Tuesday, January 10, 2006

The Dow Tops 11,000 But Problems Remain For The U.S. Economy

The Dow may now top 11,000, but severe problems remain for the U.S. economy. Yesterday at the Detroit Auto Show, China displayed a new car brand that will soon compete with troubled American firms such as GM and Ford, the Geely.

On www.geely.com , a series of four modern automobiles including a sleek sports car will soon compete with GM and Ford. This company has even bid for the assets of the British MG and Rover company in a bid to move this heavy equipment to Hong Kong for more production of automobiles. While U.S. firms have a long history in America. Studebaker started from two blacksmiths in 1850. Rambler started in the late 1800's as a bicycle company. Oldsmobile and others have a long history. But some automobile producers in Asia tha have been in business only a limited number of years display an amazing growth potential. Even Subaru, with a past of building automobiles starting in 1967, has become a major U.S. import brand. The ultracheap 360 model, a two cylinder automobile that sold for a mere $1,297 in 1969 has been long forgotten. Current models are top quality and high horsepower, yet still return excellent mileage.

While the Dow is up, oil still hit $64 a barrel today as nuclear fears of Iran again were raised. OPEC still intends oil production cutback talks this month. All of this could hit the U.S. automobile industry hard this year opening up room for reliable and cheap automobiles from China. Rather than buying a used car, many already buy a low price car like a Hyundai. These have recently proven themselves to be low priced and reliable, unlike earlier models which were the subject of some problems. With some automobiles that could sell for less than the South Korean automobiles, China has some room to put GM and Ford on further slippery ground in 2006.

2006 will be a year in which oil price issues and automobile industry issues will help to drive the economy. The Dow is up now, but by January 2007, we may be looking at a far different U.S. economy. Oil prices will decide how much low priced imports cut into the U.S. automobile market. Without a doubt, 2006 will be an interesting year of economic uncertainty.


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