Motown to NOTOWN -Detroit GOES BANKRUPT! Home of the usa auto industry, now bankrupt

[markabilly]

What's the big deal? :confused: It is only $18 billion in debt......why do I keep hearing the song, it is the beginning of the end as we know it ??.
The city's murder rate is at its highest in nearly 40 years; only a third of its ambulances were in service in the first quarter of 2013; and its nearly 78,000 abandoned buildings create "additional public safety problems and reduces the quality of life in the city," the governor noted in his letter.
Detroit was once synonymous with U.S. manufacturing prowess. Its automotive giants switched production to planes, tanks and munitions during World War Two, earning the city the nickname of the "Arsenal of Democracy."
Now the city's name has become synonymous with decline, decay and crime. Detroit has seen its population fall to 700,000 from a peak of 1.8 million people in 1950. The city's government has been beset by corruption cases over the years. Waning investment in street lights and emergency services has left it struggling to police the streets.Detroit bankruptcy first step in 'restoring the city' (http://news.msn.com/us/detroit-bankruptcy-first-step-in-restoring-the-city)

[markabilly]

What were you muttering, roamy??????
I think the reactions of the George Zimmerman verdict have shown us once again what is leading to the decline of this country and why it is more important than ever to be self-reliant and to prepare for uncertain times.........But again, my big problem is the lack of personal responsibility in this country. It’s the notion that we can do whatever we want without consequences, and that someone or something (such as the government) will bail us out or take care of us. .....?http://www.motorsportforums.com/chit-chat/159163-george-zimmerman-verdict-just-6.html#post1147111

[Starter]

Absolutely amazing, boggles the mind. That it took this long for Detroit to get there. Forty years of incompetent and/or corrupt mayors and administrations will do that for you. Not to mention unions which made hogs at the trough look dainty.

[anthonyvop]

http://sphotos-a.xx.fbcdn.net/hphotos-prn1/74667_10151731248121489_1863843881_n.jpg

[Rollo]

Forgive my ignorance but wasn't Detroit the home of several auto makers?

When companies like General Motors choose to build cars like the Cruze and Captiva in places like Hanoi, Gunsan and Saint Petersburg, where they can pay workers less than $4000 a year, what sort of tax base does the city have left?

If the City of Detroit has gone bankrupt, then surely that's just one of the consequences of capitalism. The people who live could just as easily move to Vietnam, China or Russia because GM and Ford obviously made the economic choice to do so.


Absolutely amazing, boggles the mind. That it took this long for Detroit to get there. Forty years of incompetent and/or corrupt mayors and administrations will do that for you. Not to mention unions which made hogs at the trough look dainty.

To be fair, there is no point in manufacturing anything in the United States, not when people in other countries are prepared to work for wages which are even less than the cost of rent in American cities.

[anthonyvop]

Forgive my ignorance but wasn't Detroit the home of several auto makers?

When companies like General Motors choose to build cars like the Cruze and Captiva in places like Hanoi, Gunsan and Saint Petersburg, where they can pay workers less than $4000 a year, what sort of tax base does the city have left?

If the City of Detroit has gone bankrupt, then surely that's just one of the consequences of capitalism. The people who live could just as easily move to Vietnam, China or Russia because GM and Ford obviously made the economic choice to do so.



To be fair, there is no point in manufacturing anything in the United States, not when people in other countries are prepared to work for wages which are even less than the cost of rent in American cities.

1st off you have no grasp of how capitalism works. The reasons for the Auto Companies expanding overseas are many but one of them is High Taxes and repressive regulations. Something that is 100% fault of the Left. The Auto companies share in the blame as they catered to the liberals to curry favor as they were caving to the UAW.

Funny how you blame Detroit's downfall on the US Automakers for moving offshore for cheaper labor and yet Companies like Honda, Toyota, Mazda, Nissan, Volkswagen, BMW & Mercedes have all open factories in the USA

2nd The biggest debt held by Detroit and the main cause of their bankruptcy was their bloated pensions. They spend decades caving to the Unions for votes. The Liberal politicians would just spend and spend and just pass the buck to later administrations until..........Now.

FYI there hasn't been a Republican Mayor of Detroit since the early 60 and a fiscal conservative since the 1800's Their last mayor, Kwame Kilpatrick is actually in federal prison for racketeering, conspiracy, extortion and the filing of false tax returns.

