Detroit in RUINS!

My reaction: I agree with much of the video above, except I wouldn't place blame for Detroit's demise entirely with the city's liberal lawmakers. Federal "free market" policies which encouraged outsourcing over the last several decades bear equal responsibility for turning the city into a ghetto.

US car market implodes

USA Today reports that car dealers fighting to keep buyers of dying brands.

Car dealers want to keep buyers of dying brands
Updated 12/28/2009
The closed Saturn of Colma sales lot sits empty on Sept. 30, in Colma, Calif. General Motors is closing its Saturn brand after negotiations with Penske Automotive to take over the brand fell apart.
By Sharon Silke Carty, USA TODAY

DETROIT — This Christmas and New Year, the auto industry is worried about the orphans.

There are about 3 million of them: Customers who either lost their dealer because of closings in 2009 or whose current car brand is going out of business. And it's pitting carmakers and car dealers against one another as they fight for who'll win that business.

Urban Science, a consultant firm in Detroit, says 1,467 dealers closed in 2009. The bulk were General Motors or Chrysler dealerships. They were forced out of business when the carmakers filed for bankruptcy and could close weak dealers.

Auto sales are expected to rise slightly in 2010, up to around 11 million, compared with fewer than 10 million sold in 2009. But dealers are still expected to close at a faster rate than usual, because GM isn't done closing outlets.

GM is killing the Pontiac, Saab and Saturn brands. Its Hummer brand will likely be sold to a Chinese company. That leaves Pontiac, Saab and Saturn customers needing a new place to service their cars.

If GM can't hang on to these customers, it risks losing sales to other brands.

"GM desperately needs those sales and that market share," says Michelle Krebs, senior analyst and editor at consumer website's AutoObserver publication.

Chinese car market explodes

Msnbc reports that China's rural markets have big appetite for cars.

China's rural markets have big appetite for cars
Dealers run out of inventory; spike is major reason country is No. 1 market
The Associated Press
updated 12:20 p.m. ET Dec. 27, 2009

CHENGDU, China -
Minivan salesman Zhu Yi has a problem that most auto dealers elsewhere would happily swap for their own — he doesn't have enough vehicles to satisfy customer demand.

"Sales are exploding," says Zhu, a 32-year-old manager at a General Motors Co. joint venture dealership in Chengdu, pointing to charts on his laptop that vividly plot the steep incline.

Car buyers in Chengdu,
a grimy city in southwestern China's Sichuan province best known for its giant pandas and spicy food, face waits of up to several weeks for some popular models, he says.

"We simply don't have the cars people want. Sales could be climbing even faster."

As growing numbers of Chinese shop for their first vehicles, or trade up for newer models,
sales in China's immense hinterland are booming, encouraged by tax cuts, government subsidies and growing consumer spending power.

In regions striving to catch up with relatively well-off coastal cities, families and small businesses are gladly swapping scooters and bicycles for the comfort and convenience of the automobile.

The supercharged growth has propelled China ahead of the United States as the world's biggest auto market and provided a lifeline for automakers like General Motors and Toyota Motor Corp. as sales crashed around the globe.

The government's role in spurring the market has been crucial but China's still low level of car ownership points to the potential for decades of strong growth even as some analysts warn the future holds tougher competition and dwindling profits.

To counter a slowdown late last year as the global financial crisis unfolded, the government halved taxes on purchases of small autos and is spending 5 billion yuan (about $730 million) on subsidies for purchases of light trucks and minivans in the countryside, where most of China's 1.3 billion people live.

Earlier this month, the purchase tax was raised to 7.5 percent, though subsidies also increased.

Happy with the results from this year's rescue package for the industry, Beijing is leery of risking a relapse, analysts say.

"The message sent by the government is that they will not let the auto industry weaken, especially not in 2010," said Jia Xinguang, chief analyst at China National Automotive Industry Consulting & Developing Corp., an investment management company.

Enticed by the potentially huge market, automakers have poured billions of dollars into ventures here in the past two decades. Total sales this year forecast to shoot past 13 million units, up a third from last year's 9.8 million.

Meanwhile, sales in the U.S. have faltered, with January-October vehicle sales totaling 8.6 million, compared with Autodata CorpChina's figure for 10.9 million in China during the same period.

The revival in sales has been opportune for GM as it struggles to restructure following a spell in bankruptcy court. Including minivans and other passenger cars, SAIC-GM-Wuling, GM's minivehicle venture in China, led nationwide sales in November, with 83,753 units sold.

Car sales in the main cities like Beijing and Shanghai are robust, but the zippiest growth has been in so-called second, third and fourth-tier cities. Chengdu, a city of 11 million, now ranks in the top four auto markets, with sales jumping almost 60 percent over a year earlier in September, to 22,585 units.

