Tuesday, July 20, 2004

Just because car prices are experiencing slow-motion deflation and sales sans incentives tanked last month doesn't mean you can't triple your profits.
The Ford Motor Company reported a $1.17 billion second-quarter profit on Tuesday, nearly tripling its earnings from the period a year earlier.

But analysts are concerned that Ford relied so heavily on its lending division in the quarter and lost money in its core business: making cars and trucks. . . .

For the second quarter, Ford's net income of $1.17 billion, or 57 cents a share, was up from $417 million, or 22 cents a share, in the period a year earlier. Ford Credit, which offers loans to car buyers, contributed $897 million, more than doubling its profit from a year earlier. Ford Credit is reimbursed by the automotive group for the cost of offering no-interest loans, a situation that benefits the credit division but erodes the auto division's bottom line.
Like so much of the US economy, moving out of M-C-M' and straight into M-M' seems the way to go. As Giovanni Arrighi argues convincingly, financialization is the beginning of the death throes of a production model and a hegemonic economy, but hell, the City did pretty well while Britain crumbled around it, so I'm sure Wall Street won't mind playing the same role.

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