A little over 3 months, Americans were complaining bitterly about $4 gas. SUV and pick-up sales sank and the mood was sour. This was before the economic crisis, a new President and the stock market plunge.
I predicted gas to hit in the mid-2's and the stock market to bottom at 7200-7800. We did hit 7800 and I think the market will find the 7's again before the 10's. But for oil to drop from $143 to under $60 a barrel is unprecedented. Or is it?
Today, gas is $1.99, a level not seen in more than two years. However, no one is celebrating this fact. No one is out rushing buying SUV's and pick-ups. In fact, no one is rushing out of their homes.
We finally have a new President. Obama makes only the 44th American to reach this lofty goal. His reward? The stock market crated 900 points, retail sales hit the lowest level in "who can remember" days, and GM will make an announcement tomorrow that will be riveting for the USA.
GM's CEO Rick Wagoner only three months ago told the world that he predicted the price of oil to be in the $130 range in 2009. So many wrong predictions over the years have cost Detroit and now we have 2.4 million jobs in limbo because of it. Wagoner can say a lot of things tomorrow: we already know GM had the worst month in history with sales down 45%.
We also know that he stated that bankruptcy was not an option. At 11AM tomorrow, Wagoner's speech will be more important than Obama's Tuesday night in Grant Park. He could say that unless GM gets money from the government now, GM will close down (assets sold to the highest bidder).
He could say that GM is shuttering "x' number of plants. Or GM is shuttering "x" number of divisions. Or GM is terminating "x' number of employees. Or he could say a combination of all. GMAC is already down for the count so nothing to say about this once dominant division.
Wagoner won't talk about $1.99 gas. He also won't talk about merging with Chrysler--most likely the deal is off the table until GM gets its house in order. Wagoner needs support and he needs it now. Yes, GM and the other two have made huge mistakes the past 30 years and they have now caught up to them. It's truly Saw VI for the auto companies.
But if the government lets them crash and burn, life will be far worse for all. We don't even want to look into the future to see what that brings us.
I will close with one final comment: I hope my predictions are 100% BS.