National / International News

Thank the Japanese Prime Minister for that new car deal

Marketplace - American Public Media - Tue, 2014-09-23 01:30

When I first figured out that the most popular car in the U.S. costs the same now as it did 25 years ago when Marketplace first went on the air, I was as astonished as I assume you are.

We have been looking at the weird, wonderful but sometimes destructive ways that prices have moved in the last quarter century. When it comes to cars, it has been an article of faith that 2014 cars have so much more sophisticated stuff bolted to them that they must be more expensive.

The 1989 Honda Accord for instance had no airbags at all. ABS braking? Forgettaboutit. The entry level DX sedan didn't come standard with air conditioning. You had to roll down the windows. Its engine generated just 98 little horses. It did come with doors and a steering wheel, however, and luxurious power steering.

The sticker price for that base Honda Accord in 1989 was $11,700. These days, the cheapest Accord has airbags galore, AC standard, Bluetooth, power windows. Its got 185 horses, its fuel economy is much better, and it's even just about a foot longer. But it lists for $21,955. The price of the extras that accumulated over the years.

Or is it?

Adjust for inflation and the 2014 Honda Accord is like $11,445 back in 1989. In other words, the fancy new Accord is selling for a few hundred dollars cheaper than its more Spartan predecessor back when the first President Bush was in the Oval Office.

Since we didn't just fall off the turnip truck however, we know that the cost of a car is not just the cost of a car. What happens to the total cost of driving a mid-sized sedan like the Accord over the last 25 years? The results of that analysis were also a surprise and they're here. Not to ruin the suspense, but while gas, maintenance insurance, taxes/title are more expensive now, the cost of borrowing money to buy a car is much, much lower now. Depreciation is also less as cars get better and last longer.

But I haven't forgotten I mentioned the Japanese Prime Minister in the headline. What does Mr. Shinzo Abe have to do with any of this? Maybe nothing, maybe a lot. One veteran economist I talked to about how the 1989 and 2014 Honda Accord cost the same reminded me that Honda is based in Japan. Prime Minister Abe's economic stimulus program known as Abenomics has had the effect of weakening the Japanese currency. Even though the modern Honda Accord is assembled in Ohio, the low yen/high dollar means that Honda can keep the Accord's price low, in part because the same amount of dollars generates more yen when the profits are sent back to Japan. This economist told me that Honda's competitor Ford grumbles about this and estimates the low yen these days lets Honda sells the Accord for a few thousand dollars less than a U.S.-based car company.

The thing is, Mr. Abe has only been running things since very late 2012 and his Abenomics have held sway since last year. And those Accords have been awfully competitive contenders in the U.S. car market for decades.

Parliament crucial to IS decision

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MPs' views will decide if UK joins strikes against Islamic State

Rights watchdog to probe Met Police

BBC - Tue, 2014-09-23 01:11
A human rights watchdog is to investigate the Met Police after it emerged references to discrimination were deleted from internal reports.

Grainger - My toughest ever decision

BBC - Tue, 2014-09-23 01:10
Olympic rowing gold medallist Katherine Grainger reveals how much she agonised over her decision to get back in the boat.

Philips plans to split business

BBC - Tue, 2014-09-23 01:06
Dutch electronics giant Philips says it is planning to split the company in two, separating its lighting business from its healthcare division.

Ebola's Toll: Farmers Aren't Farming, Traders Aren't Trading

NPR News - Tue, 2014-09-23 01:03

Guinea, Liberia and Sierra Leone were just starting to see economic progress after years of conflict. The blow of Ebola, says the World Bank, could be "catastrophic."

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Cameron to hold talks with Iran

BBC - Tue, 2014-09-23 00:53
David Cameron is to meet Iranian President Hassan Rouhani - the first time a UK prime minister has met an Iranian president since the Iran's revolution in 1979.

Public borrowing at £11.6bn in August

BBC - Tue, 2014-09-23 00:41
Government borrowing remained high in August, denting the chancellor's efforts to reduce the public deficit, official figures show.

Theatres make gender equality pledge

BBC - Tue, 2014-09-23 00:40
Leading English theatres commit to making changes in their programming and working practices to address gender inequality in the theatre industry.

Singer to direct new X-Men outing

BBC - Tue, 2014-09-23 00:36
Film-maker Bryan Singer is to direct X-Men: Apocalypse, the next movie in the long-running blockbuster franchise.

Miliband: Scots made 'right choice'

BBC - Tue, 2014-09-23 00:33
The Labour party will show Scots they made the "right choice" rejecting independence, Ed Miliband is expected to tell his party's conference.

Peshawar bomb attack 'kills three'

BBC - Tue, 2014-09-23 00:31
At least three people are killed in a bomb attack in the Pakistani city of Peshawar as violence returns after several months of relative calm.

MLA concerned by A&E pressures

BBC - Tue, 2014-09-23 00:24
A Sinn Féin MLA says she is "very concerned" about pressure on the emergency department at the Royal Victoria Hospital on Monday night.

VIDEO: Murray's regret over referendum tweet

BBC - Tue, 2014-09-23 00:24
Andy Murray has spoken publicly for the first time about comments he made on the eve of the Scottish independence referendum.

Andy Murray regrets tweet fallout

BBC - Tue, 2014-09-23 00:19
Andy Murray says he does not "regret giving an opinion" but was "disappointed" with the way he tweeted his support for Scottish independence.

Liberia in 'trees for cash' deal

BBC - Tue, 2014-09-23 00:11
Liberia is to become the first nation in Africa to completely stop cutting down its trees in return for development aid.

Connolly warns PM over Scots pledges

BBC - Tue, 2014-09-23 00:05
Scottish comedian Billy Connolly has said there will be "hell to pay" if David Cameron does not honour his pledge of extra powers for Scotland.

A question of identity

BBC - Tue, 2014-09-23 00:05
The team which overhauled the government's websites is attempting to solve the problem of effective online identity verification.

Does Labour have the cash to expand the NHS?

BBC - Tue, 2014-09-23 00:02
Does Labour have the cash to expand the health service?

HK students gather for park protest

BBC - Mon, 2014-09-22 23:53
Hong Kong students gather in a park in front of government offices, on the second day of a week-long pro-democracy protest.
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