the power to build schools, hospitals, airports and so on. These require people to build and run, jobs are created. If a government had no power to curb unemployment the media wouldn’t keep track of the figures and parties wouldn’t trot them out at every opportunity to score points.
Paul Horrell: Wow a response from the author, I feel privileged. I usually get responses from twenty year olds pretending to be owners of Ferraris. As long as I have your attention I want to write that not only did I like this article but I also liked GM: Dead within Weeks. I appreciate you taking the time and effort to point out the complexity of the topic with out cliche’ “they don’t no how to make a proper car” type declarations.
I remember in a previous post you made the observation that someone might ride in an airline that is bankrupt – take a chance- but wouldn’t take the same risk regarding a car- more expensive, more permanent, where to get parts. I understand your points. But how many high cost manufactures can compete in a mass market category. You can do that if you are selling exclusive high end high margin product but none of the three are in this position. The volume of the companies is such that they at least have to be competitive in price.
Can this be done with UAW workers. Well Caterpillar was able to get concessions out of the union in the early ninety’s which not only allowed it to be competitive but held it gain market share against foreign rivals.But Cat went through a 17 month strike in which management came into the factory to preform laborer’s work. That is not going to happen in this situation.
Will the Government be able to get the UAW to accept cuts in wages that would put it in parity with the workers in foreign owned car plants ( this would be a $30 per hour cut in wages/benefits per worker per hour) Well they were offering $3 an hour cuts following the failure of the bailout plan in the senate. Would a Democratic administration put pressure on them to the point they would become competitive? I have my doubt’s.
I realize the negative ramifications of a company that makes a very expensive consumer product going bankrupt are, but I still can’t think of how a company can be one of the high cost producers and still sell on a mass market level.
There is another problem besides the credit crunch for car buyers, at least here in Germany and to a lesser extent globally: what kind of regulations are going to come to fight the global climate change?
Over here the base for car taxation will be changed from engine volume to CO2 emission. Other countries may follow. I believe in GB you are already extempt from car-taxes and Londons congestion-charge if you drive a zero-emission-car. These kinds of punishments/rewards are going to increase and spread with rising temperatures and sealevels.
So, even if i had the money to buy a new car, right now i wouldn’t do it, except a ZE-car. Let the powerplants bear the legal uncertainty! Problem is, i (and most people) can’t afford a ZE-car. So no new cars for most of us and a bit more trouble for the carmakers…
J.Stevens that is a terribly naive thing to say for someone who seems to have power to post on a well-renowned site.
Now let me draw upon an example that you may be able to relate to.
Back in the early 1900′s many horse cart makers, and hourse keepers were putting up the same argument as you about saving their jobs.
It takes many more people to run a horse and cart than 1 car. Are you suggesting the production of the car should have been stopped to save all the jobs involved in the horse and cart industry?????
What would have happened if the Government had intervened back then and said – “No cars are going to be built because we need to be socially responsible and keep the larger amount of jobs in the horse and cart industry’.
Sorry J.Stevens you arguments screams of you being too emotionally involved in the car industry, and that has clearly clouded your judgement.
And who the hell are you to suggest that once these companies failed some smart entrapanuers could jump in, and re-allocate some of the sold resources building a more sustainable business?
A government can only divert resources from somewhere else to create jobs. What you do not see is how other people suffer, and lose their jobs and opportunities because of the governments actions. Thery dopn’t create jobs, they just DIVERT resources. Rule number 1 of BASIC economics mate – the broken window fallacy!
DO you seriously believe the US Government has any money? they don’ and thus will probably print it… creating inflation. And when that day comes when all the us dollars are dumped back into the system hyperinflation here we come
This isn’t saving jobs, this is leading the USA into a deep depression, and I really really do hope some of you wake up to what’s happening soon!
People who can buy expensive makes aren’t in any economic danger and most probably wont ever be. On the other hand bargain car sales indicate how the main part of the population is doing economically.
As far as GM and Chrysler go, it’s hard to be an American automaker, they came a long way as far as quality and sales go but could do a lot better. The difference between US companies and Japanese companies, the Japanese invest most of their RND in finding new faster cost saving processes while US companies focus on researching the newest product, putting them at a lesser profit gain per product than the opposition.
