The citizens of Michigan certainly must think things can't get any worse,can they?I mean,after a decade of depression under Granholm,what's left to get any worse?Unfortunately there is more to come and we are being misled by those in power to think we've turned the corner.
Granholm has been hard at work handing out tax credits thru the MEDC/MEGA like candy.The MEDC/MEGA has a proven track record and it is one of failure.Less than 30% of the announced hirings will ever be filled and for every million dollars given away in those tax credits,another 95 manufacturing jobs will disappear.The program is a complete and utter failure and needs to be scrapped asap.No chance of that happening until the GOP returns to power.
There are 26.9 million unemployed or underemployed workers in the U.S. as of today.The number of self-employed and contractors aren't counted in these dismal numbers either.To put that in a little perspective,Michigan only has 10 million residents total.For real job growth to happen,not the dreamworld of Obama's 2 million stimulus fantasy jobs,we have a couple of obstacles to overcome.First,we need over 100,000 brand new jobs created every single month simply to keep up with the birth and immigration rates.Second,the bulk of those part-time jobs already counted as employed will likely need to be increased to full-time before companies will hire new workers at all.It's only after these two steps occur that we can start the process of restoring jobs for the 15 million that have no job at all.
25% of home mortgages are underwater right now,meaning they owe more on the mortgage than their house is worth.This is the fallout from the derivatives meltdown.We've experienced firsthand what type of stress this places on the economy even when people generally have 30 years to pay off that mortgage.The commercial real estate crisis winds are now blowing.Beginning in earnest in 2011,we'll have $1.4 trillion dollars in commercial real estate loans up for refinancing.An astounding 50% of those are already underwater.Most of these are financed thru your local community banks.Commercial loans generally refinance every 5 years,not 30.
We will face a double whammy later this year and next year.A large block of residential mortgages are up for ARM expiration and will require refinancing into a conventional mortgage or another ARM.Remember,25% of these are underwater meaning they won't be able to refinance which will lead to another glut of foreclosures.Add the commercial foreclosures from the 50% of underwater mortgages on top of that.This will also lead to personal bankruptcies as small business owners go out of business.3,000 community banks are exposed to these potential defaults.Add it all up and you see businesses failing,banks going under,and even more pressure on residential housing as the affected people will then get into trouble on otherwise stable residential loans.It's truly a recipe for disaster.
Today we see GM calling workers back and investing many more millions into it's auto plants again.Green job initiatives are starting thanks to federal stimulus money.This sounds good on the surface.But what will happen when the dual mortgage crisis's really ramp up?Only the short-sighted Obama kool-aid drinkers would risk personal investment income long-term.Sure,you can still make lot's of money in short-term investments today as long as you can get out quickly when things go bad.Many will be caught who buy into the rhetoric being spewed from our government.It's not that we don't want the country to succeed as some say.There simply has to be a solid,stable foundation for recovery to be real.And we don't have it.Not by a long shot.And none of these scenarios take into account X factors like natural disasters and future wars which will be drags on any recovery.Buckle up!More to come...