Freefall: The Circle-Jerk Economy and No More GM

When many people discuss the economy -- especially people who know very little about the causes behind our current economic troubles -- they paint in broad strokes, they toss around financial buzzwords and they happily regurgitate terms and concepts they heard on Sunday morning news programs.

I'm -- happily or otherwise -- not sophisticated enough to confidently -- or accurately -- state what caused these problems per se. I have some ideas, as do many of us; but overall, for me, it starts and stops with two military excursions and an overmortgaged, overleveraged balancing act known as Fanny Mae and Freddie Mac. And those pesky CEO golden parachutes -- coupled with retirement accounts disappearing like Doug Henning's career -- didn't, certainly, help much.

But -- despite knowing a few people whose jobs have been liquidated due to the current economic picture, the reality of the economy doesn't end with the closure of Circuit City, The Sharper Image or Nunzio's Dancing and Scungille.

Where it does -- hopefully -- end is the reality that has set in care of GM.

Based on yesterday's deadline for the Big Three -- Chrysler, Ford and GM -- to submit their viability plans in order to secure current and earmark further bailout funds, there were some pretty interesting results. Some of which were borne of common sense, but -- clearly -- some were surprising in their harsh, in-your-face reality.

Say goodbye to the Chrysler PT Cruiser. Ditto the Dodge Durango. Jeep will keep on truckin', but -- alas -- GM has axed Hummer.

What a shock -- a 4-ton monstrosity that barely can navigate city streets, in these times of green environmental responsibility, is being jettisoned. If it's not sold to a private firm -- Chinese or otherwise -- the Hummer will be no more.

Interestingly, joining Hummer in extinction is -- presumably -- Saturn and Saab.

The biggest surprise of all -- sort of -- is no more Pontiac.

That means that the producers of the cars that made American automobiles what they were -- for better or worse -- will die. Keep in mind that Oldsmobile already disappeared from the American automotive spectrum several years ago (even if they clog the nations suburbs and Midwest with nonchalant obstinacy).

Let's face it; some of these moves are relatively surprising. Saturn? Saab? Others, not so much -- not really. Is it a shock that Hummer's about to head down DeLorean way, especially in today's socio-economic climate? It shouldn't be -- not particularly. However, with the dissolution of some or all of these marques, it still should hit us as a shock similar to the disappearance of The Sharper Image and other "institutions" which were part of the homogeneous American mallscape. Put another way, even if one never had any intention of buying a Hummer or a Pontiac, it will be strange knowing that -- sometime soon -- those car brands will be relegated to the history books.

Perhaps a better way of conveying this quasi-shock is evidenced in
this article by Des Troups, "Yet we’ll mourn these brands even if we won’t miss them."

There's more here as well. But basically, the news is still the same -- just like Bob Dylan once sang, the times they are a-changin'...

What is perhaps most disconcerting -- legitimately so -- is not the issue of cars or car companies vanishing from the American business model -- even if said companies are international icons like GM or Chrysler. What is -- and should, rightfully, be -- our biggest concern is what happens to the employees of all these defunct brands? What happens to the people that sold these cars? Serviced these cars? What about the mechanics that -- due to (let's be honest) shitty quality -- fixed these cars?

We're not talking a few thousand people, incidentally; we're talking hundreds of thousands of people from top to bottom.

And let's also not forget another major consideration: even though Toyota and Honda aren't experiencing this kind of toilet-flush en masse, they will feel the pain, as will we: since many parts that GM and Chrysler installed in these vehicles were produced by the same plants who manufactured parts for (or, in plenty of cases, were identical to parts installed in) the aforementioned Toyotas and Hondas, that means that spare parts will simply be harder to come by. That means the parts will cost more, there will be less of them, and -- therefore -- prices for cars (and fixing them) will also increase.

Add to that there will be throngs of people without jobs over the next 24 months (as if that was a newsflash) and what we have is a bonafide full-on, extended visit to Depressionville.

No, the sky's not falling. The sun will not refuse to shine tomorrow morning, and it will again set in the west as it has done since -- well, for some time. The problem is that when a company -- like GM -- exhibits the sort of irresponsible decline that it has been in for a number of years (if not decades), the eventual thud of the other shoe hitting the floor is that much more significant. However, ten to twenty years ago the writing was on the wall. Japanese and German auto workers are paid less and have far fewer benefits than do their American counterparts. That never made any sense to me, especially given the fact that American auto workers -- and the cars they produce -- were and are considered to be the lowest quality among the three. Yet American auto workers -- the UAW, etc. -- managed to secure so much in the way of benefits for its members that the UAW was able to accomplish the ultimate feat of power -- it put its members before its employer and -- if this week's news is correct -- destroyed one of the largest auto manufacturers.

Whether or not we acknowledge or understand the causes behind these troubles, we should not be surprised by the changes for which we're in over the coming months. If nothing else, with the changes should also come the knowledge that if we don't learn from our past mistakes we will be doomed to repeat them, again and again and again.