Ya gotta wonder......about cars.

John Key's new government and Cabinet is worthy of closer examination and I will get to it soon. I want to let that one settle a bit.

Today I am thinking about cars. Make that car makers. US car makers.

I remember, back in late 2003, I was standing in the paddock behind the house on a property we have since sold, thinking about cars.

My train of thought had run across and through the US invasion of Iraq and on to a falling US dollar. If past cycles held true, the Saudis and others would seek to compensate themselves for the decline in the currency their oil is valued in and oil prices would rise. Alongside this, the avalanche of war spending that would surely ensue in Iraq over a period of what could only be YEARS would see debt explode and interest rates rise leading to........a recession.

When? Unclear....but as certain to arrive as almost anything I could imagine. The signs would be there along the way.

In this context, cars came to mind. The last time the United States did this to itself, the Vietnam War era, the big US automakers made almost no provision for a possible future that involved selling smaller, more efficient cars. They suffered and the Japanese and European car makers began to eat their lunch.

Surely, this time around, mindful of past cycles, the legion of experts the major US automakers would have on tap would see to it that this contingency was covered. How could I, standing in a paddock in NZ, possibly have more insight into global economic trends than they could or would? Seemed bizarre to me that they would allow this particular process to engulf them.

I clearly recall concluding that they would. I was betting on the myopic stupidity of people I've never met and never will...based on my own knowledge and experience of US corporate culture.

Looks like I was right.

Whenever I think I'm right, I look for an alternative explanation. There is one, but it requires some faith in clever people working for US auto makers and if they really were that clever, they would be able to avoid the whole problem in the first place by being tooled up and ready to make smaller, more efficient cars....and would have been pushing for laws to push people in that direction in order to address climate change, energy independence, national security...or whatever.

It could be that running the US-based auto industry off the cliff is their way of breaking the powerful unions who ensure that US (and Canadian) auto workers have good wages and conditions. While times are good...No problem. When times get tough, the automakers let the shit hit the fan, take the inevitable bail-out....and bust the unions.

This alternative explanation accounts for all the facts BUT FOR the effect such a plan would have on the current crop of executives....who would almost certainly get the sack and have their reputations tarnished and possibly their business careers ended.

Whatever....there are some dumb people in big automaker offices in Detroit.