"It'll never be the same. That's a given. This (bankruptcy) makes the climb even steeper to ... get out of this local depression," said Jacobs, who has delivered the annual economic forecast for Macomb County for 25 consecutive years.
The former longtime professor's prediction was based on jobless rates in the county that exceeded expectations even before Chrysler and General Motors filed for Chapter 11 bankruptcy protection.
The Macomb County unemployment rate fell from 15.0 percent in March to 14.4 percent in April. But analysts say the decline was due to a large number of jobless people who stopped looking for work.
Yikes! That's about as bad as it can get, no? So bad that people are just giving up on finding jobs? That's no way to get the unemployment number down. Not that's it's that down and not that it's that low either. Further:
Jacobs predicts the rate will hit 20 percent before the local economy stabilizes, perhaps not until 2011. In 1982, unemployment topped 20 percent in many Macomb communities, but the countywide average for the year was 17.6 percent.
The economist said that auto suppliers who haven't diversified and lined up new customers may fold. The local housing market will take another hit, with foreclosures on the rise and prices heading south. Vendors who count on GM -- everything from food service companies that rely on GM properties to uniform cleaning companies that depend on blue collars to keep their balance sheets in the black -- could struggle to survive.
In addition, shops and restaurants that cater to auto workers could see their customer base dwindle.
Jacobs said the post-bankruptcy automakers must rehabilitate their reputation with American consumers so that they will give a GM or Chrysler car a long look. If the prominent perspective is that automakers are teetering companies "propped up by the government," then car buyers may stay away, he said.
In addition to that final thought, should GM make cars that Obama wants but consumers don't, GM simply won't make it out. There was an entire thread about a boycott against GM by consumers that are angry with GM basically being Government Motors now. I can see their point exactly. Not that I'm boycotting all the autos. I'll still buy Ford even though I've been a life-long GM owner (24 years running!). There is a principle at stake here in addition to all the jobs, many of which have disappeared under Obama already. For whatever reason, Candice Miller appears to support Obama on this one. That won't be forgotten. Commenter Deep Throat had this to say about it:
Congresswoman Candice Miller is probably one of the biggest RINOs in Congress. Miller is one of those Republican Members of Congress who likes to return to the home district on weekends and extended holidays to brag about how conservative she is to her constituents only to return to Washington DC to behave like another spend happy liberal.
Unfortunately for Miller, her record speaks supports the foregoing assessment. Over the years, Miller voted for the Leave No Child Behind Act which was one of the biggest unfunded federal mandates on the states. Miller also supports the entitlement culture by voting to expand federal entitlements by pushing through the Medicare Prescription Act.
Now, Miller has joined the ranks of the political elite who think they can run a nationalized auto company for the benefit of their political constituents. Miller forgets that the last country to nationalize their industry for the benefit of their political constituents was the Union of Soviet Socialist Republics. The end result for the USSR was political, moral, and financial bankruptcy.
Miller decries that doing nothing would have been a worse alternative. Perhaps, but Miller conveniently ignores the truth that the government intervention that she wholeheartedly supports has exacerbated the situation and now commences the United States' journey down the same path as the USSR decades earlier. The fact of the matter is that the auto companies should have gone into Chapter 11 last November with Debtor in Possession financing provided by the federal government instead of pouring tens of billions of dollars into these companies over these past few months that is never going to be repaid.
Unlike Miller, the rest of us hard working taxpayers, those of us with jobs anyway, don't particularly care to see our hard earned money being used to subsidize the UAW's pay and benefits, or a failed business model that is now Government Motors (GM). (I don't see the Teamsters knocking at the White House begging for a handout like the UAW.) We the People may not have been able to stop the political elite from taking over our auto industry but we can still vote with our checkbooks and I for one intend to boycott GM and Chrysler and buy Ford products.
Ouch! Maybe DT should be writing the articles around the Macomb Daily. By the way, wasn't the entire point of the auto bailouts to keep GM and Chrysler out of bankruptcy? How'd that work out? The 20% unemployment number isn't unheard of. Recently, David Littman,winner of the prestigious Lawrence R. Klein Award for Blue Chip Forecast Accuracy and Senior Economist at the Mackinac Center for Public Policy, predicted the possibility of a 20% unemployment rate - for MICHIGAN!!! Here is the interview with Littman:
"Revenues for the state will continue to plummet." "The automakers and suppliers were such a big part -- I'm going to say between 26 and 30 percent -- of the tax base of Michigan. And today that's eroding to something on the order of perhaps 10 to 12 percent." Ouch!
