Friedman and Schwartz vs. Today’s Talking Heads: The 88 vs. The Gazillion

Talking heads, pundits, and media types speak/talk/write volumes-upon-volumes about the recent housing boom-bust and subsequent financial crisis. Specifically they commentate that the subsequent deep economic recession, shallow recovery, and subsequent economic malaise has a common thread of risk aversion and the quest for liquidity. They elude to, poke about, show charts and graphs, and otherwise attempt to explain in 100 gazillion words that risk adverse and liquidity is the revealed preference after a cataclysmic economic event.


Consider the following excerpt, specifically the eighty eight words within the following passage that concisely and compactly economize on the 100 gazillion plus words of today's talking heads, pundits, and media types:

“Partly, no doubt, the stock market crash was a symptom of the underlying forces making for a severe contraction in economic activity. But partly also, its occurrence must have helped to deepen the contraction. It changed the atmosphere within which businessmen and others were making their plans, and spread uncertainty where dazzling hopes of a new era had prevailed. It is commonly believed that it reduced the willingness of both consumers and business enterprises to spend ; (6) or, more precisely, that it decreased the amount they desired to spend on goods and services at any given levels of interest rates, prices, and income, which has, as its counterpart, that it increased the amount they wanted to add to their money balances. Such effects on desired flows were presumably accompanied by a corresponding effect on desired balance sheets, namely, a shift away from stocks and toward bonds, away from securities of all kinds and toward money holdings.” - Friedman and Schwartz, The Great Contraction 1929-1933, pp 10-11.



Note: the footnote referenced by Friedman and Schwartz appears below:

(6) See A. H. Hansen, Economic Stabilization in an Unbalanced World, Harcourt, Brace. 1932, pp. 111-112; J. A. Schumpeter. Business Cycles, McGraw-Hill 1939, Vol. II pp. 679-680; R. A. Gordon. Business Fluctuaions, Harper, 1952, pp. 377-379, 388; J. K. Gaibraith. The Great Crash, 1929, Boston. Houghton Mifflin, 1955, pp. 191-192. See also Federal Reserve Board, Annual Report for 1929, p. 12.

And About Those Vehicle Sales Trends

Current public policy, also known as notional visions of elites through their particular politico enablers, is that auto makers should create small vehicles with greater gas mileage. In other words, the paramount purchasing criteria for consumers should be gas mileage regardless of consumer preference. However, the revealed preference of consumers is pickups, vans, and SUV’s. Go figure!

Truck sales, which includes pickups, vans, and SUV’s amounted to 51.2% of total new vehicle sales during 2011. During December 2011 the rate was even higher at 54.8% of total vehicle sales. (1)

Hence those third parties, your betters, those with the elite-knowing vision who know exact what is best for you are going to be very disappointed.

Meanwhile, back on the sub-compact gas mileage frontier, a small-claims court is about to hear a case regarding a hybrid buyer’s complaint that gas mileage is not as advertised:

“She alleged that Honda misrepresented the $25,400 car because it initially got 20% less than the 49 miles per gallon in the city and 51 mpg on the highway promoted on its window sticker and in promotional materials. She says the mileage worsened as the battery deteriorated — and a software update only exacerbated the problem. She sought compensation for her lost gas mileage, the premium she paid for a hybrid and diminished resale value.” (2)


One may find Honda’s counter to the allegation of interest. Honda merely is taking the wonderful government regulations that always accompany the notional visions of elites through their particular politico enablers, and stating:

　

“A Honda representative, however, countered in court that Honda followed government rules regarding gas mileage and that the automaker clearly states that fuel economy will vary depending on how owners drive the car.

"We have no choice," said Neil Schmidt, a technical specialist for American Honda, who brought in a blown-up copy of the car's window sticker. "We have to put these numbers on the label." He noted the small type on the label, which gave a listing of 41 to 57 miles on average, saying, "This is more toward the real world." He said the software update was aimed at extending the life of the battery and should not have affected gas mileage.”(3)


Ah, the evil of it all!



Notes:

(1) Truck sales revving despite high gas prices, us today, James R. Healey, 01/05/2012

http://www.usatoday.com/money/autos/story/2012-01-04/truck-sales/52381866/1


(2) Honda goes to small-claims trial over gas mileage claims, us today, Chris Woodyard, 01/04/2012

http://content.usatoday.com/communities/driveon/post/2012/01/honda-taken-to-small-claims-court-over-gas-mileage-claims/1

(3) Ibid.