10/4/08

Bailout of Congress won't help Michigan

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Related story: "The 28 labor-states"

Worker-choice could actually make a difference, but union-backed power-brokers refuse to consider it

By loosening tight credit markets, the $700-billion financial rescue plan should prevent more pain from hitting Michigan's long-suffering economy. But experts say it won't have much of an impact on the state's fundamental economic problems.

"It will prevent a calamity," said Dana Johnson, Comerica Bank's chief economist. "The plan makes the national recession less deep." But Johnson cautioned that the country is probably already in a recession and the bailout package won't end it.

Expectations are high that the financial rescue plan will encourage banks to step up their lending since the government intends to take toxic mortgages and other burdensome debts off their books.

That could help Michigan banks with bad mortgage loans or significant housing-related assets, such as National City Corp. and Flagstar Bank.

The plan is also expected to aid Detroit's automakers by making it easier for consumers to obtain car loans.

Perhaps most important of all, the return of credit markets to more normal operations should prevent a financial crisis at many companies that rely heavily on borrowed money to operate, particularly manufacturing companies and small businesses. In recent days, these businesses were having a harder time getting access to capital.

But the bailout doesn't do anything to stop the loss of thousands of manufacturing jobs from the state caused by the restructuring and sales slump at Detroit's automakers. And it won't reverse the slide in home prices or the wave of home foreclosures that have besieged the state in recent years.

David Littmann, senior economist at the Mackinac Center, a free-market think tank in Midland, said the rescue plan could provide a temporary boost of confidence to the local economy.

But Littmann said he believes Michigan still needs to take a number of steps to get its economy growing again, such as reversing last year's tax increases, making deeper cuts in government spending and becoming a right-to-work state.

"If you don't change the climate for being here and working here, it's a graveyard spiral," he warned.

(freep.com)

1 comment:

Anonymous said...

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Recently an insurance company nearly wind up....
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A bank is nearly bankrupt......filing chapter 11 protection.
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How it affect you? Did you buy insurance? Did you buy mini note or bonds?
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Who fault?
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They bailout trouble finance company, but they will not bail out your credit card bills……And the bill out of company is still not enough yet…….Should they have use the bail out $$ to pump into all different industries……You got no choice, and no point pointing finger but you can prevent similar things from happen again……
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The top management of the Public listed company ( belong to "public" ) salary should be tied a portion of it to the shares price ( IPO or ave 5 years ).... so when the shares price drop, it don't just penalise the investors, but those who don't take care of the company.....If this rule is pass on, without any need of further regulation, all industries ( as long as it is public listed ) will be self regulated......because the top management will be concern about their own pay check…… And they are still spend big money on hotel stay and luxury function……..
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Meanwhile if company was being acquired, there will be a great movement in terms of staff……eventually staff suffer also.
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So Bail out already happen, So the next question is, what regulation are they going to implement, so as to prevent similar things to happen………
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Are you a partisan?
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Whenever anywhere, anytime, there is election campaign.....We can use this to question your candidate there….. if you agree on my point, please share with many people as possible.... Finance and Media are the two only industries can shaken politics ( Maybe Hackers can ), please help to highlight also...
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Blog
http://remindmyselfinstock.blogspot.com/
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Facebook, come and join as a friend and share with your friends…..
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