Tuesday, September 22, 2015
Diesel smell
Several oddities about EPA's fine against VW, and also about the market response to the fine.
I'm certainly not defending VW. It has grown WAY too large, and I'm overjoyed to see extreme automation lose credibility.
(1) There's nothing new about fiddling with emission tests. Other carmakers have been playing this game for 30 years, and I don't blame them. For instance, Honda equipped early Civics with manual chokes. Because EPA tests assumed bimetal chokes, they didn't specify pulling the choke knob. In fact you need some choke for cold starts, and the choked condition would fail the test.
(2) Emission tests, like state safety inspections, have always been a racket. Their main purpose is to create business for favored repair shops. So fiddling with a racket (eg Libor) is only a "crime" from the viewpoint of the racketeers.
(3) Normally huge corporations swallow regulatory costs as part of overhead. Why isn't that happening here? Why is this particular fine larger than usual? Why did VW fail to anticipate, and thus fail to bribe, the EPA regulators?
(4) Normally the stock markets don't worry much about a regulatory cost. Why this time?
= = = = =
I don't know if these oddities are connected, but taken together they smell like a missed blackmail payment.
A bit later: ZeroHedge answers the question and even puts an exact number on the missing payment! $144,699,788.
¶ 4:22 AM 
