In and outs of the political campaigns, focusing on Michigan and Lansing, Tim Skubick will report regularly throughout the primary and then general election campaigns.
Sunday, May 17, 2009
Not Many Silver Linings
You will need a magnifying glass to find a silver lining in the most recent batch of bad news surrounding the on-the-ropes domestic auto industry. The state's top bean counters summoned the experts in the field to give some sense of what happens in Michigan if Chrysler and GM are in bankruptcy at the same time. You did not need a PhD to know this will be ugly. The good news is Chrysler could be out of the courts before sixty days has elapsed. An economist for the Center on Automotive Research down in A2 reports, "The judge is doing everything we would hope he would do" to right size the smallest of the Detroit Three. GM will be another story. Sean McAlinden says there is a "99%" chance the former auto giant ends up in bankruptcy and "there is a 50% chance it will stay immersed there for more than sixty days." And if it does, McAlinden forecasts more bad news for the state budget i.e. a loss of more revenue to pay for the already battered state services. A GM bankruptcy is "far more complex" he tells FOX2 Detroit. You have a ton more bondholders to appease, foreign plants to figure into the mix and if the whole shebang goes beyond 90 days, it spells trouble with a capitol T. With GM already shedding dealerships around the state and more plant closings on the horizon, state government will have more than its projected $1.7 billion shortfall in tax monies to contend with. That means more service cuts…unless somebody wants to raise taxes and no "somebody's" have said that yet. On the plus side, McAlinden sees a comparatively robust Ford Motors growing even more and in two years, he predicts GM and Chrysler, mere shadows of their former selves, will still be in the game. You are welcome to believe that, but do so at your own risk.