Not wishing to sound to depressing, the world is on the brink of a Depression (not seen since the 30′s) not recession. The world car market hasn’t even started to take a knock yet, wait for Europe to catch up with the states. It may come, that each major country just supports one manufacture, the States Ford, Germany Mercedes etc the rest of the companies falling by the way side. We are all in this for the next 5 to 10 years,or more? The rich will get a great deal richer the rest will keep picking up the tab for the ‘brilliant’ bankers and financial advisers past mistakes.The real worry is that it took a world war to over come the last depression,the Governments of the world are in free fall panic,which country will be the first just to print more money? PS the good news in all this is that Cad is one of the rich so it’s not all doom and gloom… Happy Christmas.
If GM etc. go down remember this: there are sill american made cars from the 50′s running in Cuba, despite all the embargos. They are maintained by ingenious craftsmen that use any, ANY, parts available. They even copy or MAKE them to spec if nothing else fits!
So, if push comes to shove, what are the chances that you really, really will be totally unable to get an important spare part for your car anywhere on the planet?
Zilch!
Entrepreneurs will take up the slack of failing car companies. Owners clubs will form or expand into swap meets. Flea markets will have GM transaxle units. Top Gear will do match-up services for rare parts.
We are HUMANS, we ALWAYS find ways to survive! Has been so since 1m BC, will be so in 1m AD, period!
no I’m sticking with my second hand Morris Marina for now. No point buyng a new car when the value will plummet when GM shrink / reduce models in the UK or go bust.
It isn’t attatchment to an industry, there are 800,000 people employed within the car industry in the UK, there is the very real possibility for many of these jobs to be lost within months. We’re not talking about a gradual shift in technology but a very sudden change. I’m sure you wouldn’t be so blaise if you were a production line worker at Vauxhall or Jaguar, it’s very easy to dismiss the problem if you don’t actually have to see it. Governments have to step in to protect the citizens that elected them, it is their duty to do so. The bottom line is that a loan now is a damn sight cheaper than the unemployment benefits, housing benefits, retraining and associated costs later. This economic situation is punishing carmakers that haven’t made ‘mistakes’ other than to manufacture a rather expensive none essential purchase, the mistakes of the global financial system are already hurting the average family, they shouldn’t risk losing their jobs too.
As for who eventually pays for all of this, it has nothing to do with Governments, they’ll borrow the money and we’ll pick up the bill later. I wouldn’t claim to know the ins and outs of global finance or running a country but I can see that it isn’t as simple as some people make it out to be. A world wide industrial collapse on this scale would be catastrophic, if that wasn’t the case then governments wouldn’t be stepping in, they haven’t got money to burn.
J. Stevens, if every car company shifted to manufacturing say, buses, or even just electric cars, the majority of the jobs need not be lost, as the majority of jobs are labour to actually make or sell the cars, and they would still need to be made.
J.Stevens you fail to realise that Governments will fail dismally at running these companies! We are heading into a global depression because of the obsession with centralised, government controlled banking systems…and you trust the SAME people to run a car company.
J.Stevens I am sure if you wrote for ‘Top Horse and Cart’ in 1908 with an article on the MOdel T Ford you would be saying
“800,000 will lose their job in the horse and cart manufacturing industry. We need government intervention to save these jobs and stop the production of the Model T Ford”
If that did happen then you wouldn’t be writing about fabulous cars today. You would be cleaning up poo of the sidewalks instead. That’s by YOUR very logic!!!!!
Car makers HAVE made mistakes! They hired the wrong economic forecasters, and built their businesses upon stupid finance deals.
And what do you mean ‘pick up the bill later’? what? God help us if we get hyper inflation because that little ‘Bill we will pick up later’ will involve all you savings being worth 1 loaf of bread! You think that’s an impossible situation to be in in the 21st century..? well history teaches us otherwise.
I fear J.Stevens you have falling for Government and Union propaganda and it’s time for you to wake up son. I suggest you start researching proper economics. Search for ‘Austrian Economics’ That should get you started.
