Monday, August 4, 2008

The Economy on Wheels

I am now seeing more evidence of my favorite indicator of economic instability--absurdly expensive exotic cars. It is now a seller's market for such vehicles as the new Ferrari 612 Scaglietti with an average price of $320000 and the Maserati Quattroporte with an average price of $112000. While the price of some of these exotics is lower than the super-rare exotics of 5 years ago (the Ferrari Enzo sold for $630000), those had extremely limited production of only 200 or 400 individual cars, world wide.

The current crop of uber-expensive cars are showing two trends that worry me: 1. they're biased towards luxury, 2. they're being produced in huge quantities that are selling out as fast as they can turn them out. What this tells me is that the more and more of the money in our economy is moving into the hands of a very small upper echelon, and it is now de-rigeur to have one of these exotics as a status symbol--yet the people who are buying them are not the expert-driver car collectors, just garden-variety ultra-millionaires who have more money than brains and need the status symbol.

When people start dropping $200,000 and $300,000 for a status symbol without caring too much about it, while a vast majority are having increasing trouble making ends meet, the economy is unbalanced and rushing headlong towards collapse.

We saw this in 1989 - 1992, with the Ferrari F40, the Bugatti EB17, the Cizetta-Moroder V16T, etc. As more and more of these $350,000-plus cars became immediate sell-out items, the economy became more and more unstable, eventually collapsing and leading to the election of Bill Clinton over Bush the 1st.