| May 31 @ 3:25 PM |
Did you vote for her?
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blueyes101
Posts: 8,243
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Michigan, the New Mississippi
StockJockey's avatar
by StockJockey
Wednesday, May 28, 2008 - 12:54 am
Many years ago it was said that "What's good for General Motors is good for America". And while those were not the exact words spoken by the GM chairman at the time, multi-year lows in the stock of General Motors (GM-NYSE) Tuesday cannot be disputed
One year ago I made a quick sprint through the state, amazed by the state of the economy. And while I appreciate the State Troopers looking the other way while set land/speed records in an Arena Red Twin Turbo from Germany, the state's economic straits have certainly gotten worse over the past year, with the auto industry leading the way down. And the woes are being exacerbated by a tax and spend governor, whose policies were beginning to whip up the populace as they contemplate a revolt. The Wall Street Journal has an update:
Officials in Lansing reported this month that the state faces a revenue shortfall between $350 million and $550 million next budget year. This is a major embarrassment for Governor Jennifer Granholm, the second-term Democrat who shut down the state government last year until the Legislature approved Michigan's biggest tax hike in a generation. Her tax plan raised the state income tax rate to 4.35% from 3.9%, and increased the state's tax on gross business receipts by 22%. Ms. Granholm argued that these new taxes would raise some $1.3 billion in new revenue that could be "invested" in social spending and new businesses and lead to a Michigan renaissance.
Six months later one-third of the expected revenues have vanished as the state's economy continues to struggle. Income tax collections are falling behind estimates, as are property tax receipts and those from the state's transaction tax on home sales. Michigan is now in the 18th month of a state-wide recession, and the unemployment rate of 6.9% remains far above the national rate of 5%. Opinion Journal/WSJ
Perhaps there is a small victory to be had; this time last year the state's unemployment rate was 7.1%, but the improvement might be due to a steady stream of people leaving the state:
Michigan ranks fourth of the 50 states in declining home values, and these days about two families leave for every family that moves in. Making matters worse is that property taxes are continuing to rise by the rate of overall inflation, while home values fall. Michigan natives grumble that the only reason more people aren’t blazing a path out of the state is they can’t sell their homes.
Research by former Comerica economist David Littmann finds that about the only industry still growing in Michigan is government. Ms. Granholm’s $44.8 billion budget this year further fattened agency payrolls.
One year ago, almost to the day, Ford (F-NYSE) shuttered its massive Wixom assembly plant, that once employed 6,000 workers and produced nearly 300,000 cars annually. Nothing positive has come from it; at least if you look at Ford’s shares.
And the stock market is none too pleased with GM’s stock either, which is back to levels last seen in August 1982, the month the great bull market kicked off. It is tough to find anything good in the Motor City outside of the Pistons and Red Wings..
It is probably too late to quarantine the Great Lake state, but I am hoping what ails the once prosperous state does not spread. Wilbur Ross and private equity professionals continue to pick over the bones, but until Michigan’s home grown talent steps up, the carpetbaggers and misguided politicians will continue to set the agenda.
Michigan, the new Mississippi.
Unemployment rates by state, including District of Columbia, April 2008
45 MISSISSIPPI 5.9
45 SOUTH CAROLINA 5.9
47 DISTRICT OF COLUMBIA 6.0
48 RHODE ISLAND 6.1
49 CALIFORNIA 6.2
50 ALASKA 6.7
51 MICHIGAN 6.9
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| Jun 2 @ 2:12 PM |
Did you vote for her? |
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Sidsaidso
Posts: 77
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In a word...NO
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| Jun 3 @ 6:49 AM |
Did you vote for her?
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andyorange
Posts: 8
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Granholm has been a disaster. No, I didn't vote for her. In all fairness however, the seeds were sown decades ago. What is going on today is not completely her fault.
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