Good luck, and have a happy XMAs.
btw trust the government if you will, but if I were you I would buy some Gold, as much as you can!
http://fagarass.gotdns.or g/ car versus tank !
Well I think the author of the article is not getting the point, GM, Chrysler and Ford are not the victims of the credit crunch, no sir – only due to their own stupidity in terms of producing products people are willing to buy. But also unions are to blame hear with insane social benefits (negotiated in the 90s) that would even ruine the most solvent car producer longterm. So the tax payers money dumped into these black holes is lost, cause the big 3 will have burned the money until march 09 – which solution than – well burn more tax payers money or send them into prearranged chapter 11 (better to do that). They could give them money until 2020 and they would not be producing cars worth a dam.
Lets get something straight, these are loans not buyouts, the government isn’t going to be running the companies as things stand. I think British Leyland is still fresh enough in the UK’s memory for us to see the dangers there. There are issues that need to be addressed by the American big three but I think it’s unfair to say they are in trouble because they only make rubbish vehicles. The Volt and the Insignia are both pretty exciting cars, Ford UK has gone from strength to strength in the last decade and even Chrysler have a couple of decent cars at prices that undercut the Germans by a margin. The biggest problems these companies are facing were laid out for them in the nineties when they didn’t bother with R&D and when they tied themselves to financial obligations they couldn’t possibly honour.
As a side note, this is in no way analagous to the demise of cart building, the car industry wasn’t an overnight success. The shift was gradual and took 50 years to make cars commonplace in the UK, this crisis could finish these companies within months.
If all of these Major companys have been in Business 50plus years & are now Skint, What happened to all the Billions they’ve made over the years?? Makes you wonder doe’snt it.
J.Stevens, if a car isn’t selling it isn’t a good car. That’s the end of the story. You can NOT argue with that. Does that mean Toyota and co are also making bad cars? well, yeah! Except they have had a bit more business sense and are not in AS MUCH trouble.
Just because you say they are a good car doesn’t actually have any worth. At the end of the day this is business. I love certain cars but am under no illusion that a cars real value is how many are sold and what profit is made.
GM and crew aren’t making good cars, and no ‘zcar’ is going to change that. In fact they will probably;y make it worse
And you say ‘loans’ – do you have any idea where this money is coming from? Do you think they make it out of thin air? well. actually, they do! And that’s why we are in this mess. Do you not understand the DEVASTATION of hyper-inflation?
It appears you are refusing to see the wood for the trees, but I will save you the embarrassment of replying to one of your blogs in 12 months time saying
“I told you so”
I bid you good night sir!
J. Stevens said…
Thursday December 25, 2008 at 7:22 pm
“Lets get something straight, these are loans not buyouts”
Ummm… That assumes these companies will be able to survive. It also assumes they will obey the terms of the loans.
Otherwise the government will try to pull the money, resulting in immediate chapter 11 bancrupcy and NO money back to the government because (as was said in the senate hearings) other entities (banks etc.) already have premium claims on everything in these companies.
Knowing Detroit i could imagine they will disobey the terms (for example by paying bonuses), play dumb when caught, go down like a brick and the management will “take the consequences” (laughing all the way to the bank).
These are CEOs, not Jedi-Knights! Look what the U.S. banking CEOs did with their bailout money: pay bonuses to themselfs! It’s disgusting, but this hyper-greed is a reality, sadly.
I fear you may be right about GM, there aren’t consequences in place to stop that level of greed. They still haven’t managed to fix the loop holes and legal inadequacies exposed by Enron. I hope that isn’t the case, GM and Ford do make some decent vehicles and if they can scale back on the rubbish and excessive management structure they might make it through as stronger companies able to compete on the world stage. As I said earlier a car maker doesn’t have to make bad vehicles to suffer at the moment, many new car purchases are not necessary and these are the first areas struggling families and companies can save very large amounts of money. I’d also like to point out that all the current economic trends point towards deflation, so cries of hyper inflation on internet forums should probably be ignored as doom-mongering hyperbole.
Hyper inflation is an interessting topic since the FED lowered their rate to 0-0,25%. I guess even 3% inflation would feel like “hyper” if you don’t get anything for your deposits and nest eggs.
