Krugman: US auto industry will probably disappear

[kpete]

Krugman: US auto industry will probably disappear

By MALIN RISING - 5 hours ago

STOCKHOLM, Sweden (AP) - Nobel economics prize winner Paul Krugman said Sunday that the beleaguered U.S. auto industry will likely disappear.

"It will do so because of the geographical forces that me and my colleagues have discussed," the Princeton University professor and New York Times columnist told reporters in Stockholm. "It is no longer sustained by the current economy."

Krugman won the 10 million kronor (US$1.4 million) Nobel Memorial Prize in economics for his work on international trade patterns. Some of his research on economic geography seeks to explain why production resources are concentrated in certain locations.

Speaking to reporters three days ahead of the Nobel Prize ceremony, Krugman said plans by U.S. lawmakers to bail out the Big Three automakers were a short-term solution, resulting from a "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."

more:
http://openleft.com/showDiary.do;jsessionid=C04407FAB10E6BF032D8A9507BB3051C?diaryId=10324

[rockymountaindem]

1. Well, here's one time I hope he's wrong n/t

[tekisui]

2. Ugh.

This is going to be devastating.

[bdamomma]

20. all those people out of work, I hope this is not true.

Like Krugman do not like his comment.

[Speck Tater]

3. Link doesn't work for me. Try this one...

US Auto Industry

[SoCalDem]

4. "...me and my colleagues have discussed..." I hope he was misquoted

should be "..I, and my colleagues.."

I also hope the industry does not totally tank..

[Speck Tater]

5. Guess he won't win the Nobel Prize in grammar. ;-) nt

[unblock]

7. interesting how they'll clean up shrub's grammar,

but not krugman's, assuming it's an accurate quote in the first place.

[chimpymustgo]

9. "My colleagues and I...". Still, hope he's (they're) wrong on this one.

[northernlights]

15. actually, seriously,

it should be "My colleagues and I..."

When it switched to the egotistical, ungrammatical "me and my colleagues" I don't know. But I feel like I've been cringing for decades.

[Odin2005]

25. That's a very common slip-up in everyday speech.

Hell, it's so common that it's become the new normal, using the "correct" usage almost make one look snobbish and pretentious, same with using "whom". It would be like a person in the early 1800s using "Thou" when it had gone out of use a century before...

[Uzybone]

38. He says he was misquoted.

"December 8, 2008, 1:49 AM
Me, misreported
Urk. I gather that there’s a report on the wires quoting me as saying that the US auto industry would disappear. What I actually said was that the concentration of the industry around Detroit would disappear.

And did I really say “me and my colleagues”? I guess it’s possible — but that doesn’t sound like I speaking."

http://krugman.blogs.nytimes.com/2008/12/08/me-misreported/

[GreenPartyVoter]

41. LOL

[msongs]

6. if they cut their car prices by 1/3 sales would skyrocket...

they're running at a loss now due to their business and management choices, but at least they would get some cash coming in rather than sitting on inventory people do no want or cannot afford.

Msongs

[SoCalDem]

10. The govt could issue "govt backed" credits for GM-Ford-Chrysler cars

that would create a need for them.. If I had a $10K "credit", I'd buy a GM/Ford truck for my husband in a heartbeat.. Share that $10K 50/30/20 between manufacturer/dealer/salesperson & you've got a real stimulus

[notadmblnd]

12. have you been to a showroom lately?

I have. I was looking at a 25,000 G6 that was marked down to 16,000. Pretty good deal if you ask me. If you have the added bonus of the employee discount , then you're looking to save another 12-1500 dollars. No, I think people right now are hanging on to ther money and not taking on more debt because their own position with their employers are uncertain. We have to regain confidence before we buy again.

[Joe Bacon]

8. I still remember my 1970 1/2 Gremlin

It cost $1,970.50 brand new. Ran for years until AMC went out of business and the parts dried up.

Now that $1,970.50 would only pay for half a Segway.

[SoCalDem]

11. or maybe a "Hover 'Round"

[Neecy]

42. My sister had a '72 Gremlin

I remember that car fondly. She wasn't kind to her cars and the thing just drove and drove...

Because so many Gremlins were cut down for street racing there are hardly any parts for them any longer. A fully restored Gremlin today is worth many times more than what they cost new.

[Tutonic]

13. He's correct. No indication that the US Auto Industry has made that

180 degree turn and that the public will follow. Who in their right mind would pay $65,000 for a Volt??? And keep an eye on at what the Oil companies are doing with the price of gas--how convenient that gas is about to hit $1.00 a gallon. Just in the nick of time--to help their buddies in Detroit. This game being played out is stale. The Japanese, Koreans and Germans will lead the auto industry for the next decade. Blame Detroit and Washington. Obama needs to stop the charade--his economists have told him what Krugman is positing. If we had a government during the previous eight years that cared about our livelihood, they would have demanded that changes be made. Its too late now. And worse, the Big Three are not prepared to change. Last one out the building turn out the lights.

[ben_meyers]

14. Krugman stating the obvious

Not that I think he's wrong, but look at just one aspect of the situation.

