Chrysler has gone broke. Meanwhile, over at GM, the new owners - the feds and the unions - are already working hard to bring the automaker into line with the new patrons' program.
In a special press conference yesterday, UAW bosses joined hands with federal bureaucrats, and announced a "Five Year Plan", which they predicted would be a "great leap forward" for the automotive industry and for Detroit.
"The first thing we have to do," we imagine the declaration to say, "is to redesign the automobiles so they will be more easily turned out...and will be more in keeping with their new mission. We will dispense with the many different colors GM has used in recent years. In our view, they only encourage bourgeois egoism. In the future, all the automobiles will be gray. And there will be two models - one for the workers...and another, a luxury model, which will be reserved for politicians, apparatchiks and union bosses.
"Our objective is to produce solid, safe automobiles...while also providing employment for the workers. We will make some improvements on the assembly-line techniques. Each automobile will be assigned to a team of nurturing workers who will put the parts together between union meetings and lobbying activities. Consumers will be given a number. They will be notified when their automobile is ready.
"Marketing costs will be reduced by requiring customers to stand in line for a very long time, before they are allowed to pay - in cash - and take a number. Then, they will wait a very long time for delivery of their automobile.
"Congress, meanwhile, has agreed to pass legislation limiting the number of autos that may be imported from abroad to two vehicles per year - one for the UAW president...the other for Michelle Obama."
"That idea of 'decoupling' was not all wrong," explained French MoneyWeek editor Simone Wapler a few days ago. "You remember...the emerging markets were thought to be immune from the excesses of the developed countries. Even if there was a major correction in the United States, Britain, and France, for example, investors thought China would be untouched.
"Well, it turned out to be nonsense. Stock markets in the emerging markets actually got hit harder than those in the developed countries. So there was no decoupling in a financial sense; they all went down together. Investors lost money...they panicked...and they pulled their money out of all risky investments. The only safe place to have your money during the panic was in the U.S. dollar.
"But now, more than 6 months has gone by. And it appears that the 'decoupling' idea does work at an economic level. The United States and Germany are both in recession - with GDP retreating at 6% per year. Japan is imploding...with a negative trade balance for the first time in more than a quarter of a century. But India, China and other emerging markets are still growing. Consumer spending is up in China - at a 15% rate. And this year, more autos will be sold in China than in the United States - for the first time ever. And just look where those autos are made - in China, of course. So, they seem to be doing just what we predicted they would do - shifting their industries from export to domestic sales...and counting on rising consumer spending in their own countries to make up for lost sales overseas."
"Is it time to get back into emerging markets?" we asked.
"Yes...maybe... But you've got to have a long-term outlook. Three...five...ten years. Companies are growing fast. Sooner or later, those sales...and the growth...are bound to be reflected in rising stock prices."
Our old friend, Marc Faber - recently back from Beijing - added this:
"I can assure my readers that social, political and economic conditions in China have improved enormously in the last 20 years or so, and that, aside from the current temporary economic setbacks, the country's progress and development is almost unstoppable (as was the case in the U.S. in the 19th and the first part of the 20th centuries.)"
Bill Bonner
for The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
