It's like the old Soviet Union

A Toronto Sun columnist, Eric Margolis, likens the US car industry to the old Soviet Union:

Economically declining, bereft of new ideas, producing unwanted products, run by dimwitted careerist bureaucrats.

America produces the wrong cars, and far too many. The bloated auto industry must downsize. It has been selling cars only thanks to the steroid of cheap, easy credit — in effect, almost giving them away. Now that the drug is largely cut off, sales have nosedived.”

He makes the excellent suggestion that Americans (and us all) must

relearn the old verity that one must save for purchases and rainy days; that gambling with your home is idiotic; that there is no substitute for hard work or manufacturing; and that it’s always very risky to trust politicians or financial “professionals” with your money.

WSJ today quotes analysts estimating that from about

10% to 26% of all US retailers are in financial distress and in danger of filing for Chapter 11.

Retailers will trim inventory and reduce the number of suppliers. That, in turn, will cause a ripple effect, prompting a number of weaker manufacturers, small brands and underfunded fashion labels to fail. New retail formats and concepts stores are likely to be curtailed in the coming year. And luxury-goods makers already are working to cut the long lead times between orders and store delivery as a way to reduce risk.

“We will have a lot fewer stores by the middle of 2009,” says Nancy Koehn, professor of business administration at Harvard Business School. “It’s happening very, very quickly because of the financial crisis and the recession.”