UAW membership peaked at about 1.5 million members in 1979, and today there are just under 500,000. 40 years of steady decline. It really doesn't take a Nobel Prize winner to spot this trend.

[defendandprotect]

16. We should buy the plants and tAke on workers to build ELECTRIC CARS --

[Gregorian]

18. I think that is a great idea. One that wouldn't work for the same reasons.

They have billions of consumers. And they have very low production costs.

I know that flies in the face of many who disagree. But I fear that is the fact. We don't make the falsified claim of seventy bucks an hour. But in comparison to their labor force, I don't think it's even close to a level playing field, against what the pres. of the UAW claims.

[defendandprotect]

30. Don't quite understand what you are saying .....

so, I'll elaborate on my points -- then you tell me where you are ...

The thousands of Electric cars in CALIF which they refused to sell --
everyone wanted to buy them -- were beautiful and efficient -- no problems.
Great mileage. Cheap to run. None of the typical repairs/servicing.
See: "Who Killed The Electric Car?" -- probably at your library.

AND .. all of it will be even more greatly advanced quickly.
All of this technology has been held back for decades --
but people continued to advance it all.

And think we can do much better on bodies ..
there are materials much lighter than steel which they use now --
but new stuff is just as strong.
ALSO .. re body -- new materials have color all the way thru material --
no painting necessary.

Also, considering Global Warming and pollution of planet, air and water
this is a urgent necessity-!! We can no longer burn fossil fuels.

THUS, for first years, government should subsidize BOTH manufacture and purchase --

and offer other incentives to get the gas-guzzlers off the roads.

Be sure to see the movie--!!!

[Gregorian]

31. I've seen it.

The electric car has, and is, with us. Renewable power generation isn't.

That's all I'm saying. As an engineer, one of my friends worked with Ford on an electric car back in the 80's. Yes, there's a reason they aren't for sale. But even if they were (this is my point) they'd still be using power generated by nonrenewable means.

Nobody killed the electric car.


One more things. The problem isn't cars. The problem is people. Billions and billions of them. I'll agree that we can't really change that part. Whereas we can change the renewable energy part.

[defendandprotect]

32. Your response is beyond odd --

there's a reason they aren't for sale.

As the movie makes clear, cars were successful on roads for years --

and those who had them wanted to BUY them --

every last one of them --

so your remarks are beyond odd --

Solar is "renewable" ... so either you didn't see the movie,

or you are simply being disingenuous.

[Gregorian]

33. The weak link in the system is not the car.

You mentioned photovoltaics. Look at the efficiency of those systems. They are horrible. Not even at fifty percent.

The electric car is refined in it's most sophisticated form, except for the batteries. And even the batteries are sufficient.

I'm all for putting the cart before the horse. I'd love to see electric cars on the road. But it's not going to accomplish anything. The car isn't the problem.

[defendandprotect]

39. It looks more like...

you're spreading disinformation ...

you're in denial cars ran for years -- drivers thrilled with them --

and new advances every day ..

vs oil-guzzlers causing Global Warming and polluting the air and water ..

and importing oil -- wars --

Not a big decision ... NATIONALIZE OIL INDUSTRY -- save the planet!!!

[Gregorian]

44. I'm sorry. This is going nowhere.

Go get a degree in engineering. I'm not saying I know what I'm talking about. But I have studied the subject. I've lived the subject.

[defendandprotect]

45. So did thousands of Californians ---!!

[Odin2005]

24. I agree 100%

The government should take over the plants, renovate them for making green cars, and give them to the UAW.

[Gregorian]

17. No bailout can reverse the decisions we made.

I didn't see it this way until just now. Back in the 80's I knew we had decided to abandon reality. We not only didn't adopt the metric system, but we decided to continue down the path of monster vehicles. DEsign was dictated by cheap oil. Not intelligence.

And now the only people our auto industry caters to is a relatively small captive audience. Take a look at the billion cars that China and India propose building.

We will be buying vehicles from them soon. I don't see any alternative. But it was a logical conclusion to the paths we've taken. We giving up, and them taking up.

[Swamp Rat]

19. I hope Krugman is wrong

After a carefully managed bailout and restructuring of the companies (firing all of the CEOs and upper management), the U.S. auto industry could evolve.

Since in America, infrastructure, demography, and socio-cultural patterns are already set up to accommodate personal transportation and delivery vehicles, the need for cars will not disappear. Revenue from importing cars (even with factories here) can never match locally-owned companies (if managed properly, and combined with universal healthcare provided to employees).

Hopefully we'll have cheap electric cars in the near future, and light rail as a result of retooling our factories.... we should have 'gone metric' decades ago.

This will keep millions of Americans employed, from large manufacturing, assembly line jobs to small businesses which furnish parts and service.

[Phred42]

21. He was wrong about NAFT - maybe he's wrong here too

because if we lose Auto Manufacturing the ripple effect will cause us to lose Steel, and myriad other BASIC industries which will mean almost no manufacturing. And the conversion of America a 3rd word country will be completed.