The major city nearest the epicenter of a catastrophic May 2008 earthquake that left almost 90,000 people killed or missing, Chengdu did not suffer extensive damage, but it is no w booming as money floods in to finance rebuilding in the quake zone.

Along the main roads ringing the city and to the airport stand cluster after cluster of newly built auto dealerships — luxury brands like Jaguar, Porsche and Rolls Royce as well as more affordable foreign and domestic brands.

Zhu's dealership, which sells mainly SAIC-GM-Wuling compact minivans, has seen sales more than double to 37,000 units so far this year, he says.

The vans, which seat seven and go for 30,000 yuan-50,000 yuan ($4,400-$7,300), are the country's biggest selling model, favored mainly by small, private businessmen like Wu Weizhong, a glove seller who was peering under the driver's seat, where the vehicle's engine is located.

"That's the heart of the vehicle, the most important part!" Wu said before jumping inside to try out the seat and steering.

Chengdu's dusty, smog-choked roads are jammed with a smorgasbord of brand names — big Toyota and Lexus SUVs, sleek Mercedes Benz, Buick sedans and smaller, compact Suzukis and Peugeots. Along with the foreign brands are plenty of Changans, Cherys and BYDs — fast-growing domestic automakers that are grabbing market share by catering to customers seeking affordable, fuel efficient cars.

The proliferation in choice has made buyers more discerning.

"Before, it was a seller's market, and people would just buy whatever was available, but now they have all sorts of requirements," says veteran saleswoman Chen Lin, who moved to BYD, a battery maker that branched into automaking this decade, looking for new opportunities.

BYD's F3 compact is currently the country's best-selling sedan, and
nine out of 10 of Chen's customers are first-time car buyers, though growing numbers of visitors to her brightly-lit dealership on the outskirts of town are looking to trade up to the automaker's F6 midsize sedan, she says.

"People in Sichuan are very practical. They are focused on value for money, not prestige. So our cars seem to suit the local market," Chen said.

... with car ownership at only 40 per 1,000 people, and even less in the countryside — a tenth that of the U.S. — dealers like Zhu and Chen have few qualms about the industry's future.

"Customers are buying because, quite simply, they need a car, their incomes are rising, and they now have the kind of purchasing power they need to buy them," Zhu says.

Conclusion: America outsourced its prosperity over the last three decades. Chinese quality of life is rapidly adjusting upwards to reflect their new prosperity (transferred so generously from the US), while America collapses into a third world nation. As the 2010 Food Crisis unfolds next year, the entire US will see the same economic disintegration already being experienced in places like Detroit and Las Vegas.

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11 Responses to Detroit in RUINS!

  1. dashxdr says:

    Eric you act like the outsourcing was a choice. The quest for profits and reducing expenses demands outsourcing to places where labor is cheaper.

    And labor outside the US is far cheaper than inside. That's why all the illegal aliens flock to the US.

    But the cause of the labor costs is Dutch Disease. That's where a country, like Holland, exports some valuable commodity like oil. That country's product is in such demand that everything else the country makes is driven up in price, because that country's currency is in such demand to buy the critical product.

    Dutch Disease causes economic devastation in everything but the critical export, because exporters of other things can't sell their products cheaply enough to compete with the rest of the world. So the economy devolves into a single product, in this case oil.

    The Dutch Disease applies to the USA in that USA is exporting dollars. And strangely enough the rest of the world behaves as if this paper has value. So as long as the dollar is in such demand by the rest of the world, the labor costs inside the USA are artificially higher than outside. So US labor can't compete. So US can't export, stuff costs too much.

    Why does the rest of the world value dollars so much? Because the USA is an empire, it props up dictatorships and "friendly" governments. The US empire bribes tyrants to suppress their population and keep them functioning as good slaves. So the elite in other countries are allowed to be rich too, but the public there is forced to live in poverty, also holding labor costs down. This is talked about in John Perkins' book, "Confessions of an Economic Hit Man".

    Sucks, huh? The outsourcing of jobs is a direct result of the US dollar as the world's reserve currency and the US empire's efforts to ram it down the world's throat. Strike at the cause, not the symptom. End the fiat central banking system and return to real money, like gold and silver, and labor costs will balance out. Made In America will be viable again.

  2. Azul says:

    another view.. it has to be somewhere in between.

