Just how does Warren Buffett suggest we improve our balance of payments? Does he suggest we withdraw from our trade agreements and impose tarriffs? Can you say Smoot-Hawley?

The only other thing I can think that might help is higher oil prices. That would reduce demand, and therefore our imports. It would also increase the cost of shipping imports to us. Perhaps something bad should happen to Saudi and Iranian oil fields?

That would turn out to have undesireable side effects.

Does he expect American companies to push on a rope?

1) The cost to build a car, large or small is about the same. The materials cost difference is rather small. The overhead, labor, payroll taxes, benefits, and retirement costs are the same for each car.

2) You can charge more for a big car than a small one. The margin on a small car is slim to nonexistent.

3) The CAFE standard applies to the fleet mileage. Nobody wants a big car with a small engine. Detroit learned that in the ’70s, when they put 4 cylinder engines in full size cars. Even with the downsized platforms the performance is miserable. The full size cars *must* have the larger engines. Nobody wanted the small cars. The US companies practically had to give them away. Even so, the CAFE standard requires the car companies to push on a rope.

4) The foreign companies have lower overhead, so they could make a profit on the smaller cars, and could afford to improve them.

5) The CAFE standards and gas guzzler taxes don’t apply to light and full size trucks. This was supposed to protect small business. All companies can sell as many of *those* as they want. This makes an SUV a better value. Thus the SUV boom was born. Even the Japanese got into the act.

6) American trucks and SUVs are better than their import counterparts. They are more durable and get better mileage. The US makers reinvested their profits in that market to continually improve their products. The lower overhead of the imports was eroding their advantage.

7) The high gasoline prices killed *everyone’s* SUV and truck sales. I bet Toyota, Nissan, and Honda management regret trying to get into that market. I doubt they even began to recoup their investment in it.

A Japanese or European car dies immediately if it doesn’t get its scheduled maintenance. It also voids the warranty. An American car waits to die until just after its warranty runs out.

It’s like the gas gauge. When the gauge on my ‘83 Rabbit GTI said the 10 gallon tank was empty, it was *empty*. Not so on American cars. People get bad habits.

My last three cars have been American, though the Ford Fusion was assembled in Mexico.

Those union wages and benefits are also crazy, only 2nd to the wages/benefits congress gives themselves. I used to work in a union shop during college summer breaks, and there was no incentive for line level workers to work harder… in fact if you did work harder the rest of the workers would be pissed at you, making them look bad. I don’t say that we should just bust up the unions as they do need some level or protection from exploitation like happened before unions arose, but they’ve gotten too powerful that the companies can no longer compete in a global economy. As someone mentioned before, bankruptcy may be the only way to renegotiate those union contracts, and if they were smart, some way to reward the harder workers instead of having them all tow the line.

“Even a total “collapse” wouldn’t mean the end of the jobs, with a large source of skilled auto workers other automakers may very likely come in and buy those plants and hire those workers. But even before a total collapse, if it came to that, a buyer could likely step in as well.”

The problem is there are no domestic auto companies in a position to drive enough market share to successfully pick up employees or substantial assets from a failed GM. The companies that would ultimately pick up the slack would export US capital and influence overseas along with jobs, parts supply business etc.

Not a good trade for the benefits of a million workers, suppliers, dealers, fully pensioned retirees and businesses and contractors, plus service and retail businesses that depend on all of the above. I’m not saying just shovel money at failing businesses, but look at how, as many of the problems created as possible, can be solved in as smart and efficient ways as possible, considering the circumstances. Hey, maybe some people think the economy is just screwed and we should all get our reservations in 1930’s style soup lines early while we still can, but before we start to experiment with irreversible options, we should look at a wider range of options.

Thanks for the support.

Here are 2 other references you might like;

http://www.biorationalinstitute.com/zcontent/alpha_strategy.pdf

Pugsley wrote this almost 30 years ago, and it appears to me that much of it is coming true. We have reached the era where we must begin to pay for years of deficit spending by the government, and an era where people think they can vote for prosperity rather than work for it.

This one is by some guy named Warren Buffet. He says we need to do something about the US trade deficit (maybe fewer imports). But what does this guy know, anyway.

http://www.berkshirehathaway.com/letters/growing.pdf

I loved mine in college had 200k on it and it ran great.

Got great millage . Oh the stories of that car.

OH and the person who said ford trucks are bad is really off base the F150 is the best truck made. They never have problems and typically go 300-400k

Hydrogen is not an energy source, because it does not exist in a free state in the earth’s crust. Every watt, or HP, or erg of energy you get from H2 has to be input during the H2 production process. H2 cannot be used to power practical vehicles because it cannot be liquefied at ambient temps. And it is so explosive that millions of mini Hindenbergs would happen every year if H2 were pervasive.

So dont be fooled by the next press release touting a “breakthrough” in fuel cell membranes, or some such thing. H2 is the fuel of the future, and it always will be.

A lot of companies have gone into bankruptcy to emerge from it in the long run in much better shape.

Even a total “collapse” wouldn’t mean the end of the jobs, with a large source of skilled auto workers other automakers may very likely come in and buy those plants and hire those workers. But even before a total collapse, if it came to that, a buyer could likely step in as well.

I still say GM should fire their CEO, it’s crazy to keep at the helm the same captain that drove you into these waters in the first place.