And Enron is an even better point. I no longer want to know what Bush and Cheney (and his “Energy task force”) really _did_ in these last 8 years, i just want it to be _undone_.
As for cars: i reluctantly agree that Ford is on the right track (maybe because they have more experience with small, cheap, economic cars worldwide, like the Fiesta and the Ka). Also Ford did not need the bridge loan, they have enough money to survive at least till March. That’s “un-american”, which in this case is very good for them, if you get what i mean.
But the future is approaching at a speed of one day per day, so things have to move very fast, not just for the big three but the whole industry. Dare i write it here on Top Gear? Let’s soften the blow a bit:
“The era of the combustion engine might not be over _as of yet_, but it is drawing to a close, and those blind to this are doomed to fail”.
On the upside this means Teslas for everybody!
J.Stevens what you are unknowlingly doing is arguing your own point. On one hand you want Government intevention which is a Keynesian approach to economics and then you say
“GM and Ford do make some decent vehicles and if they can scale back on the rubbish and excessive management structure they might make it through as stronger companies able to compete on the world stage.”
which implies these businesses to survive need to scale back massively, allow the market to function, and re-design their business model, and if so go out of business. Considering the Government is the biggest burden on the American economy shouldn’t that be doing the same!?
The Government doesn’t want this to happen of course. They have this disillusional idea that if you print money and give it to companies they can survive the recession. It wins votes but not much more, and at the end of day that’s why governmental policies are always tainted, and inherently wrong most of the time.
Well the recession has been caused by ever inflating cheap money supply, and continuing to poor petrol on a fire isn’t going to put it out.
Do you actually know what ‘inflation’ is? Its NOT costs coming down, it’s definition is the ‘increase in money supply’. That is happening right now. Also what you don’t take into account is the Government’s figures to not include food!!!!
What we are seeing now is a fake. This ‘deflation’ is temporary (not that deflation is a bad thing in reality), and I don’t know who you look at for analysts but I wouldn’t trust any economists who didn’t see this coming 5 years ago!
You only have to imagine all the dollars saved in China being dumped into the American economy to see how hyper inflation could happen very quickly!
Actually I believe the Weimar Republic in germany saw a period of deflation before too much money printing caused a heavy dose of hyper inflation.
Don’t discredit ‘doom-mongerers’ because it was the doom mongerers who predicted this mess MANY MANY years ago, but idiots thought that if you talk positive this could go on forever.
Talking UP the economy is what has CAUSED this, NOT the other way around. If people had more negativity they wouldn’t have got themselves in so much debt and bought rubbish they couldn’t afford!
Anyway J.Stevens I pretty much have said my piece!! Just make sure you buy some gold mate and tell Jezzer and co to do the same!
I cannot understand the mentality that you know better than the people running the world. I know that I don’t understand world economics to the point where I can make predictions that aren’t mere hunches and musings, I know I can’t make a better car than the engineers at GM are capable of building and I also suspect that if you did know how to do either of those things then you’d be paid very well to get on with it and not post your own musings and hunches on the internet. I, like all consumers, am capable of unqualified criticisms on any number of things sold to me, be it a system of government, financial control or cars, that doesn’t make it a fact, only my opinion. So I state that it is my opinion that you are wrong on this matter, and I hope that the bridging loans being offered by the governments around the world are enough to allow some companies to streamline their operations for the tougher times ahead, if only for the sake of the workforce they support.
Duvsta:
Also i do not agree with all of your statements i can confirm that the Weimar Republic had a phase of deflation. I know this because my granny told me about it and she said it was worse than the hyperinflation afterwards.
In that period of deflation you just could not buy anything, there was nothing to buy (so she said). I guess it might become like that again if the credit markets don’t unfreeze, because for tax reasons – among others – companies like to be in debt and not have a lot of cash in the book (which is fine as long as credit is available, but now is a big, big problem).
One would assume that under these deflation circumstances the value of money rises (if you can’t buy bread you are willing to pay more for it). Maybe that triggerd the ensuing hyperinflation, i don’t know.
