Economy crisis deepen!

After 1 year of the subprime bubble burst, the chain effect has reach US Auto Industry. So why is the auto industry badly affected when they have no link to the subprime, housing and financial?

You have to blame the "Big 3" old mindset of building muscle car (High horsepower car but not fuel efficient) that got them less attractive than the Japanese smaller and fuel efficient car. This crisis started when the economy boom in early 2007 where China as the "World Manufacturer" and "Fastest Growing Economy" require alot of raw resources, especially crude oil to fuel their economy need (Second highest consumption of oil in 2007 and growing at 7.4% yearly). This usage is still coonsider relatively low for a 1.6billion population as the usage is only 1.9 thousand barrel per capital (bbl) as compare to US 24.8 thousand barrel per capital (bbl). Meaning to say, China will required 140,000 bbl once it have developed into a mordenize country (Current usage is 7,201 bbl). With the increase of oil usage and economy boom, gasoline for cars start to rise more than 100% this year from a usual US$50 per barrel to US$129 per barrel. This causes people in US to turn to Japanese car for better fuel efficient cars.

Other than gasoline price increases, it also trigger other prices to go up. As we know all of our foods, daily necessities and etc are make from machinery therefore with the oil price increase will lead to an increase to all this necessities. Food in particular increases tremendously as food like corn, wheat can be used to produce gasoline. With more people see the profit in grwoing this crops, lesser land is used to grow crop for food that is used to feed the populations and lead to a 100% increase in certain food like rice, corn and wheat.

With the drop of 30% of sale in the car industry, the "Big 3" start to lose lots of money. This loses in money has cause the "Big 3" to operate in deficit for very long (especially GM has been in deficit even before the crisis occur). I believe this rise in oil price will be close to 200% in the next economy crisis. Be prepare.