“Many Americans have already bought their last car”

(11 am. – promoted by ek hornbeck)

In his most recent missive, “Presto Change-o“, James Howard Kunstler shares his thoughts on bailing out the big three American automakers.

The dilemma is essentially this: the consumer economy we all knew and loved has died. There will be pressure from nearly every quarter to keep it hooked up to the costly life support machines even though it is dead. A different economy is waiting to be born, but it is nothing like the one that has died. The economy-to-come is one of rigor and austerity. It is not the kind of thing that a nation of overfed clowns is used to. Do we even have a prayer of getting to it, or are we going to squander our dwindling resources on life support for something that is already dead?

A case in point: the car industry. The Big Three, all functionally bankrupt, are now lined up for bail-outs from the treasury’s bottomless checking account. Personally, I believe the age of Happy Motoring is over. Many Americans have already bought their last car — they just don’t know it yet.

The changing reality that is our cratering, consumer-driven economy won’t stop the big three automakers from asking for a bailout, what big automakers don’t understand is that many people would rather buy cars that are a few years older such as these fiat spider hardtop for sale classifieds, and aim to keep them for as many years as they can in order to keep their expenditure low.

Meanwhile, President-elect Obama wants to tie any kind of automaker bailout to increased regulations, according to the Washington Post.

“Certainly he wouldn’t believe in it being a blank check,” said an Obama adviser, who spoke on condition of anonymity due to not being authorized to speak publicly on the topic. “He wants oversight to be making sure the auto companies have figured out how to become viable, ongoing concerns.”

Congress has already allocated $25 billion for the automakers, but as if to prove Kunstler’s point, the CS Monitor reports “The Big Three are in such bad shape that they may not even qualify for the loans Congress approved in September.” Congress offered the automakers a deal, they could have $25 billion in loan if they used it to develop more fuel-efficient vehicles.

The Department of Energy wrote the rules of the program in almost record time, but since then, the economy has dropped into a bottomless pit and U.S. automotive sales are equally abysmal. The DoE’s rules state the automakers must be “financially viable”.

Under the DoE rules, to qualify for a loan, automakers or parts manufacturers have to demonstrate that they won’t need any more federal money to complete the project. They also have to demonstrate a “reasonable prospect” that they can repay interest and principal on the loans when they come due.

Applicants have to submit documents proving their liquidity, statements from their lenders that say they’re not behind on any other loans, and – here’s the kicker – “financial projections demonstrating the applicant’s solvency through the period of time that the loan is outstanding.”

No freaking way the automakers are going to be able to document they’re solvent enough to qualify for these loans.

Kunstler believes there are only two reasons why the automakers should be rescued now:

One, because we need somebody to manufacture engines for military vehicles, and two, because we need somebody to manufacture rolling stock for the revival in passenger railroad service that will have to be a centerpiece of the future economy if we want to remain a civilized nation.

So war machines and passenger trains – that’s it.

The LA Times suggests that Strict conditions are almost certain for an automaker bailout.

Environmentalists want government mandates to shift Detroit’s output to more fuel-efficient, lower-polluting vehicles. They also want the automakers to drop legal challenges to California’s new vehicle emission standards…

Other advocates are seeking new leadership in corporate boardrooms and executive suites, plus commitments to more competitive products.

Meanwhile, “Industry supporters say adding tough conditions to aid could hamstring automakers further and put as many as 3 million jobs in jeopardy.”

Everyone is living in the past and in serious denial about the state of the nation in Kunstler’s view. According to his crystal ball, Kunstler sees “global trade relations wither”, which will  “thrust” the United States back to its own devices. And, the reason why, oil has become somewhat cheaper is because of the financial collapse, not because petroleum resources are not limited.

So without being able to rely on China to manufacture goods for us, Kunstler predicts that “We’re going to have to resume making things in the USA again, too, probably at a more modest scale, and probably fewer things than we are used to.”

