Monday, February 27, 2006

More bad news from Michigan

Michigan's economy is still in a recession. I expect this number to rise with the Ford Wixom closing and its ripple effects.
From the AP

Michigan foreclosures double in two years, now 2 1/2 times U.S. rate
2/27/2006, 5:14 a.m. ET
The Associated Press

DETROIT (AP) — The number of homes undergoing foreclosure in Michigan doubled from February 2004 to February 2006 to a rate that is 2 1/2 times the nation's, according to a group that monitors foreclosures.

Michigan had 8,240 homes in active foreclosure on Monday out of 96,019 nationwide, the Boca Raton, Fla.-based Web site says. In February 2004, the state had 4,085 foreclosures in progress.

Michigan's active foreclosures are 8.6 percent of the U.S. total, while the state's population of 10.1 million is only 3.4 percent of the nation's 296.4 million.



Keith Richards said...

It is no surprise that Michigan has a foreclosure rate that is twice the national average. With the Granholm recession that Michigan, and ONLY Michigan, is suffering through there are many people that are having a hard time paying their bills right now.

What makes matters even worse is that so many people have been using their home equity like a ATM machine, withdrawing cash as fast as their homes go up in value. So when they suffer from a job loss or cut in pay, they now have to pay a mortgage AND an equity loan payment. And with loans equaling 100% of the equity in a weak market, homeowners have to PAY thousands of dollars, cash, to sell their home. For most that is not possible so a loan default becomes the only choice.

RKG said...

So what is the solution and who is going to step forward to offer solutions? People who don't have money to make their house payment don't have money to buy cars, clothes, eat at restaurants, etc., and it effects all of us, whether we were responsible with our own money. I own a business and the lousy economy is killing me. I think there's plenty of blame to go around but I want to know how we get out of this mess.

Patrick Flynn said...

It will require courage and a thick skin for lawmakers.

Trim Lansing government and institute massive tax cuts for businesses of all sizes. This has been proven to energize the economy. That way new companies move to Michigan, hire people and truly compete in the marketplace. The cost of goods and services comes down, people buy and everybody wins. Everybody except fat government.

Contrary to rumor, it wasn't the climate that attracted thousands of businesses to the South in the Eighties and Nineties. It was a low tax environment and reasonable cost of living.

We have a rare treasure here. A quality of life for families that is second to none. We will, however, soon lose a great deal of this treasure with business and government as usual.

Anonymous said...

You should really check out for the full story.

Michigan home foreclosures are high, but as bad as this is, other news reports suggest Ohio is worse - THE worst, a state with a Republican Governor.

Republican Michigander said...

Nice attempt at free advertisement, Matt.

As for Ohio having a Republican governor, Taft is about as "republican" as Bill Milliken. RINO extordinaire.

I was about to say that I put Bob Taft in the same category as Granholm, but then he's worse, since he's destroying the party down there.

Ken Blackwell needs to clean things up down there.

Keith Richards said...

Bob Taft in Ohio is a good example of why I refuse to support RINO candidates.

Democrats can never hurt Republicans as much as we can hurt ourselves. By allowing people like Bob Taft to represent themselves as Republicans we create an opportunity for Democrats to attack our entire party.

This is why I've said I would vote for a liberal Democrat over a bad RINO Republican. Neither RINO's nor Democrats support Republican ideas, but RINO's make people forget why they vote Republican while Democrats remind them, every day.

Keith Richards said...

RKG, you are not kidding about the bad economic climate here in Michigan. I have two friends that went out of business in 2005 due to low sales and high taxes.

Part of the problem is that Michigan makes business owners pay business taxes no matter whether they are making or losing money. This is ON TOP of property taxes. So a company that loses money in a bad economy gets an extra kick in the butt by having to use what little cash is left to pay business taxes. This is NOT a good idea if we want to help Michigan businesses remain in Michigan doing business.

One real bugger is that the booming economy in the rest of the U.S. is forcing the Federal Reserve to push up interest rates to ward off inflation. In this way Michigan is being penalized for the economic prosperity of the rest of the nation.

Funny thing about the climate down South. Up until A/C became common and cheap many people thought that the South was a hot and miserable place to live.

There are a lot of people in the U.S. that just refuse to live in a place like Michigan due to our long and cold winters, that is true. But we are still losing a lot of people every year that WANT to stay here but can't because of our bad economic climate.

Michigan has always had the climate that we know and love. Yet when our economy prospered prior to the 1970's people moved here in droves to take advantage of what Michigan has to offer. If we can bring back a strong economy to Michigan with lots of job opportunities we will not have any trouble finding people that want to live here.

Bachbone said...

