Autos & Tourism Next?

October 5, 2002

In three previous pieces, (click at bottom of this to access them) I discussed the distinct possibility of the housing market taking a deep plunge because of heavy layoffs and consequential inability to pay mortgages, as well as having been overbuilt, over-financed, and over-priced. It has begun in all locations, with some being more serious in decline than others. I pointed out that it is real estate which is holding the rickety economy together, and if it fails, all hell will break loose.

While the auto and tourism industries may not be actually holding the economy together, as is real estate, they contribute a great deal. I am saying that both these industries, which employ hundreds of thousands, and gross hundreds of millions, are in dire straits, and they will contribute to an economic decline, such as has not been witnessed for over 70 years.

Autos first. A casual glimpse of any auto dealership or used car lot, will prove my point. Used car lots are overflowing, as are new car dealerships. Tens of thousands of new cars and trucks are at new car dealerships, awaiting buyers. Zero percent finance was a great help in moving cars a couple of years ago, but it doesn't seem to be working now. Ford is not only offering zero percent financing, but now says one has to make no payments till 2003. Numbers new car production show declines over the past year, in spite of the interest free financing. America has taken advantage of the zero finance, and is full of all the cars they want, can afford, or will purchase, as opposed to the number of sales required to maintain a buoyant industry. The result is that more auto workers will be laid off, as well as sales persons, mechanics, and all the personnel required to sell, manufacture, and repair autos. Used cars taken in trade for the zero interest new cars, are flooding the lots of new car dealers, and it is said amazing deals can be made. Have you noticed that all new cars seem to look alike? Even Mercedes seems to look like the rest. How sad. Individuality is gone.

Used car lots, not connected with new car dealerships, are also filled to the brim and overflowing, probably thanks to new dealers unloading less current models, rather than further filling up their lots, which are already crowded. Many thousands of the used cars on lots are consigned by owners who have no time or ability to sell them themselves. Things don't seem to be moving very well. Used Harley Davidson motorcycle prices have taken a big hit recently, and new ones that used to require months of waiting, no longer do. Japanese bikes, which never required a waiting period for delivery, are anxiously discounted by dealerships.

The result of the extreme sag in the auto industry, and resultant layoffs in all of its divisions, will spell more home foreclosures. Laid off tens of thousands from Enron, Global Crossing, Qwest, and others are already being foreclosed upon, causing a glut in the used housing market, and resultant lowering of prices.

Tourism has taken a huge hit since 9/11 and the subsequent depression or recession, take your pick. In Colorado, it has been a disaster, and New York even worse. Airlines are extremely unfriendly, regardless of the advertising, thanks to supposed "safety" rules, which involve frisking grandma, while test guns by the hundreds pass through instantly. Who, in their right mind, would want to fly? One goof up by a federal inspector, and the whole airport goes into instant reverse, with planes being unloaded, concourses evacuated, and everyone having to be inspected again, with lost connections and irritation beyond endurance. We now learn that the feds are interviewing prospective hires for the airport jobs at swank Telluride Colorado, in a posh resort. They say it is "centrally located," and this is true. It is centrally located between the hamlets of Placerville and Rico Colorado, but it isn't centrally located to any other location. Rooms at the resort being used, are $395 per night, and Telluride is not an easy access at any time of the year.

Tourism and vacations have been crippled since 9/11 and before, with the market crash and the hundreds of thousands of layoffs. Colorado state gasoline taxes are off by $800,000. Hotels are not full, nor are restaurants, tour vehicles, tourist trains and boats, or souvenir shops. Queries to vendors and observations on a recent trip to California have proven the statistics released to the media seem to be true. Film, fuel, entertainment, rooms, admissions, and fares suffer, which have caused layoffs and bankruptcies for the under capitalized business proprietors. Bankruptcies cause loans to go into default, and even Las Vegas and Orlando Florida have been severely hurt. Will tourism recover in the immediate future? I hope so, but am not optimistic, because of the chain reaction of other layoffs and reluctance to purchase, by the rest of the nation.

Credit card debt is in the hundreds of millions, and the jobless are saving what reserves they have, to meet necessary expenses, until they can be re-employed. If a new job is obtained, and we all hope it will, the new salary will undoubtedly be lower than the former one was, and then there is the increased credit card debt to service. This means the old car will have to do, and no vacations. This is assuming that the home mortgage payments can be maintained.

The chain reactions of $8 trillion being lost in the stock market, 9/11, and corporate fraud, have all conspired to destroy an economy. It is a tragedy of incalculable proportions. Government hires thousands, and says it is helping the situation…which is absurd. Government is not a productive thing. Government causes productive activities to cease or decline, and become less competitive, due to regulation and taxes. Government jobs at any level are a detriment to an economy, and not just because of the increase in taxes to pay for them, or decrease in dollar value; but the harassment they cause everyone. Comedian Dave Barry said, making fun of government jobs, "See, when the government spends money, it creates jobs; whereas when the money is left in the hands of taxpayers, God only knows what they do with it. Bake it into pies, probably. Anything to avoid creating jobs."

Tourism and auto manufacturing, sales, and servicing, are things that boost an economy and sustain it, because they provide what the purchasers want and are willing to pay for. Manufacturing autos used to be America's supreme example for the rest of the world, and our scenic beauty is unsurpassed anywhere. Now, foreign tourists are a trickle, and Americans can't afford to travel. Auto manufacturing and associated trades are down, due to the trillions lost in the market, layoffs, and a general downturn of everything. The various parts of a healthy economy all combine to make a wonderful product, if they are all operating correctly. These parts include investments providing a decent return, housing, transportation, amusement, farming, manufacturing, and other things; most of which are tremendously out of whack now. This column is about two of these parts.

Transportation includes airlines, trains, and automobiles, which America uses more than any nation on earth. When a sector of industry becomes over-supplied, over-bought, threatened, or inconvenient, it must decline, causing hardships and humiliation for those who lose their employment. Amusement includes tourism, fun places such as theme parks, plus souvenirs, and costs to access those items. All are suffering radical declines in attendance, and have laid off thousands of employees, while suffering from no profits or bankruptcy in many cases. Resultant collections of sales and income taxes have severely crippled state budgets. States cannot create "money" out of nothing, as can the federal government through Sir Alan Greenspan and other assorted DC hacks and popinjays.

The intelligent sector of the populace protects itself, while the rest; if employed or affluent, continues to buy stocks when the bottom is no where near, and save their surplus assets in dollar denominated devices. The unemployed, which by using basic arithmetical computation supplied by DC statisticians, must number about 2 million, is so sad that words cannot adequately convey my condolences. I am powerless to help. I can only analyze, predict, and help people protect themselves. My prediction is that tourism will not improve next season, and the auto industry will suffer further, crippling declines. Do not invest in either!

The closed ports along the west coast means that Christmas will cost a lot more this year, and trucking and railroad transportation are taking a huge hit. Just imgine! All that Chinese stuff can't be unloaded. It makes my heart glad. Let's send it all back, re-open our rusting factories, and create domestic manufacturing again. The US stock market continues its downward trend, and the Nikkei has declined to its 1983 level. Some say the Dow will go below 1,000. If so, people won't buy cars or travel. Hold on to your hats, and above all, protect yourself with self contained, compact tangibles that need no guarantees from anyone. Guess which I prefer?

The naturally occurring gold-silver alloy is called electrum.

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