[Rollo]

1st off you have no grasp of how capitalism works. The reasons for the Auto Companies expanding overseas are many but one of them is High Taxes and repressive regulations. Something that is 100% fault of the Left. The Auto companies share in the blame as they catered to the liberals to curry favor as they were caving to the UAW.

High Taxes? :rotflmao: What is ZERO too high now?

The Corporate tax take in 2011 amounted to just 2.2% of GDP. What the heck sort of world are you living in? It's certainly not one based on facts. CBO | Historical Budget Data (http://cbo.gov/publication/42911)

Your assertion is even more hillarious considering that GM was at the top of the list of companies that paid no tax at all:
10 U.S. companies paying the least (http://www.marketwatch.com/story/10-us-companies-paying-no-taxes-2013-03-26)


Study: Many corporations pay no income taxes - Nov. 3, 2011 (http://money.cnn.com/2011/11/03/news/economy/corporate_taxes/index.htm)
The study looked at 280 companies in the Fortune 500 that were profitable for all three years between 2008 and 2010.
The results: 111 companies paid effective tax rates of less than 17.5% over the three-year period; 98 paid a rate between 17.5% and 30%; and 71 paid more than 30%.
The average rate? 18.5%.
Some companies paid zero. And 30 actually owed less than nothing in income taxes over the three years.

My personal effective average rate of taxation last year was 29.3%, so please forgive me if I think that your statement is based in complete ignorance of the real world.


FYI there hasn't been a Republican Mayor of Detroit

FYI I can't honestly see any difference between the two political parties in the United States; it's all jingoistic claptrap. Both parties live in the pockets of corporations.

[Starter]

High Taxes? :rotflmao: What is ZERO too high now?

The Corporate tax take in 2011 amounted to just 2.2% of GDP. What the heck sort of world are you living in? It's certainly not one based on facts. CBO | Historical Budget Data (http://cbo.gov/publication/42911)

Your assertion is even more hillarious considering that GM was at the top of the list of companies that paid no tax at all:
10 U.S. companies paying the least (http://www.marketwatch.com/story/10-us-companies-paying-no-taxes-2013-03-26)
The sad fact is that many US companies have, over the years, purchased Senators and Congressmen to produce a tax code that is Byzantine. GM also was aided by a massive government bailout - it would be surprising indeed had they paid any taxes recently. Let's not forget though that, for the purposes of this thread, we're talking about Detroit and not the US in general.



Study: Many corporations pay no income taxes - Nov. 3, 2011 (http://money.cnn.com/2011/11/03/news/economy/corporate_taxes/index.htm)

The study looked at 280 companies in the Fortune 500 that were profitable for all three years between 2008 and 2010.
The results: 111 companies paid effective tax rates of less than 17.5% over the three-year period; 98 paid a rate between 17.5% and 30%; and 71 paid more than 30%.
The average rate? 18.5%.
Some companies paid zero. And 30 actually owed less than nothing in income taxes over the three years.
Our wonderful tax code again. However, a 17% or so rate would be a very reasonable figure were is applied fairly.


My personal effective average rate of taxation last year was 29.3%, so please forgive me if I think that your statement is based in complete ignorance of the real world.
You live where? ;)




FYI I can't honestly see any difference between the two political parties in the United States; it's all jingoistic claptrap. Both parties live in the pockets of corporations.
In many, but not all, ways that is an accurate description.

[Starter]

Funny how you blame Detroit's downfall on the US Automakers for moving offshore for cheaper labor and yet Companies like Honda, Toyota, Mazda, Nissan, Volkswagen, BMW & Mercedes have all open factories in the USA

2nd The biggest debt held by Detroit and the main cause of their bankruptcy was their bloated pensions. They spend decades caving to the Unions for votes. The Liberal politicians would just spend and spend and just pass the buck to later administrations until..........Now.
Important to note here that most of those plants are in right to work states - for those of you not from the US, that means that unions can not force workers to join the unions or keep them from being hired if they are not union members. The workers in those plants make a decent living for where they live, but are paid far less than the Detroit UAW members (by "paid" I mean as a total of wages, benefits and retirement). Basically the unions, especially the UAW, were complicit in killing the proverbial goose. Much like the steelworkers did to Pittsburg.

[Rudy Tamasz]

If the City of Detroit has gone bankrupt, then surely that's just one of the consequences of capitalism.

