Utterly Meaningless » Blog Archive » PIMPING FOR GM

    Filed at 6:54 am under by dcobranchi

    The mavens at CNNMoney have decided that we have to bailout GM. Their logic, shall we say, is somewhat less than convincing. The nickel summary:

    If GM goes under, that would cause prices to spike. OK, I can buy this. Simple supply and demand. Then if demand continues to fall, that could cause shortages of vehicles and prices to spike even higher. WTF! If supply goes down prices go up. And if demand goes down prices go up?

    One Response to “PIMPING FOR GM”

    Comment by
    November 23rd, 2008
    at 12:19 am

    It’s not a simple straight line. If demand falls enough, then prices can go higher because it costs the producer more per paying customer to produce a sale. Think about things like obsolescence, waste, marketing expenses, payroll, and so forth.