The American Yugo?

Now that the U.S. auto industry is being given over to union / government ownership, it brings back images of the Yugo. Yugos were based on Fiat designs, but the manufacturing under the communists couldn’t make it up to Fiat’s marginal quality. Yugo was declared the worst car of the millennium by Car Talk, and Yugo jokes abounded.

When the Berlin wall came down one of the things I remember is the Yugos that were lifted up by hand and placed in dumpsters in the old East Germany. Others were ceremonially torched or bludgeoned to scraps. Yugos, if they worked at all, didn’t work for long. They were junk, and as soon as they could, their owners junked them. (How do you make a Yugo go? Get a tow truck. How do make it go 60 mph? Push it off a cliff.).

I can’t help but wonder about the ability of the new G.M. to exceed Yugo quality. The motivation of both the union and the government is overwhelmingly toward rewarding the unions with taxpayer money. Will there be an incentive to produce an automobile that the public will value? Or will there be some sort of constraint placed on buying non-U.S. autos? The stated government objective of forcing a green-mobile on the masses is the mandated direction for the auto manufacturers. This suggests that what the public wants is not a factor in any marketing plans.

In fact, with the virtual inevitability of raging inflation just around the bend, I think it is more likely that auto buyers will favor the Asian autos when it comes time to buy. These are at least a known quantity, where the U.S. manufacturers are not just shaky, they are crumbling.

Obama depends on the stupidity of his minions. This has worked extremely well for him, as his cadres have not questioned any of his personal history or motivations or veracity, but only revere his skin tone and the promise of a check in the mail. But buying an auto is different from voting for a guy because he is black. It actually costs you something up front. If it is junk that you buy, then your cash is kaput, unless you can find a greater fool than yourself to sell your junk to. I think folks in the market for an auto might continue to abandon any sentiment of “Buy American” in order to preserve their cash.

And what about this inflation? With the next huge bailout now in the crosshairs – bailing out the FDIC – and China buying gold instead of throwing more money at our increasingly corrupt and spendthrift government, it appears that inflation will be virtually required, at least after the “wealthy” have been bled dry or run out of the country. How many trillions of tax dollars would the wealthy be able to cough up anyway? And how long will they sit still and take it?

So with inflation coming on and the auto industry final collapse seeming imminent, why would sensible folk not pucker up and prepare for the storm?

I know I am.