You're absolutely right. That's capitalism. You screw up, you fail. Would you bother to explain why other cities managed to survive? Do they have socialist mayors/councils, or what?

[anthonyvop]

High Taxes? :rotflmao: What is ZERO too high now?

The Corporate tax take in 2011 amounted to just 2.2% of GDP. What the heck sort of world are you living in? It's certainly not one based on facts. CBO | Historical Budget Data (http://cbo.gov/publication/42911)

Your assertion is even more hillarious considering that GM was at the top of the list of companies that paid no tax at all:
10 U.S. companies paying the least (http://www.marketwatch.com/story/10-us-companies-paying-no-taxes-2013-03-26)


Study: Many corporations pay no income taxes - Nov. 3, 2011 (http://money.cnn.com/2011/11/03/news/economy/corporate_taxes/index.htm)
The study looked at 280 companies in the Fortune 500 that were profitable for all three years between 2008 and 2010.
The results: 111 companies paid effective tax rates of less than 17.5% over the three-year period; 98 paid a rate between 17.5% and 30%; and 71 paid more than 30%.
The average rate? 18.5%.
Some companies paid zero. And 30 actually owed less than nothing in income taxes over the three years.

My personal effective average rate of taxation last year was 29.3%, so please forgive me if I think that your statement is based in complete ignorance of the real world.



FYI I can't honestly see any difference between the two political parties in the United States; it's all jingoistic claptrap. Both parties live in the pockets of corporations.

Just a little bit of news for you. There are more than just Federal income taxes.

States and cities apply their own taxes as well. Michigan had a high Tax rate as well as Detroit.

Also Michigan is a closed shop state.
That is if a company is Unionized you have to join the union to work there.

And the idea that Detroit failed solely on the collapse of the US auto industry is disingenuous. Other cities have suffered collapse of industry and yet have survived fairly well.

Basically Detroit is a perfect storm of Keynesian & Quasi Socialist policies.

[airshifter]

You're absolutely right. That's capitalism. You screw up, you fail. Would you bother to explain why other cities managed to survive? Do they have socialist mayors/councils, or what?

To some extent a government has to have a somewhat socialist mindset. They should look out for the needs of the many vs the needs of the few. But to generate income, they need capitalism within business, and individually. If everyone is held to being equalized somewhat, those striving for more will move on, and with it the income stream moves on.

In this case I personally think the auto industry hurt themselves with the unions and the government involvement made the situation even worse long term. A lot of big cities screw up by pandering to the unemployed, seeking votes by promising benefits. But in the end there is no free lunch and the cities often suffer in the long run.


Once the infrastructure issues pop up, people start leaving quickly IMO. There are also large areas in other major cities that this is happening to. I recently traveled through parts of Missouri and Ohio that are obviously in quick decline. There were large areas of St. Louis boarded up and empty... waiting to turn into ghost towns of sorts.

[anthonyvop]

To some extent a government has to have a somewhat socialist mindset. They should look out for the needs of the many vs the needs of the few.

And that is based on what?

When the so-called needy out numbers the productive what happens then?

I will answer for you....What happens is Detroit.

[Rollo]

When the so-called needy out numbers the productive what happens then?

I will answer for you....What happens is Detroit.

What happens IS Detroit.


You're absolutely right. That's capitalism. You screw up, you fail.

Let them fail then. American business doesn't need these people any more. Perhaps they should hurry up and die and decrease the surplus population.

[airshifter]

And that is based on what?

When the so-called needy out numbers the productive what happens then?

I will answer for you....What happens is Detroit.

Name any major city that doesn't provide public schools, roads, emergency responders, etc, etc.

Without proper infrastructure a city would never attract big business nor residents with reasonable incomes that provide the tax base. The business entities and individuals within the city need a more capitalist view, otherwise the income stream would dry up for the city, and infrastructure crumbles. As it does, more of the tax base moves on.

In the case of a place such as Detroit, it's a double edged sword. The tax base was declining, but to not help the citizens would virtually ensure lack of workforce availability, thus ensure no major business interest. At that point they were probably screwed either way.

[Rudy Tamasz]

Let them fail then. American business doesn't need these people any more. Perhaps they should hurry up and die and decrease the surplus population.

