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Old 06-29-2007, 06:42 PM   #29
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Default Re: US vs Japanese Cars and Workers

Hey, preach, here are a few thoughts in how US car sales lagging hits hard at home:

First off, for every car manufacturing job created, it’s estimated that as many as 4-5 auto parts/suppliers jobs are also created. If those parts jobs aren’t also in the US, there is a big hit to US manufacturing. Manufacturing is still the basis for creation of wealth.

The argument that Friedman made that all the wealth will eventually make it’s way back to the US sounds good as long as the US economy remains the strongest in the World, but, in true catch-22 fashion, as more and more manufacturing shifts out of the Country, the economy of the US may no longer be the safest bet for investing.

US auto sales shrinking also have a direct impact on the entire US economic policy. Look up the Plaza Agreements from the Reagan years, not to mention the Fed taking lagging sales into consideration when determining the interest rates it charges. Those rates effect everything!

When US car sales shrink, it changes the prices the manufacturers can charge, not as much on new cars as on used, but both directly affect consumer pricing for all goods (Consumer Pricing Index, or CPI).

Looking even further down the road, if US sales continue to decrease, the US auto makers are going to get more aggressive about dumping their unfunded medical liabilities on us taxpayers. And don’t think for a second that it couldn’t happen. Remember who picked up the $150 billion tab for that fiasco?

Just touching a few bases here, but there is just no way that US auto makers losing ground to foreign competitors is good for the US economy.
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