How to Solve the Glut in Housing or Autos, Google-Style

Great article in Wired Magazine on Google's internal economics. Worth a read for those who wish to learn what Googlenomics is. But hidden in the end of the article, we found an interesting idea for solving current gluts in autos or housing. Keep in mind Google's core genius, after its search technology, is its auction technlogy for ads, which is extremely efficient at getting adspace sold at the best price.

Can the rest of the world be far behind? Although Eric Schmidt doesn't think it will happen as quickly as some believe, he does think that Google-style auctions are applicable to all sorts of transactions. The solution to the glut in auto inventory? Put the entire supply of unsold cars up for bid. That'll clear out the lot. Housing, too: "People use auctions now in cases of distress, like auctioning a house when there are no buyers," Schmidt says. "But you can imagine a situation in which it was a normal and routine way of doing things."

Problem is, homeowners and automakers are likely to balk at the prices they might receive if a sudden, giant auction were held. The truth can hurt. But clearing the glut of housing and arguably autos (there is also the problem of production capacity here), could set a nice floor for prices, even if it's a floor at a much sharper, lower pricing level than we can even imagine right now.