Whenever you have competition, you indeed have inequality of outcomes. Individuals, companies, industries and cities do better or worse depending on their competitiveness. That's a simple explanation. But then even in non-competitive societies where the factor of market competition is eliminated people and cities do better or worse. I can tell you that because I have lived in a real socialist country and you haven't. You can't explain that unless you factor in historical, social, cultural and individual aspects. This is exactly what's missing from your take on Detroit situation. Okay, Detroit is half dead, capitalism killed it, fine. Why other Rust Belt cities have survived then? Can you offer a plausible explanation?

You actually seem to be in agreement with Tony regarding what happened to Detroit. Both of you attribute it to capitalism. You only give it different spins. He says Detroit had it coming and deserved every bit of it. You say Detroit had it coming but what happened is bad. This type of analysis based solely on economic factors looks incomplete and one dimensional to me.

[Lousada]

Name any major city that doesn't provide public schools, roads, emergency responders, etc, etc.

Without proper infrastructure a city would never attract big business nor residents with reasonable incomes that provide the tax base. The business entities and individuals within the city need a more capitalist view, otherwise the income stream would dry up for the city, and infrastructure crumbles. As it does, more of the tax base moves on.



Or the cities/states need a less capitalist view. In a country with free travel for individuals, capital and goods everything flows towards the points with the lowest taxes. As various state and even muncipal authorities can compete with eachother with taxrates, the only thing you'll get is a race towards zero percent. It is ridiculous that in the US neighbouring towns A & B can bid at eachother with taxbreaks in order to attract shopping malls like Wal-Mart or Penske Autodealers. If there is demand for a Wal-Mart, it will be build, no matter what the tax situation is.

[anthonyvop]

Name any major city that doesn't provide public schools, roads, emergency responders, etc, etc.

Without proper infrastructure a city would never attract big business nor residents with reasonable incomes that provide the tax base. The business entities and individuals within the city need a more capitalist view, otherwise the income stream would dry up for the city, and infrastructure crumbles. As it does, more of the tax base moves on.

In the case of a place such as Detroit, it's a double edged sword. The tax base was declining, but to not help the citizens would virtually ensure lack of workforce availability, thus ensure no major business interest. At that point they were probably screwed either way.

There is infrastructure and then there is cronyism.
When Special interest groups get taxpayers money, subsidies and tax breaks Government is overstretching it's intended Function.
When politically connected Businesses get taxpayers money, subsidies and tax breaks Government is overstretching it's intended Function.
When people are hired because the color of their skin makes it Politically expedient Government is overstretching it's intended Function.
When Business are driven away due to over-regulation Government is overstretching it's intended Function
When Schools lower their standards to the lowest common denominator to appease special interest groups government is overstretching it's intended Function.
When roads and other infrastructure are built not by the lowest bidder but by a politically connected contractor at a much higher cost government is overstretching it's intended Function.

FYI the Myth that Detroit Collapsed because of the decline of the US Auto industry is just that....a Myth. It has been generations since there was a significant auto manufacturing presence in Detroit. Chrysler has been in Auburn Hills since the 1980's and Ford has been in Dearborn since 1956.

Detroit is bankrupt due to a succession of left wing administrations who actually believe you can spend your way to prosperity.

[anthonyvop]

You actually seem to be in agreement with Tony regarding what happened to Detroit. Both of you attribute it to capitalism. You only give it different spins. He says Detroit had it coming and deserved every bit of it. You say Detroit had it coming but what happened is bad. This type of analysis based solely on economic factors looks incomplete and one dimensional to me.

Detroit is not bankrupt due to Capitalism. Detroit is Bankrupt because Detroit did everything it could to ignore free-market, capitalism.

[Starter]

FYI the Myth that Detroit Collapsed because of the decline of the US Auto industry is just that....a Myth. It has been generations since there was a significant auto manufacturing presence in Detroit. Chrysler has been in Auburn Hills since the 1980's and Ford has been in Dearborn since 1956.
You're wrong on the last one. While technically Dearborn is a separate city, it really is a city within a city and is pretty much surrounded by Detroit. So the employment base is Detroit.

[airshifter]

Or the cities/states need a less capitalist view. In a country with free travel for individuals, capital and goods everything flows towards the points with the lowest taxes. As various state and even muncipal authorities can compete with eachother with taxrates, the only thing you'll get is a race towards zero percent. It is ridiculous that in the US neighbouring towns A & B can bid at eachother with taxbreaks in order to attract shopping malls like Wal-Mart or Penske Autodealers. If there is demand for a Wal-Mart, it will be build, no matter what the tax situation is.