The only thing i know is that i could happyly have lived my live to it’s end without a repeat of economic turmoil, religious wars, a failing environment and corruption whereever you look. But that ship has sailed! Maybe our current economic depression is just one expression of a deeper mental depression, and they strengthen each other. Maybe Mr. Obama should get a “shrink” in his cabinet to perform a global psychoanalysis…
hi i love the show i watch it all the time can u say who the stig is my fav car is a koanigzegg ccxr please read my letter out on the show p.s some say when he takes his helmet off the would freezes
Top Gear are soo much more better than fith gear and it should be said on t.v more often!
Most comments here are right, people who are worried about there jobs etc are not going to buy a new car. So why has the governemt given Billions in aid, would it not have been simpler just to pay the workers off? Here in the UK we no longer have a auto industry, yes we have cars lorries made here but they are owned by over seas companys, Jag/landrover now owned by Tata, did they not look at the book before buying the company, if not let them work it out.
In the past our covernemt has stoped helping industry out, our coal/steel has just about gone, I would like my money to have been spent there not on a Wheel or a dome, Now they are going to have to spennd billions on the car industry, Did they not do that in the 70′s with BL? or as we knew it Rover group.
We should stop this bail out now or every company will have to be bailed out, if its good enough for the bamks/auto industries why not every one who runs a company?
THe governement should have not bailed out the banks as they are the ones who have put every one were we are now, and it will be us twice over who bails them out, they can not go wrong?
Duvsta (comment 19).
Thankyou for your comment made using “simple terms with good grammer”.
I only have one question. What is “grammer”?
Is it like “grammar”, only not as good?
Hi, Im studing to be an engineer at high school atm (one of the only four girls taking it), when I leave im not sure whether to go to college ,do an apprentiship or study mechanical engineering at Uni. Which One do you suggest is better?
Love the show, it looks so much fun and interesting…I would love to do your Job.
Top Gear has inspired me, mostly because at first i had no idea what was being said in technical terms,But now my new year resolution is to learn all the parts of a car.Immposible task? One last thing.. What is the Main thing you look for in a car? And one thing in a car that need not be there? Thank you.
Hi Richard! My name is Adam and i’m a very big fan of you and the show!! I don’t see why Jeremy keeps on calling you hamster. Theres nothing wrong with being smaller than other people!!! I wish i could see you in real life and not just on T.V
It seems that Clarkson and team have no integrity when it comes to testing cars for the so called dumb british public.With the tesla they calculated that the car would run out of battery power at a certain mileage and then skewed all the facts to make sure that the big backhanders keep rolling in from the car giants (not so giant anymore as it seems that they have been making the wrong cars!!!).
Clarkson’s only real talent is that he would have made an excellent circus clown as most of the stuff on top gear is stage managed. If you want an intelligent car program tune in to channel 5.If you want to carry on watching Coco the clown and his bafoons bumble on stay watching top gear and watch the BBC waste a fortune in licence fee payers money being spent
He is probably called the hamster because it has homosexual connotations and it is derogatory!
Hey,,
He isnt no homo he is a married man and has 2 kids!!:P
but why are u called lofty?
LMAO!!
im a huge fan by the way!!
I think he looks like a hamster and he is small enough to be a hamster.He certainly drives like a hamster.The other 2 look like shit though.Is it not time clarkson with all his money got himself a decent hairstylist!!!
let all the car companies find their own way in the recession like every other company has to.
They need to modernise and stop building chelsea tractors and other gas guzzlers.
We need to conserve oil for future!!!
in my opinion it is the big 3′s own fault for this- but they have to be bailed out or America goes down with them.
Reading the bottom messages I didn’t realise the conversation had turned to Mr Hammond- seems like a nice chap.
What was the point of the Vietnam Show.
Little content, a view of the Country for BBC HD
show case and little else.
There was little point to th Vietnam special. The first 40 minutes was of a moaning Jeremy complaing he couldn’t ride a motorbike.Oops and oh dear, heres one for you Richard, if you delve into the archives you’ll find a video of Jeremy riding around sunny Monaco on a Ducati 916 no less! Jeremy, you actually made my Sunday night homage to Top Gear quite painful, to Richard and James my applause – you saved my Sunday evening!
