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The Michigan Messenger going forward

By Staff Report | 11.16.11

I am writing today to announce the closure of the Michigan Messenger. After four years of operation in Michigan, the board of the American Independent News Network, has decided to shift publication of its news into a single site, The American Independent at Americanindependent.com. This is part of a shift in strategy, towards new forms [...]

Colorado-based abstinence program provided false and misleading information to Michigan students

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By Todd A. Heywood | 11.16.11

An abstinence-only presentation provided to numerous school districts in Calhoun and Eaton Counties in October of this year provided false and misleading information to students about HIV, experts allege.

Class action lawsuit filed against MERS over unpaid taxes

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By Todd A. Heywood | 11.15.11

Two county registers of deeds filed a class action lawsuit Monday on behalf of Michigan’s 83 counties alleging that the Mortgage Electronic Registration Services owes millions of dollars in property title transfer taxes.

Schuette fights important mercury regulations

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By Eartha Jane Melzer | 11.14.11

Despite evidence of the impact of mercury on children and public health, Michigan Attorney General Bill Schuette last month joined with 24 other state attorneys general in filing a lawsuit to scuttle new EPA regulations that would reduce mercury emissions from power plants.

Hurricane warning: GM in the eye of the perfect storm

By LoRayne Apo-Joynt | 07.11.08 | 9:52 am

But are they battening down the hatches?

Michigan’s auto industry faces into a perfect storm, with bad news picking up speed and intensity. The Big Three are being swamped, unable to move fast enough to reduce production, cut costs and increase revenues as gas prices escalate.

But like a slow-moving hurricane we can see on radar and satellite photos, this is a problem that anybody with two working eyes and a brain in their head could see coming.

And like Hurricane Katrina, persons with real authority to change this scenario have been plodding along for a decade or two, failing to plan for the breach of the economic levee that is now giving way.

Continued – Who will be our Michael “Brownie” Brown, our fall guy, as if pointing a finger will somehow make the damage from this massive economic storm disappear? The tax structure of this state has been blamed; the governor has been blamed; the White House actually does bear some blame, as does Congress, but they flail away with their fingers, pointing in the other direction, as if they will be absolved in doing so.

Screw them. We have no choice now but to fend for ourselves; no rescue will come from Washington. It’s time to take an unstinting look at the conditions ahead so that we can prepare for the deepest and darkest before it arrives.

And it will

In late June OPEC’s president predicted oil prices will rise to $170 a barrel before the end of summer; in turn gas prices will likely rise to $5 per gallon. We’ve talked before about the dramatic effects we’ve seen and experienced as gas hit $4 per gallon. Let’s begin to talk candidly about the impact of $5 gas.

GM’s stock price tanked Thursday to a record low — a level not seen in 50 years — closing at $9.69 per share (NYSE: GM). As one smart-alecky observer on a financial forum noted, an analyst downgraded the stock from “Unload (CUTLOSS) To Wheelbarrow level II (Soup kitchen avoidance).” Chatter has been brisk in the financial and automotive industries about the risk of a bankruptcy filing by GM; GM’s CEO Rick Wagoner brushed aside this speculation as “not at all constructive or accurate.”

Um, sure. This, from the same guy who said that GM couldn’t foresee the possibility that oil prices could double in a year, that nobody could predict this.

Where have we heard this before: “Nobody could foresee…”

Apparently Mr. Wagoner also struggles with foreseeing the outcome of a simple math function:

$180 billion in sales — when gas was cheaper than $3.50 a gallon
  – 222 billion in costs
  ——
  (42) billion in losses

Wagoner says that GM’s $24 billion in cash and $7 billion in credit will be enough, though, to stave off bankruptcy.

Here’s another number that Wagoner struggles with using as a tool for prognostication. GM’s vehicle sales have fallen from 17 million a year to 15 million a year, a 12 percent slide — and the number continues drop like a stone in these turbulent waters. If gas prices increase to $5 per gallon, what do you think will happen to those vehicle sales?

I know I’m thinking, “Batten down the bloody hatches!” — and I’m not even drawing upon upon my education in business to make that deduction.

GM should be selling anything that’s not tacked down to raise operating cash to save its behind; unfortunately, since most of its $142 billion in assets is tied up in manufacturing facilities, we should see some rather dramatic fire sales of assets. Yet GM blows off such assessments, saying it’s limiting the sale of names in its stable to the Hummer brand.

Is this genius, or utterly blind madness, like Captain Ahab chasing a white whale on storm-tossed seas, GM’s management team tossing its harpoon after legendary sales the rest of us cannot see?

I vote the latter, as others with far more to lose have already bet heavily on the storm picking up speed.

Toyota, for example, announced Thursday that it is shifting production of its Prius model here to the U.S., where demand is strong and expected to remain so. This announcement was in no small part the reason why GM’s stock tanked to an all-time low the same day, as trading charts show; Toyota has been neck-and-neck with GM on vehicle sales and will likely surpass GM with this shift in production. The shift is not merely to meet need where demand is strongest, though; fuel costs for shipping vehicles make manufacturing close to demand much more appealing. Toyota obviously reads the same storm warnings that I do.

And Royal Dutch Shell, which most Americans will recognize more readily as Shell Oil, has forecast, by way of its scenario planning process, a scramble for energy as demand remains unrestrained and supplies become increasingly tighter. Their 2008 forecast is no surprise; Shell’s earlier scenarios also pictured similar outcomes, leading to Shell’s investment in wind energy and hydrogen production in advance of fuel-cell-powered vehicles.

You’d think when its largest competitor and a large oil company foresee deep needs for reduction in oil consumption that GM would adjust its own forecasts.

Apparently our own forecasts are off; who could predict that the world’s largest automaker could be so blind to the storm ripping it apart, stem to stern?

Comments

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