I did some extensive reporting on this mess in 2009. Please check those posts out for some detail on the proposed system. For more up to date information, my friends over at ITP Watch are doing a great job of keeping The Rapid on their toes.

• Rapid Silver Line – Another waste of money
• The Rapid Silver Line – More Concealment and Deceit
• Rapid Silver Line – Bus “Slow” Transit
• Rapid Silver Line Goes Down
• Rapid Silver Line: They Almost Got to Take Credit

Rapid FAIL Line

Things aren’t getting better, they’re getting worse.

This is borne out by another index that I watch closely – the Consumer Indexes Daily Growth Index. It shows the year over year decline in consumer spending dropping to -5.3%. This is real-time data, not like the government’s GDP numbers which have a lag of 30-90 days.

Looks like we’re in for a rough winter.

One thing that I think many people don’t understand is the relationship between house prices and interest rates. Yes, it looks very attractive right now to buy a house to utilize record-low mortgage rates (around 4.5% these days). Wow, that’s an amazing deal, right?

But the point is that interest rates are at record lows. Where do they go from here? Naturally, the only way they can go, eventually, is up. What happens to home values when interest rates increase? They go down. Let me demonstrate.

Let’s say you have $10,000 to put down on a house and you can afford a monthly payment of $800 a month. This means you can finance about $160,000 (this does not include taxes, insurance, etc).

What happens if interest rates go up to 5.5% Now you can finance about $142,000 for the same monthly payment.

How about if interest rates go up to 7%? Now you can only finance about $122,000.

Do you see how interest rates decrease home values? If suddenly everyone loses $20,000-$40,000 in purchasing power, home prices will theoretically drop by that much. This means that if you buy now and interest rates go up, your home value will drop and you will lose value. This is exactly what happened in the last three years and lending standards and defaults have dramatically changed the housing landscape.

But, then again, there’s the counter argument that the unsustainable and destructive national debt can only be paid back through hyperinflation. You can gamble and hope that this happens, which would end up wiping out your debt for pennies on the dollar. Maybe that’s the politicians’ long term plan – hyperinflate so that a wheelbarrow of worthless money will pay off everyone’s now-worthless mortgages. Then again, that wipes out everyone’s life savings at the same time. Oh well, at least everyone will have a wheelbarrow of cash!

Yes, here’s a picture of the billboard:

State and local government budgets are only to get worse, and as I’ve repeatedly demonstrated, public sector benefits packages are inherently unsustainable. We will see much more of this type of taxpayer extortion. As the public sector unions demand more raises, more  benefits, and more pensions, the residents who pay for them will eventually wake up and realize that they’ve been scammed. This is just one example of a growing trend.

Oh, and remember our post about how the stimulus won’t do a damn thing? Below is the Federal Government’s chart, formulated back in January, which attempted to scare people into passing the gigantic wasteful bloated stimulus plan. They wanted to show how bad things would get without the stimulus and how much better things would be if the stimulus did pass. Guess what. Things are much worse than either prediction. The red dots are actual unemployment since January. Just another reason not to believe any of the bilge coming out of Washington when it comes to economics.

Pelosi blubbers with glee over the bailout bill

Republics are created by the virtue, public spirit, and intelligence of the citizens. They fall, when the wise are banished from the public councils, because they dare to be honest, and the profligate are rewarded, because they flatter the people, in order to betray them.

-Joseph Story, Commentaries on the Constitution, 1833

If ye love wealth better than liberty and the tranquility of servitude better than the animated contest of freedom, then crouch down and lick the hands which feed you. May your chains sit lightly on you and may posterity forget that ye were our countrymen…go from us in peace, we ask not your counsel or your arms.

- Samuel Adams

Everyone wants to live at the expense of the state. They forget that the state wants to live at the expense of everyone.

The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.

-Frederic Bastiat

Although the US has gained more than 480,000 jobs over [the last year], employment in Michigan fell by more than 78,000 jobs.

That’s right – Michigan has had a net loss of over 78,000 jobs in the last year alone. What’s the total damage? According to page 6, Michigan has lost a total of 474,000 jobs since 2001.

It’s time to get serious about fixing our state. Taxes need to be cut dramatically. Right to work legislation must be passed to attract new employers. The nickle and dime “job creation” that the Michigan Economic Development Corporation claims is a corporate welfare joke. The only way to turn this state around is to make it attractive to employers. With the choking union-dominated atmosphere and choking tax rates, Michigan will continue to bleed jobs.

A study was paid for by the state and the GR Downtown Development Authority to figure out how to get more people to come downtown. I believe it cost over $100k to hire a consultant to issue the report.

The conclusions are a little disappointing. It says, “Grand Rapids must continue investment in public infrastructure but move to the next phase. Invest in marketing, promotions, recruiting, and organizational staffing to accomplish the goals.”

For sure, investing in public sector buildings in the immediate downtown area needs to stop. What do you see when you walk out of the new convention center? The city/county buildings, the post office, an empty old age home, and that’s about it. The area simply isn’t conducive to pedestrian traffic. The real entertainment district is several blocks down, from the BOB, south.

But the conclusion of the report is that the city simply needs to spend more money on marketing. Marketing what? There really isn’t much to do downtown. Sure, there are museums, the arena, and a lot of restaurants and bars. But that really is it.

What are we saying? It will take more people living downtown in order for more shopping venues to be viable. But the study recommends one more layer of bureaucracy – a new Downtown Partnership – to spend even more on marketing and such.

Downtown will start doing well and it doesn’t need more government – it needs less. Government can foster growth of housing by making it easier to do business in Grand Rapids. Lower taxes would help too. Housing growth downtown continues. It will eventually reach a critical mass, and that’s when shopping will take hold. Until then, we don’t need more government and bureaucrats, we need less.

Interestingly, some states are showing an astonishing level of income tax revenue growth over projection. Examples are Arizona (46%), Georgia (97.4%), Kansas (58%), and Hawaii (106%).

However, Michigan’s revenue gap (the gap between projections and actual revenues) stands at $465 million for Fiscal year 2005, which started on October 1st of this year.

This means a couple of things in terms of tax and spending policy. First, we’ll see whether the legislature has the guts to do some more cutting, or if they’ll try more accounting tricks, such as the property tax shift, to raise more revenue.

Second, the underlying problem of a lack of economic growth in Michigan needs to be addressed. Heavy reliance on manufacturing, high taxes, and heavy unionization make Michigan an unattractive place for business to move. We’ve seen businesses flee the state in the last several year for other states and other countries. Unless Michigan is made competitive again, the state’s economy will continue to groan under the weight of government.

It’s an unfortunate reality, but manufacturing isn’t the backbone of America any more. It’s time to recognize that manufacturing, although still an important part of the economy, is going the way of farming. It simply takes far fewer people to manufacture the same number of items.

We are a service economy now – let’s face it and deal with it.

Senate Majority leader Ken Sikkema was interviewed on WOOD radio this morning and he explained that he voted to rescind the compact because a study showed that 3,000 jobs would be lost in other entertainment industries due to the opening of a casino.

In addition, he mentioned that there are 20 casinos in Michigan and “that is enough.”

There are two points here that need to be countered. First, the idea that a new business will destroy 3,000 jobs is a fact of life. While we question that number (the study was commissioned by the Grand Rapids business community, which wants to stop the casino), it is a fact of life that new businesses create (and destroy) jobs continually. The senator’s argument only looks at half the equation.

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1100017066-9e32d306-38844