Monday, September 12, 2011

Demand, the fix for Great Depression 2.0

70% of the US economy is consumer spending. Right now the consumers have stopped spending, which means that companies cannot sell their products. Which means they lay off workers and stop buying parts.
To get the consumers to spend again, we need some new and attractive products that everybody "just has to have." Let's start with a look at the US auto industry, as a vast consumer producer.
The US car companies haven't introduced a new type of car since Lee Iaccoca invented the minivan back in the 1980's. They used to introduce new types of cars every few years, the station wagon in 1954, the compact cars in 1959, the pony cars in 1964, the SUV and the minivan later. Each new car resulted in a shower of sales. Then Detroit went to sleep and now they don't even bother with yearly restyle anymore. They used to restyle and announce "all new" cars every September. The suits in Detroit lack the stones to do that anymore, for fear that a new design that doesn't sell will be blamed on them.
How about a "mini hauler". A small car that somehow can carry furniture home from the auction or sheetrock back from the lumber year. Perhaps a hatchback with a really really big hatch, perhaps a detachable roof. What we want is a low price car that can get you to work, and haul stuff, smaller and more agile that an F150 pickup.
How about a commuter's hot rod? All the car has to do is get one person to work in some style, and with enough power and handling for rush hour on Rt 128. Maybe even four on the floor. A small car, with a small engine that gets 30 mpg and yet is still fun to drive. Give it one passenger seat just in case the lucky owner has a significant other, and it's somewhere to put a few bags of groceries.
How about a skier's sled? Comes with a stylish factory ski rack guaranteed not to separate at 80 mph full of expensive skis. Plus a good snow car, front wheel drive, traction control, an out side air temp gauge so you can tell if that black patch on the asphalt is a puddle or an ice patch. Good ground clearance for pushing into unplowed parking lots. Big fat tires to float you over snow. You could sell it to boarders and bikers too.
A snow country hot rod. Something as jazzy as a Mustang or Camaro, that would get around in winter. I used to lust after a new Camaro until a friend came up skiing in one. That car got stuck in my driveway, got stuck in the Cannon Mt driveway, couldn't climb the hill into my mother's place. After that weekend it came clear that if I bought something like that everyone would just laugh at it (and me) in snow country. Shouldn't be too hard to do. Good styling, 50/50 weight distribution, front wheel drive, big fat tires, reasonable engine power, say 300 horse.

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