    The Long Decline of the American Economy

    By John Kozy

    Global Research, December 21, 2009

    Ideally, companies exist to provide products and services to people. If the products and services are good, the companies prosper; if they aren't, the companies fail. That's risky, so American companies inverted this model. They fed the public the notion, which has rarely been questioned, that a company's responsibility is solely the financial welfare of its stockholders. Products and services are no longer the goal of business; they are merely means to profit. That reducing quality leads to greater profits quickly became evident. One fewer olive in each jar, one flimsy part in a complex device, one inefficient procedure in a manufacturing process, built-in obsolescence, built-in short product life-cycles, engineered high failure rates. The American quality standard became, "Junk"! For more examples, see my paper, America on the Dulling Edge.

    To ensure that American consumers would buy this junk, a number of other policies were advanced—declining employee wages so that consumers could not afford to buy more expensive imported produces, unenforcement of immigration laws and the introduction of special visas such as H1B1s so that the workforce would expand putting even further downward pressure on wages, restrictions on the ability of American workers to organize, and finally the offshoring of production. None of these policies could have succeeded without the complicit cooperation of America's orthodox economists and government.

  3. With american ethanol production at over 700,ooo bpd how in the hell is corn at only $4 a bushel?

  4. kean says:

    it's true what the economic hitmen say. our empire truly is an evil one that goes into a country and literally devours them from the inside. nearly every 3rd world country has been "taken" by the empire, their people nothing more than slaves for the regime. sux but wait until you see how it plays out.

  5. stibot says:

    dashxdr: "That's where a country, like Holland, exports some valuable commodity like oil. That country's product is in such demand that everything else the country makes is driven up in price, because that country's currency is in such demand to buy the critical product."

    I believe it is a flaw. Country's currency is in demand because country has good fundamentals therefore there is confidence in that currency. The strong fundamentals are based on economy which backs currency. In your example, economy becomes strong, because it is almost 'oil economy' and oil is valuable.

  6. dashxdr says:


    If a country actually had lots of oil reserves, it can trade its oil for stuff it needs. Specialization is a way of increasing wealth overall, a resource rich country can export its resources and the system operates more efficiently.

    But when there is a single product (like oil) that country only has one industry. Suppose there isn't enough labor required related to that industry? Oil is pretty mechanical. What about the rest of the population that can't find jobs in the oil industry? They're screwed. Because they can't sell goods to each other, because goods from outside are always cheaper. And they can't sell to outsiders for the same reason. So while some may profit from the oil exports, perhaps the country as a whole suffers.

    In the case of the USA the country exports dollars. So you see a migration of labor to the financial services industry, Wall Street, the Fed, the banking industry. The USA's product is fiat currency. And it is artificially propped up by propaganda and military force. So we see all industries outside the dollar business suffering.

    That all is the theory of Dutch Disease. Wikipedia talks about it. As I wrote the above I'm wondering why labor costs can't simply drop within the oil exporting country such that an internal vibrant economy is possible. Meaning you have the oil industry exporting, and you have all other industries local to the country but they just trade within the country.

    I can see two reasons. Minimum wage laws, where you can't actually form a business because you can't pay the workers low enough.

    The other reason is government transfer wealth taxation. They take money from the oil exporting business and give it to the poor who can't get work (due to the minimum wage).

    How can this end? Disaster. Because the people on the dole reproduce and grow exponentially. Eventually taking all the "oil" profits can't keep them fed. The system collapses.

    Substitute dollars for oil and you have our current situation.

  7. GreeneTimes says:

    "The vans, which seat seven and go for 30,000 yuan-50,000 yuan ($4,400-$7,300), are the country's biggest selling model"

    Sell vans for that price in the US and sales would be up too!

  8. Natasa says:

    Not just Detroit...

    Obviously, others know quite well the situation with the American quasi -"war on terror":

    Pentagon war cost exceeds US annual tax intake?;=player_embedded


    It looks like they are so amateurish now - that even couple citizens from Detroit could see and understand that something is very "stinky" in Detroit Airport "terror attack":

    There are 2 simple questions which foreigner definitely ask:
    1. WHO give the REAL MONEY to bankrupt state USA, since obviously it has NO money any more?
    2. Is this "game" with "terror attacks" just a way to scare own people and gain support for - more US warS?

    I am sure that Russians and Chinese already know the correct Answer on those questions...
    Perhaps Americans not jet, but they will.

  9. dabba says:

    to confederate miner, its because the midwest has corn up to its arse! farmer dabba, somewhere in iowa

  10. Numonic says:

    confederate miner I don't know the numbers but it seems you're saying that ethanol production at over 700,000 bdp is a record or a high number in which before production at that number had corn costing more. Well all I can say is maybe corn consumption in America in other forms dropped equally or more dramatically than it increased in ethanol use. That's understandable with the recession we are in, corn consumption could have dropped massively in other forms. And the corn we are consuming for ethanol use is probably getting exported to other nations if we're not using the ethanol ourselves. I don't know, just trying to make sense of it.

  11. Cat says:


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