REaders are first encouraged to read the “10 cent solution” for an overview of what is being proposed. Several readers have contacted me privately questioning the impact value i offer for this concept.
The first point that needs to be made clear is that no matter what Bank of America might be doing to its books, nobody has repealed the law of supply and demand. Nobody will look at buying a vehicle if they have one that meets their perceived needs and perceived ability to own. People will buy vehicles if they percevie self-interest in so doing. The American landscape is glutted with vehicles, largely as a result of improved manufacturing since the early 60s. Average vehicle life in miles, the only standard that really matters, has nearly tripled in the past 30 years. (Ask your grandfather how often the cars of “his day” lasted over 100,000 miles without at least 1 major rebuild, and then ask people you know how many of them have owned a car made since 1989 that has gone over 200,000 miles wothout a major rebuild)
Since 10 per cent of the American economy is vehicles, restoring vehicle demand is central to a lasting economic recovery, rather than a stabilising of a declining country.
So here is some background:
Overall, there were an estimated 250,851,833 registered passenger vehicles in the United States according to a 2006 DOT study.[3] This number, along with the average age of vehicles, has increased steadily since 1960,
135,399,945 cars.
100,000,000 which is suvs, vans, light trucks.
the number of vehicles in the usa has been going up by about 3.5 million a year.
what is the reality of the fuel economy happening with all these vehicles?
http://www.bts.gov/publications/national_transportation_statistics/html/table_04_09.html
While “cafe standards” pushed above 20, even tho lee iacoca warned in the early 80s that these stadnards needed to keep climbing, and indeed should have been required to be over 30 mpg by 2000, the reality is that the real fleet average of the usa is closer to 17 miles per gallon.
a look at the chart does show a slow steady increase in effieciency, lagging far behind the price of oil.
The clogging of the market can be seen most clearly by looking at the increasing mean age of vehicles, even as sale remained solid.
in 2006 38% of cars in the usa were more than 10 years old.
in the 80s lee iacoca told congress that Chrysler statistics showed 17 years as the average life of a Chrysler product–long before the late 80s, early 90s when computerised controls ensured that engine destroying pollutants were either not prodiced or better scavenged from the engine.
if i assume that the distribution of car retirement ties into that 17 mark, and sa that of the vehicles on the road, 1/4 of that 38% are older than 17 years, u am facd with 12,863,000 vehicles in the available vehincle pool older than 17 years–’92 or lder.
are 9 million of them going to be 89 or older? absolutely. is this going to apply to light tricks as well?
in my experience, even more so. That’s going to be pushing 9 million light trucks and suvs. REality tells me that the older suvs are going to be especiallly high consumers of field and air.
FRom these numbers it is obvious that the USA can “afford” to get rid of 18 million cars and light trucks. The net result, with no replacement, of vehicles, would still leave the usa with more vehicles than licensed drivers.
Let’s add a construct to the 10 cent solution: the certs for destroyed vehicles are classed as regulated financial instruments of the treasury.
Let us assume that 1/2 of the “tuna-canned” vehicles produce a certificate that is taken to a bank and lays on the books as a securitising asset for a mortgage or other debt. let us assume that the financial institution can pay 2% interest for the use of the security on its books. Does this help solidify banking assets?
yes.
Does it still empower the purchase of 9 million vehicles?
yes.
Can it do it in one year?
yes.
CAn year 2 o the program advance the chop date to 1991?
Yes. becuase the funding is there. it is clearly there, as shown before from 10 cent a gallon on fuel.
it becomes “profitible” (deficit reducing) to the treasury is a very conservative 15% total tax transfer to state and federal governments results from the sales taxes, registration, personakl property taxes, payroll/fica taxes created by the economic acitivity.
it becomes “cost effective” (deficit reducing) by the effect on air/water quality from increased average vehicle efficiency.
it becomes “econonically stabilising” (everybody wins, including the deficit) by improved fleet average droppon demand for imported oil, a large increase in available supplies of steel scrap, high-tensile aluminum scrap, and small but meaningful amounts of ductile metal scrap.
the program maintains American economic srength by ensuring an end use for high-tech, green solutions for future vehicles, becuase they will actually be bought, and therefore can be builtm and therefore their creation can be prudently invested in.
Posted under business
This post was written by admin on February 25, 2009
