FW: More On Detroit's Collapse- Unthinkable

Subject: More On Detroit's Collapse- Unthinkable

Many years ago I made several trips to Detroit, over a period of several months.. The C & O's Northern Regional Offices were in the GM Building.

Detroit was prosperous, a relatively clean town. You could get off the train and walk anywhere you wanted in town. It was the epitome of the working man's dream... good jobs for you, your sons, daughters and grandchildren.., virtually into perpetuity.

To learn what has happened to this once thriving city is a shame.... most of it is due to mismanagement, failure to realistically look at common sense issues and the perpetuation of "something-for-nothing mentality.

To understand what is going to happen to America 's health care delivery system, we must first understand what has happened to Detroit . Detroit is dying. Yes, I know that there are lots of books on "The Death of. .. ." That word sells books. But Detroit really is dying. It is the first metropolis in the United States to be facing extinction. We have never seen anything like this in American history. It is happening under our noses, but the media refuse to discuss it. To do so would be politically incorrect.

Two factors tell us that Detroit is dying. The first is the departure of 900,000 people – over half the city's population – since 1950. It peaked at 1.8 million in 1950. It is down to about 900,000 today._
(http://en.wikipedia.org/wiki/Detroit#Demographics) In 1994, the median sales price of a house in Detroit was about $41,000. The housing bubble pushed it up to about $98,000 in 2003. In March 2009, the price was $13,600. Today, the price is $7,000. Check the price chart.

There has never been a collapse of residential real estate values of this magnitude in peacetime history, anywhere. Detroit is dying. We are unfamiliar with anything like this. The media are silent. The powers that be are not interested in reporting on this, because readers might ask the obvious question: "How did this happen?" Obvious questions tend to lead to obvious answers. Detroit has been killed by flight out of the city.

The 2008 Clint Eastwood movie, Gran Torino, dealt with this problem. Eastwood plays an 80-something Korean War veteran who will not leave the neighborhood. His children keep bugging him to sell and move into a retirement home. He will not hear of it. He is alienated from them and from his immigrant neighbors: Hmong refugees from South Vietnam . The Hmong have trouble with the Blacks. Every group is essentially trapped in a neighborhood, with the gangs running the show.

There is no surge of buyers to take advantage of fabulously low prices in Detroit . Can you imagine buying a home for cash for $13,600 in 2009 – a house that had sold for $98,000 six years earlier – and losing half your money? It's incredible. The Wall Street Journal recently ran one of the most creative stories I have seen in years.

(http://online.wsj.com/article/SB125390841258341665.html) .

The journalist told the story of the history of a 5-bedroom home in Detroit , from the land purchase to its recent sale. It was built by one of the most influential man you have never heard of, Clarence Avery. Avery was on the Ford Motor Company team that conceived of implementing an assembly line for Ford's factory. He copied the idea from a hog-slaughtering operation.

His home was a very nice home for the time. The journalist located his daughter, now age 91. She said that she always thought the home was the best home she ever lived in. As recently as 2005, the home sold for $250,000. It was purchased by a woman who was lent $200,000 to buy it. It was financed by a subprime loan. The asking price was $189,000. Where the other $61,000 went, the woman has no idea. She defaulted. The deteriorating house was bought by a Christian organization that is renovating it. The house sold for $10,000. This is simply inconceivable to anyone who is unfamiliar with Detroit since 2005.

Nothing like this has ever happened. How can we conceive of a lender lending $200,000 to a woman to buy a $250,000 home offered at $189,000? How can we conceive of a fall in price from $250,000 to $10,000? This is the sign of a dying city. This does not happen in a normal environment. Even with the mania created by Fannie Mae and Freddie Mac, in conjunction with Alan Greenspan's Federal Reserve, nothing like this has happened anywhere else. If you had predicted anything like this in 2005, you would have been dismissed as a crackpot on crack. You would not have been taken seriously by anyone. Yet it has happened.

The city planners, the Federal government's subsidy defenders, and the welfare state aficionados are all discreetly silent about Detroit . The city funds its schools with property taxes. Property taxes have collapsed as sources of revenue. An honest property tax system will generate less than ten cents on the 2003 dollar. Last week, the school board announced the closing of one-quarter of Detroit 's schools. The city is out of money. The central agency of propaganda by the government is in the process of closing up shop. This is not "anti-business as usual." This is collapse!

The American public does not perceive what is happening in Detroit . When a city simply shuts down from the effects of government mismanagement, the media say nothing. Detroit has become the poster child of government regulation, welfare systems, and a population that has given up hope.