Welcome to the new world order

[nichomachus]

22. What is Detroit offering as change?

They want a bailout loan so they can continue doing the exact same things that got them where they are, except for paying their employees decent wages and benefits. They didn't go into the shitter because they paid their employees too much. They went into the shitter because they fought tooth and nail against everything that could have kept them on top of the game.

They didn't want fuel efficiency -- and fought hard against it. They didn't want alternative-fuel vehicles until they were dragged kicking and screaming into that market. If they had put the money into developing alternative-fuel cars that they put into lobbying against fuel efficiency, they would be leading the world right now.

Does anyone realize that the first hybrid car was patented in the US in 1908 -- the same technology they're using today? So, it's not like this was uncharted territory. They could have dusted off that patent in the '70s, when we first realized we were being held hostage to oil-producing countries.

Nissan is ready to bring out a full line of affordable electric vehicles. And, where are Detroit's electric vehicles?

If I can buy an electric Nissan for $22K, I'll do it -- and since I'm converting my house to solar electric, I'll be driving for free, at least for one of our two cars. The other one gets 28 around town and 38 on the highway.

[Phred42]

26. Not a rational reason to allow Manufacturing in this country to die

[nichomachus]

28. I didn't say it should be allowed to die -- so please don't put words in my mouth

You're arguing against a straw man.

All I said was Krugman may be right and explained why.

I'd love to see the auto industry survive and thrive -- but so far I haven't seen a plan for that, just a bunch of guys with their hands out.

If I got to the bank for a loan to "save" my business, the bank wants to see a detailed plan as to what I plan to do to achieve that. No plan -- no loan. It's a simple as that. If I got to a venture capitalist, they will want a 51 percent share in the company, at the least.

If I've put my business on the rocks and say I need a loan to continue doing the same things that put the business on the rocks, I'm not going to get a cent from anyone.

I don't want to see anyone lose their business or their job, but so far no one has convinced me that the bailout will do anything but postpone the inevitable for a few months.

[Odin2005]

23. If that happens this is gonna be worse then the Great Depression.

Hold on to your hats, folks. :scared: :cry:

[Greyhound]

27. The article left out the qualifier, if it continues to try to operate by the old models.

One of the best reasons for the government and UAW to partner and buy up GM is the technology that it has bought and suppressed/restricted over the decades. Better batteries alone would make a huge difference and the accompanying design innovations that come with it would result in some awesome changes in people moving methods and capabilities.

[sarcasmo]

29. I hope he is wrong, but lately he has been dead on.

[Are_grits_groceries]

34. Krugman was misquoted. Here's what he said:

"Urk. I gather that there’s a report on the wires quoting me as saying that the US auto industry would disappear. What I actually said was that the concentration of the industry around Detroit would disappear.

And did I really say “me and my colleagues”? I guess it’s possible — but that doesn’t sound like I speaking."

http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/paulkrugman/index.html

Makes a difference.

[Uzybone]

37. Thanks for posting this

looks like another fine job by a reporter.

"December 8, 2008, 1:49 AM
Me, misreported
Urk. I gather that there’s a report on the wires quoting me as saying that the US auto industry would disappear. What I actually said was that the concentration of the industry around Detroit would disappear.

And did I really say “me and my colleagues”? I guess it’s possible — but that doesn’t sound like I speaking."

[Mike 03]

35. Holy Shit, is Krugman saying this???

I just finished reading his revision of "Depression Economics." It was frightening, inconclusive and dire, but, wow, this shocks me...

[Mike 03]

36. One other note about Paul Krugman:

To my knowledge, he was the only economist to predict that last week's new filed unemployment numbers would exceed 500,000. He wrote it in his blog.

He is very worried that we might hit double digit inflation far, far sooner than most economists think.

[defendandprotect]

40. They should have been gone decades ago -- and we should have had ELECTRIC CARS --

[backscatter712]

43. ACHTUNG!!! This quote is false!!!

http://www.dailykos.com/storyonly/2008/12/8/13383/8545/508/670730

http://krugman.blogs.nytimes.com/2008/12/08/me-misreported/

Me, misreported

Urk. I gather that there’s a report on the wires quoting me as saying that the US auto industry would disappear. What I actually said was that the concentration of the industry around Detroit would disappear.

And did I really say “me and my colleagues”? I guess it’s possible — but that doesn’t sound like I speaking.

[Mike 03]

46. Even though this is shocking and upsetting, Krugman is damned right about the "bail out"

being a foolish short-term solution to a severe structural deformation that can only be solved through total restructuring and some sort of financial conservatorship. Just as the major airlines had to endure. It's absolutely ridiculous to issue funds now knowing full well these companies are basically insolvent and that we'll be repeating this process in March, and June, and September..., on and on until they just disintegrate. Did anyone listen to the testimony of the second panel on Tuesday before Barney Frank's committee? Or for that matter ever listen to what economists on both sides of the aisles are saying?

At least $79 billion and probably closer to $150 billion, and that's not to save these companies but just to give them a year or so longer to fail utterly.

[robertpaulsen]

47. Chapter 11 is a best case scenario for the Big Three.

Chapter 7 is the most likely.