Since their market is super small cheap cars anyways, a mpg limit will not hurt them. If the car is 2800lb and uses a 80HP engine, not a lot of technology is needed to get it to make 35mpg. But in the market of bigger cars it takes more expensive materials and contruction techniques to get the weight down and engines more efficient. The tech is there, it just costs money.
Hence the term "weak-form efficient" -> so it's not perfectly efficient but investors can still profit from smaller inefficiencies. For example, this morning Geitner went in front of the Senate banking committee talking about the Fed prioritizing the selloff of TARP warrants, so that might have generated some buzz in early hours trading. But, you also have to remember other factors such as HP (whose stock I happen to cover ) had a pretty bearish '09 outlook that they announced after hours yesterday. Either way, regarding discretionary spending declining -> I think this is a very good thing in the long term. Once our personal savings rate gets back in line we can stop with the defaults and delinquencies, and get back to healthy GDP growth. It's a long road to recovery, but deleveraging the consumer is a key step.
I totally agree with it being a strong positive to have debt payoff and increasing personal savings rates, but certain policies especially environmental ones in this economy drive up prices on virtually all goods and services which reduces discretionary or even debt payoff funds. The expectations of increased legislation are factored pretty quickly into corporate and individuals plans. Companies realizing they will have to conform to green measures may begin to make changes now and could layoff people to offset the increased costs. I think the issue is timing. Like I think Obama's statement about ending the mortgage interest deduction was a logical and a point I agree with but now is not the time to say that as it has a negative impact on housing demand which is what banking solvency is based on.
While I agree that increasing corporate tax rates right now is a bad idea, the green legislation isn't going to have a material impact in the short term. Most of the new CAFE standards, for example, shouldn't take effect until 2016 or 2019 I believe. Better emissions and fuel economy standards have been put off way too long and holding off until the 2011-2012 timeframe would put us even further behind the curve. Meanwhile, I don't forsee any headcuts as a result of green legislation.
