The Hot New Car Is Your Old Car

For one thing, one must consider the extent of privilege we have been afforded during this "reincarnation" of sorts of the Great Depression that began eighty years. Unlike in our present recession, the availability to own one's car was limited amongst the middle class; a renowned photograph from the era shows a former Wall Street stock who, having lost all of his life savings in the market, he was forced to sell his car off on the street. Fortunately, the nature of the automobile market has progressed as such in the past century that at least most Americans in some form own cars - whether by lease or by ownership of new or (more often) old, used cars. While the decline of new car sales signal a concurrent decline in the former strength of the automobile, the trend towards maintaining older cars in some ways ought to be celebrated. rather than "craving the latest mechanical 'bling'" and taking advantage of "easy credit" and cheap leases to spend beyond their means on luxury cars, Americans are becoming increasingly more practical in saving money and managing their transportation needs without the excess of services (and more importantly, monthly interest) that follows leasing out new cars.

At the same time, however, while the practical frugality of keeping older used vehicles in relatively good condition and functioning should certainly be commended, there are grave consequences to the development of such short-term financial solutions. Inevitably, the only way in which the auto industry, like other industries, will be revived is through the economic principle of high demand and low supply, such that most Americans will be motivated to return to leasing out cars on three or four year plans, which will in turn generate the revenue necessary for companies like Ford and GM to return to their former prestige. At the same time, the recession persists long enough that, for most Americans, holding onto older vehicles becomes feasibly the ONLY option for them, this establishes a dangerous trend away from periodic purchases of new cars, integral to the growth of car companies. 

Furthermore, we endanger our own public health, as older vehicles diminish in safety quality over time, are more prone to engine malfunction, are more delicate (and thus require more frequent oil changes), and lastly are more economically UNfriendly than newer cars, which (variably) tend to have better fuel economy, and are more likely to be "hybrid"ed in some manner than older cars which are more likely to run solely on gasoline. Over time, it is easy to see the trend return to new cars as Americans restore fiscal confidence and return to their incessant desire for buying new and having the latest gadgets, but until then, economic prudence may be the best option.

The Stock Market

Wall St. rallies late as data offsets bond sale gloom by Edward Krudy (Reuters)
http://www.todaysfinancialnews.com/us-stocks-and-markets/panicked-short-selling-causes-financials-rally-3531.html

According to Krudy's article, the present Wall Street rally stems from the recent reports in the "housing and durable goods" markets. Most notably, the February housing report boosted consumer confidence with statistics that indicated a rapid increase in new home sales within a ten month period. Consequnelty, homebuilder shares have been steadily rising. Krudy offers the share DJUSHB as an example, which has went up by 2.2 percent since the report's release. Another factor contributing to the rally is the advance of large manufacturers, including Boeing, as the nation's "orders for long-lasting manufactured goods unexpectedly rebounded." The third, and most critical, aspect leading to the rally was the belief that (save for Citigroup) the U.S. banking system was "stabilizing," confirmed for most people by a recent LA Times interview with the Chief Executive Kenneth Lewis of Bank of America Corp., who, says Krudy, stated that his company would "start repaying $45 billion of federal bailout money" beginning in April.

However, this late progress strikes me as rather artificial. While the strength of the stock market relies on these bursts of consumer confidence, the premise of the current rally appears considerably fragile. For one thing, the rise in home sales comes in light of plunging housing prices, a trend that still persists, and while it is commendable that many large manufacturers have experienced a surge, the more crtical automobile manufacturers, companies like General Motors, still suffer and demonstrate little hope of feasible recovery. This hinders the supposed "stabilization" of the banking system in light of the struggles of Citigroup, and even companies like Chase that have shown some upward progress. Underlying this is that a facade of consumer confidence will not be sufficient to boost the economy, given that the more significant issues of the housing crisis, the auto industry, the banking system, and the unemployment, retirement savings losses, and other financial and social consequences that this financial crisis has created, will take years, perhaps even two presidential terms, to begin feeling lasting economic progress.