In the last two days GM and Chrysler gave notice to 2000 dealers that their dealerships were terminated. Approximately three billion dollars of new car inventory will be thrown into the streets.
These are new cars without dealer backing for service or repairs or parts. Their paperwork will go down when their computers stop functioning. Their sales and service and management personnel will go into unemployment lines. Their owners will probably follow GM and Chrysler into the bankruptcy courts.
But what about the accessory business that supports these dealerships? What will happen to the finance companies, banks, used car dealers, rental car dealers, parts suppliers, repair shops and thousands of other business entities that live like small parasites off the functioning of the big animals?
What will happen to a public which suddenly loses another piece of their asset base as their previously bought car suddenly is reduced in value by the influx of thousands of new cars into an already saturated market?
Perception of beauty is in the eye of the beholder. When the American public rubs its eyes as they see thousands of new unsold cars floating around their cities, the glitter of “newness” will wear off and they will notice that these vehicles are grotesquely large and totally unnecessary to carry one or two people to work or a store. The thought that they had previously paid more than twenty or thirty thousand dollars for these collections of steel and plastic, which indiscriminately pollute the air, will cause them to realize that they had been brainwashed by a marketing system that had robbed them.
As the American public realizes that their wealth has dropped significantly, since the value of their cars makes up a large percentage of their net worth, their confidence in their ability to buy will drop significantly. This will be another factor that will further slow a falling economy.
Even the thieves who steal cars, chop them up and ship the pieces abroad will have to wonder: Is it worth it?
Other car manufacturers with open dealerships will also be impacted with this deluge of new unsold cars. Like the reality market, with houses prices falling everywhere, who wants to buy?
THE FOREIGN CONNECTION
China and India are waiting to sell their small vehicles in the American market. GM realizes this and has already made overtures to China to start a manufacturing plant in China where they can pay hardworking Chinese labor three dollars an hour instead of paying indulgent American labor sixty dollars an hour. More jobs will be shifted overseas and the American economy will drop another notch.
This increased dependency on imported goods will have its impact on the US dollar as the trade deficit grows again.
Nothing is lost in the universe, mass and energy cannot be created or destroyed. If power is lost in one place it pops up in another.
As the car manufacturers and their dealerships lose power over the transportation industry, we see that power shift to the federal government and the federal bankruptcy court system.
The new federal government is operated by the same people who caused the Economic Disaster we are now in. These elite Money Managers once ran the financial institutions that concocted and compiled the fraudulent mortgages that were sold worldwide. These same Money Managers are now ensconced in the executive branch of the federal government. They have consolidated their power over the financial institutions, and big business by using the Treasury and the legal system to keep these entities under their control. This last push against Chrysler and GM demonstrates their strength.
As the economy falls further into decay, people will demand a stronger government that can save them. They are already seeing the evolution of that stronger government. Within a few years, the American public will find that most of their daily activities will require the agreement of the federal government. At that point, which and what type of car they drive will be irrelevant.