Change is coming in ways we’re not ready to accept, but in order to make the right investments we have to give up the idea of an auto-centric America. In Kunstler’s view, Americans are mistaken when they think the solution is to retool the automakers to make more fuel-efficient vehicles and develop hybrids. Our American car culture of suburbia and multiple-lane freeways are no longer possible. We need to realize this before we waste America’s remaining resources keeping the 20th century alive on life support. Change is possible though.

Self-evident necessity will prompt different behavior and different ways of doing things. Sooner or later, the new arrangements will self-organize — if we don’t squander resources defending an unsustainable status quo.

So, if Kunstler is correct then the big three need to be rescued, but in doing so, we should redirect their manufacturing efforts to supporting a sustainable 21st century and not clinging to 20th century.

What will we decide our future to be?

35 comments

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    • Magnifico on November 14, 2008 at 1:46 pm
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    My last car was built in America and is more than 10 years old and has more than 156,000 miles on it. It is also now quickly wearing out.

    • Edger on November 14, 2008 at 2:51 pm

    in 1995. I doubt that I’ll ever buy another.

    Now I have to go back and rad the rest of your post. I made part way through the first quote, till I ran into…

    a nation of overfed clowns

    And spit coffee all over the monitor. That’s got to be one of the best, most succinct descriptions I’ve ever seen, but for all it’s terseness contains depths upon depths upon inky depths of meaning. What a great string of words.

    • RiaD on November 14, 2008 at 3:44 pm

    i’m driving a 1999 dodge caravan. i inherited it. it’s named Van-Go. it has 96,500+ miles & gets 26-27mpg highway.

    we thought about trading it in, getting something a bit smaller…. but 20-25K is a chunka change & they wanted to give me squat for Van-Go. and i couldn’t make up my mind what to get.

    the love of my life….was the last car i had (actually still have- its in the field waiting for my attention)…i think its an ’81 or 82 Honda civic wagon, stickshift- ‘the battlewagon’

    best damn car i ever bought. (the ONLY car i ever bought & paid for myself)

    it  has damn near 200K miles. i’ve bondo’d the bad bits & have some primer (that i really need to put on) & i need to fix the windows so they’ll roll up & down. (for the last year of the battlewagons ‘life’ either the windows were open or had a clear plastic trash bag slipped over the door)

    it needs new seals…maybe i can get to that this spring…..

    it got great mileage, fits 2 adults and 3 largish dogs & camping stuff too…. if i can’t get it fixed i’ll probablly turn it into yard art. i just can’t bear to part with it.

  1. Funny that I have thinking lately along these lines, and being careful to tend to the current vehicle (oil changes, new tires, etc) knowing that a new one is not forthcoming in the near future. I have a 10 year old Subaru that just crossed 105 K miles, running strong and going to be around until there’s no more gas.

    Edger- that line about overfed clowns hit me too, no coffee in mouth fortunately. But you are correct in pointing out the depth of meaning in those few words.

    I am not so sure about the need for military engines, but rolling stock, wind turbines and solar panels can all be built in those Union factories.

  2. Toyota Corolla which is 20years old and drives great, we paid cash. The body however is a mess, it fills with water and as I live in OR it is like driving a rolling swamp most of the year. I must confess that 5 months ago we bought a Prius, we inherited some stock which we sold  and invested in both paying down our mortgage and bought our last car. Once again no car payments. We bought it because we do a lot of hauling and it was the only hybrid that had room.  

    The neighbors call it a Pious. It is getting unbelievable millage and as we don’t drive a lot it’s only used two tanks of gas in 5mos. I hope the day will come when even the Prius will be considered a gas guzzler, and no cars will operate on fossil fuel. Meanwhile the Corolla like RiaD’s is still my baby, I use it to haul rocks, mulch and various garden stuff, anything that I don’t want to fling in a new car. I and am thinking as it rusts more and more of figuring out how to use it as art.        

