Dave Letterman Should Stick to Comedy

Dave had John McCain as a guest on his show tonight. I know he loves politics, but the man just doesn't understand the markets. They were speaking of the 15 billion dollar "loan" to the Big Three.

Dave recited the Reed/Pelosi mantra: if we give them the money, then the Big Three must devote half of their production to hybrid/alternative energy vehicles, for this will create a plethora of jobs in the industry.

There is one problem: the market. Expansion of jobs within a company require an increase of revenue. This revenue can come in the form of sales, bonds, or government subsidy. The first is the problem: sales. There is simply not enough demand to warrant that much production. People buy what they can afford, and these cars are more expensive to make. Moreover, it will take 5+ years to break even if gas prices stay low. If people don't buy those cars, Big Three is right back in the place they are now, and with a depreciating stock of cars.

So, in order for this bright idea to work, one of two things must happen: Gas prices skyrocket (and if the do, it is probably due to the dollar, meaning car prices will also increase) which will fuel some demand...or [the more likely solution] the government will force us to buy them by coercive methods

Neither is desirable. Trust me, if gas goes up to a point at which it is economically worth the cost for a hybrid, demand will increase for it. Markets will take care of the problem when the problem manifests...

...also, global warming is such a serious problem, it snowed in South Louisiana yesterday, so lets bring more expensive regulations on the already struggling car industry, because New Orleans can't handle this snow.