Thursday, December 18, 2008

Euro, Dow, Automaker bailout, think outside box

It seems like it's the only sound currency. But please explain why EUR is so strong. I haven't had time to delve further. USD is screwed because of the government's money printing policy. At first I thought Fed was doing something very stupid: let's print money, bailout the economy with money we don't have, lower interest rates to zero, and reverse this recession. But there's good reason after some thought. GBP is ridiculously low compared to USD and EUR. I didn't understand why so I bought... lost money on that. Of course buying EUR/USD was very profitable.

Update 19/12/08: ECB just announced they will cut rates and the currency just dropped like crazy.

Update 21/12/08: GBP should go down further. Interest rates being cut and it has no significant exports. Finance sector dead.

In the very short term such as today and tomorrow, it may go up. But a recession doesn't just last 4 quarters and it was up overall this week...

Probably going to happen, but I don't think it should. It's government's responsibility to take care of its people. So many industries depend on the auto industry and so many more jobs: Suppliers, distributors, bankers, advertisers, etc. Ford is actually looking pretty smart after their near bankruptcy. If its re-structuring is a good model, it's a good sign these other automakers can be saved. However, I am going to argue it's probably more difficult to save than to start a new. There are so many labor union problems. They're international companies with extremely complicated joint ventures and equity agreements. Even in the early 2000s, people saw weakness in auto demand and the need for them to merge to stay competitive. Sure jobs will be lost, but new ones will come along with new automakers created by the void.

Essentially, big companies are very difficult and costly to turnaround. And did you know most turnarounds involve job loss? This is not a service industry such as airline that is vital to the economy. They only gave airlines bankruptcy protection and at best should only do that for the automakers. They are making a product so efficiently, that there's no point.

Outside the box
What about thinking outside the box? How about sending the talented US work force to Asia or Europe? Make it easier for them to get visas for working abroad by talking to other countries. When the world has problems, countries should work together politically. Look what that did to the EU. Expand NAFTA so labor visas or easier to get for graduates in Canada and Mexico. They aren't trying to take away your crappy blue collar jobs anyways. What about creating smaller auto manufacturers that are more focused? Or just use all that money and buyout Toyota? Or push electric cars with electric recharging stations or electric grid roads program in a New Deal fashion. I remember the US used to be bad ass with slavery and taking Indian and Mexican land. What happened? Now you're just helping Iraq and before you got any oil or converted it into a State, you're getting kicked out? I think the US needs to play hardball with the world. Yeah you got the right idea, depreciating your money to the extreme. Yeah I got 14 trillion in debt but it's in USD so that's like 14 Euros. I don't have cash on me, why don't I take you to dinner and we call it even C:

1 comment:

Taige said...

dang it. ECB just cut rates.