  3. It has a 2200 diesel with a 5 speed, 260,000+ miles, gets 30-35 mpg still (it will go back up to 35-40 when I re-build the engine), and I have taken the transmission out for repairs 4 times since I bought it in 02-the weak link in this vehicle. I learned the inside workings of a manual transmission finally, after keeping my shade tree mechanic’n self away from trannies for 45 years, they are actually pretty easy. I now have two transmissions, one semi-ready for swap. And, and it is a big “and”, there are NO electronics in it, no computers; I can fix it forever. Nissan, Datsun’s parent, is keeping parts available for it incredibly well.

    Yeah, I love it, is a great little truck for someone who lives 25 miles from town. But it is very true that the car culture has to go, even if a perfect, totally non-polluting energy source popped up tomorrow. The planet can’t sustain the construction of the rest of the throw-away car, the metal ores are getting more scarce every year.

  4. But even more important, my spouse and I live within a 1/3 mile walk of a supermarket under construction, within a 1/2 mile walk of a farmers’ market,  and within a little more than a mile walk of a supermarket that is up and running.

    We have enough stuff. We just need food and the electricity to cook it. Also municipal water. And soap for clothes, dishes, and selves.

    It would be nice to keep central home heating and AC, though we have good quality sleeping bags in case the gas heating supply or the electricity grid should collapse or become intermittent and unreliable, as in a Third World country (been there, done that).

    What we lack is the land to grow our own food, or the kinds of workman skills that can readily be bartered for other services.

    Maybe it’s time to stock up on the bags of rice and beans? And to fill the wine cellar? And a few years worth of batteries for the SW radio for a little entertainment and news beyond re-reading the books in the stacks? (Oh yeah, forgot that I already have a crank-up emergency radio with an SW band.)

    Even Paul Krugman is starting to sound a little uncertain about our ability to avert a major economic collapse.

    My major concern at the moment is that a massive Keynesian infusion of magical government funds (i.e., additional federal debt) into the system, if clumsily executed, may fail to provide the necessary stimulus, while leading to hyperinflation and perhaps even national bankruptcy by 2010 or 2011. Are the collapses of Argentina in 2001, Iceland in 2008, and the Soviet Union in 1989 our ultimate role models?

    Does anyone out there have a credible solution?

  5. lives in a rural area thirty minutes from work and commutes in, something I could not do in a car less society unless it was replaced with rapid transit. There isn’t a hospital in my community to actually work in. My guess is there will be some day.

    I don’t do suburbs, never lived in one always lived in a city until now.

    I have a 2005 Volkswagen Passatt turbo diesel station wagon thingy. I traded in a Volvo for it which was the first new car I ever owned and I was over thirty when I bought the Volvo. I thought even with the good trade in, it was rather pricey and many of the people I work with much younger than me have more expensive cars. I waver between thinking that we are fucked and society will degenerate into a social nightmare of gangsters or we are fucked and will ultimately get smarter and survive. Very on the fence at the moment about the final result.

    • Robyn on November 15, 2008 at 12:06 am

    …I gave my car to charity last Spring Break.  We still have Debbie’s mom’s Saturn that Debbie inherited.  We make do.

  6. with about 40K miles.  My husband and I share the car – it helps that we work at the same office.  Our commute is only 3 miles but I usually ride my bike when the weather is nice.  I wish that we had purchased a Civic hybrid but we couldn’t afford it at the time – we bought the cheapest no-frills model. It runs great and do I hope it is our last car.  I plan to keep it around until the gas runs out.

  7. I can’t say I’ve bought my last car–but only because I never bought my first car.  I’ve been waiting since the 1960s for a return to the rail-based transportation infrastructure (not to mention the manufacturing economy) that made this country great.  I figured economic and environmental circumstances would force it sooner or later, and now it looks like later is going to be sooner.  My own opinion is that the automakers shouldn’t be bailed out unless it’s now clearly understood by all parties that the price of the bailout is that the automakers are now in the railroad-manufacturing business.

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