Tar Heels Deliver Hard Truth on the Michigan Economy

April 7, 2009 by  
Filed under Money and Behavior

No, this post is not really off-topic.  And no, Mr. ToughMoneyLove doesn’t mean to pile on all of those in Michigan who are unemployed through no fault of their own.

But enough already about how the Michigan State Spartans – crowned the “team of destiny” by an epidemic of wishful thinking – were going to inject hope and comfort into those being dragged down by the Michigan auto industry. Win or lose, that kind of fantasy attitude is not going to help anyone recover from economic misery. Nor will it expedite the acceptance of a radical change in economic thinking which is sorely needed.

Accept the Reality of How You Got There

Writers and other media are always looking for angles. This week, that angle was that residents of Michigan – Detroit in particular – would be inspired and uplifted from their economic malaise by the success of the Spartans.

What a load of “let’s avoid the truth.”

First, Detroit became perhaps the worst large city in America long before the current economic crisis. Corrupt leadership, over-dependence on a declining industry, the list of contributing factors could go on. Michigan itself has relied  too much on the negotiating muscle of its labor unions to force-feed economic benefits to a declining membership.

Now all of that has come crashing down. But are we hearing acceptance of why they crash and burned? Are union leaders issuing apologies for burdening auto makers with oppressive labor costs? Are members of management taking the blame instead of bonuses for bad decisions, including agreeing to union demands?

Some are now “admitting” mistakes. But that is only because they are increasingly dependent on life support provided by taxpayers. The government has also been slow to accept reality, as demonstrated by its deep incursions into the finances and now the management of GM.

Why can’t these folks be more like Tom Izzo, the competent realist who directs the highly successful Michigan State basketball program? After the game, he immediately accepted reality, acknowledging that Carolina was clearly the superior team. When will those running the bilge pumps on the SS GM-Chrysler-Titanic reach similar levels of acceptance?

Accept the Reality of What Must Change

Yes, the UAW finally made some concessions. The government partially forced its hand. But a lot more hard truth needs to be heard and understood by the players in the auto industry before its future is secured.

I am not confident in the GM Total Confidence plan. Are you?

Where is the Chevy Volt? It will be too little, too late.

Where is the recognition that too many broke Americans were buying cars they could not afford? The auto industry depended on bad decisions by underfunded consumers to get feature-bloated vehicles off the lot.  GM’s “new and improved” strategy is to target those same buyers by offering to make nine months of car payments if they lose their job. Please.

Thank You Tar Heels

Yes I am a Carolina fan, by proxy. One of my sons graduated from UNC and is very proud of his school. So I am pleased they won.

But I am also pleased that Michiganders (or whatever they call themselves) will no longer be distracted by the hype from working their way through the pain of economic reality.

I have often written that money and emotion do not go well together. It leads to blaming external factors instead of looking internally. It also causes fantasy and wishful thinking:

  • “I will find some way to make these payments.”
  • “I deserve this.”
  • “If I buy it, the money will come.”
  • “Gasoline will always be cheap.”
  • “More SUVs means more profits.”
  • “See the USA in your Chevrolet”

Stop fantasizing. Accept where you are. Acknowledge how you got here. Make the changes that are necessary. Only then will you clear a path to your recovery.


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Comments

3 Responses to “Tar Heels Deliver Hard Truth on the Michigan Economy”
  1. MasterPo says:

    I like your comment about Detroit relying too much on a dying industry. Makes me wonder about NYC. With the death of Lehman and the other previously financial power houses dropping to mediocre at best that doesn’t boad well for the city. Even before that many companies were relocating out of the city, at least in part. And now that our esteemed Gov. Patterson wants to impose a millionaires tax on people making over $300,000 (I think the gov needs a less in math – 300k is NOT 1 million!!!) that’s going to push more people out too. Even the Don is talking about moving out!!

    ps- Electric cars, no matter who makes them, are a no-go unless the gov *forces* people to buy them with hyper taxes on gas auto, impossible emissions standards, etc.

    pps- Where will we get all that electricity to recharge tens of thousands of electric cars every today?! Places like New York City already have rolling black outs every summer! Imagine another 10,000 or more cars plugging in to charge!

  2. MasterPo – Good point about the having all of those electric vehicles recharging on the grid at the same time. AS for the future of NYC, I guess it starts with Wall Street. I’ve heard that broadway shows having been closing right and left.

  3. MasterPo says:

    Let’s be realistic:

    New York City is not an industrial center.
    The arts rarely make anyone rich (defined any way you want)
    And who is going to go to shows, museums and resturants when they can’t pay their rent?

    THE main #1 life blood, THE reason for the very existance of NYC *IS* Wall Street. Period. If it wasn’t for the exchange Lehman, Goldman, et al would have looooong ago moved out of the city, taking the thousands of jobs (direct and indirect) and it would be an urban desert. Think “Escape From New York”.

    That’s just fact.

    But now Wall Street is enemy #1. I think investment banker has replaced lawyer as the top hated profession in the country.

    Obama hates Wall Street. Patterson hates Wall Street.
    (But they both sure love the taxes they pay!!!)

    And neither is doing anything to encourage a rebound.

    Rome is burning.

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