Financial, Economic and Social Mood Update (May 2, 2017)
The employment cuts coming to the public sector of the US economy in 2017-2021 will be even more severe than reported in last month’s update. Instead of the maximum 12 million positions to be eliminated, the figure may now go as high as 18.6 million. As said so many times, the resources to staff, maintain and fund the socialist welfare state simply no longer exist. As the late Margaret Thatcher of England once said, socialism does not work because eventually, you run out of “other peoples’” money to spend. Socialism, communism, Marxism, Leninism, Stalinism, Maoism, Fascism, religious fundamentalism, crony capitalism and feudalism are all among the WORST forms of government possible. Only the true capitalist free market as articulated so clearly by Adam Smith of England will work well.
The US attack on Syria is yet another ongoing mistake of American foreign policy regardless of which of the two large political parties is “in charge” in Washington – Democratic or Republican, are equally as bad. The American government, its so-called Allies around the world and the international mainstream media all claim that the Syrian government is responsible for having used chemical weaponry on their own population – propaganda we have heard in the past with respect to Iraq before “regime change” removed the government of Saddam Hussein. Both the Syrian government and the Russian government (the Russians are allied to Syria) deny having done this. All one needs to do is to study the “fruit” of “regime change” where so-called dictators have been targeted. The removal of the Shah of Iran in 1979 produced an Islamic fundamentalist regime in Tehran. The removal of Saddam Hussein in Iraq in 2003 produced the horror of ISIL-ISIS-Daesh. The removal of strongmen in countries such as Egypt and Libya has only given the region more chaos and anarchy. The removal of the government in Afghanistan (after the attack on the World Trade Center in New York City in 2001 – where I worked at the time) led to merely more instability, chaos and terror in Afghanistan. The current civil war in Syria has given us much of the so-called refugee crisis which has inundated the European Union with far too many immigrants………………newcomers who are in large part hostile toward western culture and values.
Update on the Automotive Industry
Interesting things are happening in the global vehicle industry. Total worldwide output of motor vehicles including cars, light trucks, large commercial trucks, motorcycles and motor-scooters is up to 151 million units per year made by 109 manufacturers. 67 percent of the market is controlled by business groups based in Asia, 25 percent is held by European-based companies and merely 8 percent is controlled by the Americans. Back in 1947 (2 years after the end of the Second World War) US auto companies held a global market share of 92 percent……………..this situation has now reversed itself. In 1947, General Motors Corporation alone controlled a 50 percent global market share and 40 percent in the USA. In 1927 (after the demise of the Ford Model T), General Motors had a 78 percent market share in the USA alone. Those days are gone, never to return.
Among the 109 manufacturers in the global vehicle industry, many companies have chosen set up alliances and to cooperate with each other. Honda is primarily a motorcycle manufacturer and they cooperate with other Japanese motorcycle manufacturers especially outside of their native Japan. These companies combined (Honda, Kawasaki and Yamaha) control 19 percent of global unit output.
Volkswagen AG of Germany and Austria is the largest company in terms of car production (passenger cars and light trucks) plus large commercial trucks. VW already controls or has an equity interest in many other automotive brands including Audi, SEAT, Skoda, Bentley, Lamborghini, Bugatti, Ducati, Porsche, Scania, MAN, NEOMAN, ERF, Navistar International, Cosworth, Quattro and Karmann. VW has manufacturing cooperation agreements in place with the likes of Magna, Steyr, Puch, GAZ-Volga, BMW, SAIC and FAW. FCA (Fiat Chrysler Automobiles) has at one point or another sought a merger agreement with either Volkswagen AG or with General Motors Corporation. FCA is based in the Netherlands and its ownership is entirely based in Italy. FCA owns the active brands of Fiat, Lancia, Alfa-Romeo, Maserati, Ferrari, Iveco, Magirus-Deutz, Chrysler, Dodge, Jeep, Ram, Mopar and Yugo. VW is a much larger company compared to FCA – VW would own 81 percent of the equity in a merger combining VW and FCA. The two automotive groups put together control 17 percent of the global market.
Next in rank comes Renault-Nissan, which like FCA is based in the Netherlands. Most of the group’s equity ownership is based in France and Japan. They own the brands of Renault, Dacia, Samsung, Nissan, Infiniti, Datsun, Mitsubishi and Lada. Renault-Nissan shares some cross ownership with Daimler AG of Germany. Daimler owns the brands of Mercedes-Benz, Maybach, Smart, Freightliner, Western Star, Fuso, Setra and Detroit Diesel. This alliance controls 9 percent of the worldwide vehicle market.
In 4th place is Toyota of Japan which owns the brands of Toyota, Lexus, Hino, Daihatsu, Isuzu and Fuji-Subaru. They have 8 percent of the global market.
In 5th place is Peugeot SA of France. Peugeot is 14 percent owned each by the Peugeot family, by the French government and by Dongfeng of China, Dongfeng being 45 percent owned by Volvo AB of Sweden. They have the brands of Peugeot, Citroën, DS, Dongfeng, Mack Trucks, Volvo Trucks, Opel and Vauxhall. They manufacture cars for Holden of Australia and for Buick of the USA and China. Volvo Auto is entirely a separate company, being owned by Geely of China. Peugeot has 6 percent of the global market.
In 6th place is Hyundai-Kia of South Korea with 5 percent of the global market.
Among the remaining larger automotive groups with at least a one percent global market share are medium sized players who are no longer necessarily able to compete on a fully global scale. The Ford Motor Company of Dearborn, Michigan (Ford and Lincoln brands) has just 4 percent of the global market, and appears less likely than its crosstown rival GM to merge with another automaker. General Motors Corporation of Detroit, Michigan (brands of Chevrolet, Cadillac and GMC) has just 3 percent of the global market and no longer has any significant representation in either Europe or Africa. Suzuki (which terminated its former equity cross ownership with Volkswagen AG) makes both cars & motorcycles and like GM has 3 percent of the global market. Solex of France (they make carburetors, motorized bicycles and mopeds) and Mazda of Japan (a money losing former brand of the Ford Group) have just one percent of the global market each. Mazda will likely be absorbed by Toyota of Japan. Both GM and Ford are dependent upon their native US market for survival, and the next collapse in US retail sales has likely already commenced. But this time around (unlike in 2000-2002 and again in 2007-2009), the combined resources of the public sector of North America, Japan and the EU will not be able to bail out the failing manufacturing companies, banks and insurance companies.
A number of developing national automotive industries have a significant share of the global market when put together. Vehicle companies from India have 13 percent of the market. Those from Mainland China have 8 percent of the market. Those from Taiwan and Iran have one percent of the market each.