Modified Car Owners Are Happy see : http://www.ukmodifiednetw ork.co.uk/news.php
Im glad they have been bailed out tbh
Everyone’s gone off on a tangent with this blog. Mind you, can’t see any of the top gear team rushing to do a new blog, aren’t licence payers a wonderful thing?
Happy New Year Top Gear team.
PS if things get any worse next year Cad would like to propose the following cut backs at Top Gear…Star on a reasonably priced push bike. Tom Ford (Clarkson mini me)permanently left at 5th gear to entertain their 7 remaining viewers.
OK English Cad (67), just to prove we’re not all asleep at the wheel, here are some facts.
1. The licence fee doesn’t pay for this blog, as it’s part of the BBC’s external commercial arm. In fact Top Gear magazine and topgear.com actually make a profit which subsidises the licence fee.
2. I don’t work for the BBC anyway, I’m a freelance, paid by topgear.com to do this blog because their editors think I do a decent job of it. (You’re welcome to disagree, though I notice you keep coming back so you must find something to commend it, and I’ll take that graciously.) But yes, I’ve had a few days off for Christmas.
3. I try not to comment too much on the replies posted here. It’s generally better to let the debate rage. The comments by the way are unmoderated, which explains why so many of them drift off topic, and why so many show appalling spelling and grasp of the English language. I’m assuming lots of people are posting in what is not their first language, so it would be unfair and unkind unkind to poke fun at them.
Cheers, and happy 2009 yourself.
Why doesnt Ford USA sell the newest Focus? IIRC they still sell the Mk1 out there…They should sell the newest one , and also the new Fiesta and Mondeo. Gm should have the new Corsa and Insignia availible in the USA too , I cant suggest anything to save Chrysler though. Its cheaper to run a small turbo diesel engined car than one of those big petrol 4x4s , in dark economic times they are the kind of cars the American public may think about buying.
Paul your posts are always of great interest and informative, just trying to goad you into replying. There that’s enough toadying, can Cad get back to what he does best, being puerile and ignorant something you will agree Cad is rather good at. Paul have a brilliant New Year.
Pls try and get to show the toyota V12 Nardo on the show
Dear Team,
I’ve looked through the blog and I think a longer perspective is needed not only of economic history (it really is cyclic) but also the future of the car industry.
Given the US has been in a recession for a year, a recovery will be overdue around July 2009. I have no doubt the push to replace older technology – and that includes fossil-fueled vehicles – coupled with traditional government ‘pump-priming’ spending and a miniscule cost of borrowing will turn things around. In short, we need to get over the fear and start to look for positive signals (for example, a slowing of the decline in house prices or reductions in household debt).
As for Top Gear, it is a great program but I would like to see the crew investigate more alternative fuels. I find it incongruous given the UK has so much coal and natural gas, as to why British cars are not fueled with methane gas. I know this was done during World War II. I can’t see why it would be too difficult technically since many vehicle already use liquefied petroleum gas (LPG).
Methane isn’t dense or power rich enough to be a viable alternative to petrol. Hydrogen is the fuel of the future once a few things (not exactly minor things, I’ll admit) are sorted out. Until then the volt concept is very interesting, it’s far more efficient to design an engine to do just one thing well, I think it will be remembered as a real eureka moment in car design. Like many great leaps forward it hasn’t really invented or discovered anything, it has just looked at the things we know and taken them to a logical conclusion.
Excellent!
Here goes the US government borrowing money that was printed out of thin air by the fed to support corporations that screwed themselves over and cannot be fixed with any amount money. With the ridiculous inflation and worsened debt that will surely result from this, the economy is really on its way to recovery!
But with all sarcasm aside, I wish people wouldn’t be so blind. All these bailouts will do in the long run is increase the burden of debt on the American taxpayer, while they cause a ridiculous increase in the money supply. Remember what printing money without restraint did before the Great Depression? History is bound to repeat itself if society refuses to learn the mistakes of the past.
save ford and gm.
but from chrysler keep dodge-only the viper and challenger-and keep jeep but screw the rest the rest all suck!
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