Man! I'm surprised you folks haven't yet learned that Toyota, grants for college education to high school grads (i.e, more taxes on working stiffs), affirmative action for some (but not all), prayers that God will bless the unions and open voters' eyes to the fact that only higher taxes will stop more fire fighter and law enforcement layoffs, and "Cool Cities" are the answers to Michigan's problems. OOPS! I forgot to mention federal bailouts for auto manufacturers.

Not necessarily in that order, though.

Republican Michigander said...

RKG - I had to sleep on it before commenting on this.

"""So what is the solution and who is going to step forward to offer solutions?"""

This is what my solution would be.

1. Eliminate the SBT - there's nothing worse than losing money and still paying taxes on it.

2. Right to work state.

3. Cut the red tape and bureaucracy.

4. Tort reform - enact a loser pay law.

5. Diversify Michigan's economy. Right now it's 28% manufacturing, and most of it is all auto-related.

Keith Richards said...

Tort reform - Yes. We need to allow victims to recover fully for all medical expenses, lost wages, etc . . . but we need to limit the awards beyond that. There is no reason that a person should be awarded tens or hundreds of millions of dollars for an injury. Yeah, everyone feels sorry for a victim, but these huge awards are crippling our economy. Already we see drug manufacturers saying that they are afraid to introduce new drugs in the U.S. because of fear of mega-lawsuits. Eventually sick people in the U.S. will have to go to other countries to buy their medicine not because it is cheaper there, but because the medicine won't be available at any price in the U.S.

We also need to limit the amount of money that lawyers can make on these lawsuits. If a victim gets awarded $10 million there is no way a lawyer deserves half for managing the lawsuit.

All we are doing is putting companies out of business, destroying jobs, and jacking up prices to line the pockets of a few lawyers.

Right-to-Work - Would help a lot but we will never see it in Michigan, at least not in the next few decades.

Cut red tape and bureaucracy - Definitely needed but very hard to do. One man's red tape is another man's favorite law. Pogo would say "I have seen the enemy and he is us." (or something to that effect)

Diversify Michigan's economy - Yes. But how do we do it? Do we really want to get into a game where the government tries to pick the winners and losers? This is one of those ideas that everyone likes but nobody can agree on the details.

Taxes - If we REALLY want outstanding results, we should not stop at eliminating the SBT. Ideally, we would reform our entire tax system.

The problem that manufacturing has in the U.S. is that our entire tax system is based on the idea of making and selling products right here in the U.S. Basically, we tax the heck out of companies like the big 3 when they make cars here. It worked fine as long as it was American companies competing against American companies. Everyone paid the same high taxes and so the playing field was level.

But once we opened up our economy to imported goods this tax system put them at a terrible disadvantage. Now companies can build cars in places where taxes are much lower and then import them here to sell.

We used to have a lot of tariffs on imported good but our options are now very limited due to trade agreements.

To level the playing field we need to shift away from a tax system that heavily penalizes businesses for making products here to a system based on consumption. Essentially, reduce or eliminate taxes like the property tax and SBT and replace them with Value Added taxes like those used in Canada and Europe. This way our manufactured goods would be competing equally with imported goods. So instead of supporting our economy with taxes on the big 3, we would be getting taxes from all car makers no matter where the cars are built. If we had a VAT of 20%, that means that we would be collecting 20% on all that cheap Chinese junk that is flooding the U.S., rather than allowing it to enter virtually tax free.

Anonymous said...

"Part of the problem is that Michigan makes business owners pay business taxes no matter whether they are making or losing money."
The main reason my business closed. You get to the point that you look at the leeches and think, why don't you wait until we actually have some blood for you to suck ?
Thankfully, for us, after everything was sold, bills paid, etc, we got out debt free. Nothing owed. We were thankful for that much, and that we had marketable skills to fall back on.
So much for the permanant full time jobs we had planned to create. So much for the taxes they would have paid, monies they would have spent locally and State wide.
On an entirely different note,
Does anyone remember Granholm's 'pleading poverty' tour early on ?
I found it, interesting ?, how after telling us how broke we were, and the populace agreeing that cuts were in order ( police, prison gaurds, etc ) She managed to find $50 million to purchase laptops for sixth graders. I'm not against the idea, but I do not see it as taking priority over police services.
Laptops for schools would be nice, but how about actually educating the children, rahter than indoctrinating them.

Anonymous said...

"Diversify Michigan's economy - Yes. But how do we do it? "
By creating an environment that is friendly to innovaters and risk takers. The government's role is to encourage, with a hands off approach.
"Do we really want to get into a game where the government tries to pick the winners and losers?"
Granholm already is. Remember the development of hydrogen engine initative ? Let's throw all our money at.... the auto industry. I'm sorry that Motown is dying, but by the same token, Motown killed itself. The Saturn's and Toyota's could have built their plants here, but wisely chose not to.
Most likely because between the liberals and the unions they saw it as suicide.
Besides, 'we' don't want those jobs, they're nonunion ( so we can't force democratic policies on them ).