The media say nothing because they are caught in a dilemma. If they say that the local government's welfare programs are not really to blame, what does that leave? The unmentionable issue: 82% of the city is Black. So, that means blaming white employers, who discriminate, despite 40 years of Federal anti-discrimination laws. But the main non-employers today are the region's auto companies, and two of the three are partially owned by the U.S. government. One – GM – is mainly owned by the retirement fund of the United Auto Workers. So, the media are not about to blame the auto companies – not now. That leaves that other politically incorrect issue: the rate of illegitimacy, which is in the 80% range. That social phenomenon represents a moral collapse, but the participants were all educated by the tax-funded schools. Who ya gonna blame? The media pundits cannot decide, so they simply ignore the collapse. " Detroit ? Never heard
of it."

The lesson of Detroit is this: the "experts" do not see a collapse coming. They assume that next year will be like today, give or take 3%. They do not believe that anything as complex as a city can collapse. So, they believe that things will continue, as they always have. Taxes need not be cut. Spending need not be cut. Schools should be allowed to educate. Tax-funded welfare programs should be increased. When it comes to tax revenues, "there's always more where that came from." And then, overnight, the system collapses.

The assumptions were wrong. Real estate prices collapse, indicating an irreversible flight of capital from the city. The ability of the government to collect taxes collapses.


bendk said...

Haha it's like it tries to grab onto reality of why Detroit is shit but then SOCIALISM

Anonymous said...

What a bunch of rambling, racist crap.

Yes, Detroit used to be the richest city in America. Yes, now its the poorest. So who do we blame? According to this, its the fault of the black people left behind by generations of white flight, racism and poverty. Because that makes perfect sense.

Detroit has been going downhill for decades, mostly because its manufacturing base has been shrinking and its tax base has been fleeing. Why would they flee? It wouldn't have anything to do with the fact that they didn't want to live next to black people, would it?

In a sense its right to blame the government, but not for socialism. Government policies in the 20th century tipped the scales in favor of suburbanization, flight, and the moving of businesses to new cities instead of the expansion in traditional business areas. Those who could leave were encouraged to do so, and those would couldn't were left behind in dying places.

I love the tactic of blaming the government and UAW for the collapse of the auto industry. They step in to try and fix the mistakes of generations of auto executives who let their place in the market slip, and so it makes perfect sense to blame the rescuers. Just like firefighters are the reason that houses burn down.

And whats the solution for all these ills? Cut all spending! No more services for anyone!

And invoking Gran Torino? Insane.

ferschitz said...

Rightwing thinktank alert! Note how they sell shit and make it seem like shinola. The RepubliKKKan party at work.

I agree with Anon, who gives a very cogent analysis of the issues involved. Whether you like Michael Moore or not, watch "Roger & Me" for more info about how poorly auto industry execs ran their businesses. That was about the failure of Flynt, MI, but the same crap applies to Detroit.

All Teabaggers wept and wailed when BHO fired the GM exec (forget his name), but it's no secret that the big three Detroit auto CEOs (great "captains of industry" that they were) were greedy pigs feeding at the corporate trough. Rather than investing enough $$$ in R&D in their industry, they took home the bacon for themselves in giant salaries, perks, bonuses and stock options.

If Republics want to PRETEND that US cars were so great, then let me ask them what kind of car they drove??? Were they buying American? I seriously doubt it. I didn't bc the cars were shit.

Detroit CEOs were lazy buggers who claimed the "problem" was simply marketing. What a bunch of baloney.

I have my own issues with the Dems and BHO, but I'm in agreement for the most part with how they handled most of the bail outs of the auto industry.

No surprises, though, that of course this rightwing think tank article wants to blame blacks, the unions, and somehow make white flight the fault of teh eeeevul minorities. No doubt our troll friends here will now instantly claim that somehow I'm a racist for pointing out the reality of this propoganda.

Oh well. Same shit, different day. A load of lies, racism and bullshit.

Invoking Gran Torino is nuts.

Marc with a C said...

Huh. I thought Detroit was dying because we decided it'd be a great idea to start rewarding companies for outsourcing our heavy industry and manufacturing jobs to places like China and India, while slashing the taxes which helped support things like libraries, public schools, and police forces.

Never realized it was the unions and the blacks all along!

katz said...

This is a perfect example of a pseudological argument. They spend the first half of the article citing evidence that Detroit is collapsing, including sources and everything. But then the conclusions, trotted out in the last four paragraphs, are unsupported and feature no citations, even of the statistics.

Thus, there's evidence and a conclusion--a logical framework--but the evidence doesn't support the conclusion. Pseudologic. I think I'll write about it on Chimaera.

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