Random Stuff

Chevrolet just made a big mistake. Then again, it’s the same mistake the American auto manufactures have been making for years. They did what I call the video game rut.

When you go shopping for a video game console and games to go with it, most of what you will find are games centered around shooting, explosions, and general violence and destruction. It’s a good market, but the reality is that it is a 10% market. Most everything video game related is targeted toward adolecent and young adult males. Simply forgetting about the 90% of world that would buy video games.

Nintendo came along and made a game console that didn’t market to the young male, but targeted everyone else. Others in the industry laughed, but they are not laughing anymore. The Wii is now the number one selling console in the world. They are still hard to come by even after more than a year of being on the market. They made something that everyone else would like.

Just like the rest of the auto manufactures in the world, Chevy decided to make a production electric car. Ok, that’s pretty cool. Then they came out with their prototype vision of what it would look like. Surprisingly, it looked good! Unline the egg shape of the Prius, it looked like something sporty. I was actually excited about this. This wasn’t just a car targeted at a very specific market, rather it was made to look good. It wasn’t a design that said “I’m driving green!” it was a design that said “This is a good looking car.”

There was lots of buz generated around this car. Lots of people saying “Finally!” or “GM got something right!”

Then something happened. I’m not sure how. Committee maybe? Lack of vision? Fear of stepping out in front? I wish I knew. When the production model showed up, it was a major dissappointment.  By the time everything was said and done, Chevrolet designed another Prius. Another boring egg shaped car. When asked, the CEO simply said, “Well, the kind of people who are going to buy an electric car aren’t concerned about how it looks. They are buying it to make a statement.” In effect, the market for this car just got reduced to the 10% (or less) market instead of everyone else.

Does it bother anyone that the largest financial institution in the United States is now 80% owned by the US Government? I can’t see how any good can come of that. That means that most of the capital that flows through our financial system is going to be under the control and scrutiny of our government. They’ve already proved they don’t know how to manage money, what makes them think they can do any better with this one?

Then there is the $700 billion deal that is being finalized. The idea is that the government buys the morgages of homeowners who are at risk of foreclosure so the banks no longer have the risk of losing more money. Great for the banks. They don’t lose the money they were about to. They lower their risk exposure. Now they can start lending money again.

On top of that the homeowners now get a lower interest rate from the government to lower their payments to something they can afford. Great for the homeowner who went into a loan they knew they could not afford.They now get to pay less for something they shouldn’t have in the first place.

But what about people like me. I get to pay for all of those through taxes. My kids will pay for it too. I never missed a payment, I don’t live in a house I cannot afford, and I am not a high risk. What do I get out of this? Same payment, same interest, same house. No gain for doing what I was supposed to. Yet my neighbor up the hill who bought that beautiful 5 bedroom, two story home, with two car garage that was way outside his means, now gets a bonus and gets to keep the house.

As for the banks, they won’t open up the credit market. Why? Because they have been burned so badly by their own lack of dillegence, that they are leaning far toward the other direction of not making loans that have any sort of risk. They are getting their money and hanging on to it. Using the bailout to get what they should not have risked in the first place. Leaving someone like me stuck.

The price of gas is certainly a hot topic these days. I know personally it has hit my pocket book quite hard. A couple years ago I bought a car I never thought I would buy simply because it was getting too expensive to drive one of my gas hogs every day to work. When I did this I went from no car payment and $1200 a month for gas, down to a $575 per month car payment and a fuel bill of $300 per month. A decent amount of savings. Now that gas prices have doubled since then, I am almost back at the point I started at. For the first time since I was 20 years old, I am seriously considering riding the bus because it is getting too expensive for me to drive.

But I’m not angry about it. Far from it, really.

Over the last few years I’ve been in many discussions about fuel prices, fuel efficiency, electric cars, traffic, and a few other related topics. Usually there are a few different catalysts to the conversation or debate, but my argument as always stood pretty much the same. I usually emphasize two of my opinions. So far they seem to be playing out as expected.

People won’t change unless they are forced to do so. This is common for a lot of systems outside of people. A system does not change unless it gets stressed to the point of being either uncomfortable or even failure. People will not give up their cars unless it becomes too much of a burden to keep it. The environment, global warming, pollution, none of these have an impact on the driving habits of most people. Yes there are a few who take these things seriously, but the majority of the population will take no action regarding these impacts of a car. Why? Because they can still afford to drive.

Stress to the system will also drive innovation. The electric car has been around since the time of Henry Ford. But in the last 100 years, there has been a negligible amount of research to make electric cars go further, faster, and more reliably. Yet look at the gains in automotive technology. The worlds fastest car in 1908 could only go 141 miles per hour. It had only 135 horsepower. My “economy” car has twice the power, and with very little modification could go just as fast. But the electric car, up until recently has not really improved in performance at nearly the same pace. The power may be close, but the range was limited to about 50 miles at best. But recently, there has been real change in this area. Take a look at the Chevrolet Volt or the Tesla Roadster. Real change is coming. Why? Because people has started to demand it as a result of Gas prices. It is getting too expensive to put fuel in your car. Research is now actively happening. Making electric cars that cost less to drive and are just as convenient as gas powered cars. And they look good too.

But what is the price per gallon which people start serious making the change? The point at which it goes from only people who are early adopters to mainstream? I have always argued it will be when gas here in the U.S. goes above $5.00 per gallon. I’ve mentioned this over the course of several years as I talked to people about this subject. Recently when Honda came out with their hybrid car, and again when Toyota came out with theirs, and even yesterday when talking about the Tesla roadster. Daily we seem to get closer to that point. The new technology started to appear around $3.50 per gallon and really started to look like a serious alternative when the price went to $4.00 per gallon. Now, as we get closer to $5.00 it seems more and more like an electric car will be a reality.

I don’t know for sure. Those are just my opinions. But I think we are ready for this now.

Wait a couple of years before buying a house if you are thinking about it. Why? I think we are headed into a recession. I’ve been reading a lot of and listing to business news. I’m not sure how I got in this habit, but I find it entertaining. Perhaps it is because I am in a position that I don’t have to worry as much as a lot of people I know. Looking at all of the trend data that is out now, the last ten years almost exactly matches the trends of the 1980s. The patterns of the Federal Bank’s interest rates, value of gold, unemployment data, and housing trends, credit crunch, and the value of the US dollar compared to the rest of the world’s currency.

Currently there is a surplus of new homes on the market. There is also an increasing number of existing homes for sale on the market. The length of time to sell a home is going up, the prices for equivalent homes are going down.  If the current trend in market data continues to match the 80’s data as closely, then in two to four years would be the absolute best time to buy a house. I’m guessing there will be a drastic drop in home values over the next two years before they begin to climb again. Then your home will be set as an investment for the next ten years.

But our economy has a bit further to go down before it levels out and begins to expand again.

Of course, this is all just speculation.