Here is "Automobile Bailout Excuse #2"-- Detroit and the State of Michigan "are too big to fail"...

Haven't we heard this before?

LANSING, Mich. – A quarter-century ago, Michigan's monthly unemployment rate hit 17 percent and so many laid-off workers left the state that bumper stickers asked, "Will the last one leaving Michigan please turn out the lights?"

Fears of a replay now have residents feeling even gloomier in this hard-hit industrial state where the Detroit Three are headquartered.

Executives with General Motors Corp., Ford Motor Co. and Chrysler LLC have so far been unable to persuade Congress to provide billions of dollars in loans to keep them afloat.

Even if they get federal help, domestic automakers likely will shrink further, something Michigan has had to deal with for years.

Since 2000, the number of Michigan workers making transportation equipment has dropped from 342,000 to 175,000, a decrease of nearly 50 percent.

"Michigan has been bearing the brunt of these adjustments for eight years now. Unfortunately for the state, things are going from bad to worse now, because the financial woes are being laid over the structural changes," said Thomas Klier, senior economist with the Federal Reserve Bank in Chicago. "So it's a real double whammy."

Oakland County Executive L. Brooks Patterson said communities and schools would be devastated without the automakers. The county northwest of Detroit — one of the nation's most affluent — is home to Chrysler's sprawling headquarters, a GM campus and a slew of auto plants and suppliers that employ more than 40,000 people.

"If GM or Chrysler goes under, or both go under," Patterson predicted, "it will be a nuclear winter. We'll lose tens of thousands of jobs."

The state already is in the top 10 for home foreclosures and suffering from bad publicity with its largest city, Detroit, embroiled in sex and spending scandals.

Any reduction in auto industry jobs and profits means less tax revenue for state and local governments and more demand for health care and welfare services.

That's why Patterson and the mayors of several Michigan cities went in Washington to lobby for the loans. More than 240 Michigan communities benefit from an auto-related facility within their borders.

The mayor of Hamtramck, Karen Majewski, said the GM and American Axle plants at least partially within the Detroit enclave contribute more than a third of her city's annual budget, critical to the city's way of life.

"There's really, really no way to cut. If we expect people to live in a community with decent services, we cannot provide it if we lose this revenue," she said.

So far, even with October's unemployment rate surging to 9.3 percent and the state having the unfortunate distinction of having led the nation for the last two years in annual unemployment, Michigan isn't nearly as bad off as it was in the early 1980s. Back then, state unemployment nearly doubled from an annual rate of 7.9 percent in 1979 to 15.6 percent in 1982.

http://news.yahoo.com/s/ap/20081120/ap_o...n_meltdown

WMD Owl Wrote:So far, even with October's unemployment rate surging to 9.3 percent and the state having the unfortunate distinction of having led the nation for the last two years in annual unemployment, Michigan isn't nearly as bad off as it was in the early 1980s. Back then, state unemployment nearly doubled from an annual rate of 7.9 percent in 1979 to 15.6 percent in 1982.

But the worst isn't over for MI. They were the only state to lose population in the last census estimate. We keep hearing how they're diversifying their economy, but when they get UAW supported officials, innovation is a long time in coming.

Postponing change has only hurt MI. They should welcome it.