Very good points IMO. Locally the property tax rates are often used as as an attraction for home and yacht ownership. Quite a few people will "winter" their yachts anywhere the tax rate is low, and use that as a legal home port for property tax reasons. Once the warmer months come they move them to where they are most convenient.

For a large city it's a balancing act and IMO not an easy one. Here in Va Beach overall the city has swayed towards income through business even when the residents aren't happy with it. Years ago they had a referendum about developing or not an oceanfront park. The residents understood that a slight bump in property taxes might result, but voted to keep the park regardless. Ignoring the residents, the city allowed it to be developed anyway. :rolleyes:

[Tazio]

To some extent a government has to have a somewhat socialist mindset. They should look out for the needs of the many vs the needs of the few. But to generate income, they need capitalism within business, and individually. If everyone is held to being equalized somewhat, those striving for more will move on, and with it the income stream moves on.

In this case I personally think the auto industry hurt themselves with the unions and the government involvement made the situation even worse long term. A lot of big cities screw up by pandering to the unemployed, seeking votes by promising benefits. But in the end there is no free lunch and the cities often suffer in the long run.


Once the infrastructure issues pop up, people start leaving quickly IMO. There are also large areas in other major cities that this is happening to. I recently traveled through parts of Missouri and Ohio that are obviously in quick decline. There were large areas of St. Louis boarded up and empty... waiting to turn into ghost towns of sorts.

Good post Air' :up:
Here is an interesting read IMO:
Detroit bankruptcy - only in America? | Americas | DW.DE | 24.07.2013 (http://www.dw.de/detroit-bankruptcy-only-in-america/a-16973785)


It may not be the first US city bankruptcy but it is certainly one of the biggest. Nearly 640 cities declared bankruptcy between 1937 and 2012. In Germany, by comparison, not one single city has been forced to go down that path, even though numerous communities are in financial difficulty

[anthonyvop]

Want to know why Detroit is Bankrupt? Here is a perfect example.

Detroit council supports calls for federal investigation of possible civil rights charges against George Zimmerman | Detroit Free Press | freep.com (http://www.freep.com/article/20130723/NEWS01/307230095/)

They are in the middle of a crisis and they are spending time and MONEY on an issue that doesn't effect them except in the eyes of extremely stupid voters.

[anthonyvop]

You're wrong on the last one. While technically Dearborn is a separate city, it really is a city within a city and is pretty much surrounded by Detroit. So the employment base is Detroit.

You are wrong. Dearborn is West of Detroit and is the Corporate Headquarters of Ford. Ford is doing fine and really hasn't suffered any major employee cutbacks. Not that many who worked in the Corporate headquarters would live within the city of Detroit anyway.

[BDunnell]

Want to know why Detroit is Bankrupt? Here is a perfect example.

Detroit council supports calls for federal investigation of possible civil rights charges against George Zimmerman | Detroit Free Press | freep.com (http://www.freep.com/article/20130723/NEWS01/307230095/)

They are in the middle of a crisis and they are spending time and MONEY on an issue that doesn't effect them except in the eyes of extremely stupid voters.

Well, clearly it works you up and therefore must affect you, which — by your own admission — makes you...

[anthonyvop]

Well, clearly it works you up and therefore must affect you, which — by your own admission — makes you...


Of course it affects me. Obama pumped BILLIONS of $$$ into that left-wing, money pit. And now the left is lobbying for more of my money.

[BDunnell]

Of course it affects me. Obama pumped BILLIONS of $$$ into that left-wing, money pit. And now the left is lobbying for more of my money.

Let me quote you:

'...they are spending time and MONEY on an issue that doesn't effect them except in the eyes of extremely stupid voters'.

So, as you put it, the only voters it affects are 'extremely stupid' ones. Your own words, Tony.

[Rollo]

So, as you put it, the only voters it affects are 'extremely stupid' ones. Your own words, Tony.

Actually the article which Mr Vop mentions nothing about money.

Also, I find it odd that according to him the issue doesn't affect them either:
Detroit council supports calls for federal investigation of possible civil rights charges against George Zimmerman | Detroit Free Press | freep.com (http://www.freep.com/article/20130723/NEWS01/307230095/)
The resolution, sponsored by Councilwoman JoAnn Watson, sparked a discussion over the need for city leaders and others to focus more on violence in Detroit.
...
“We need to have that same level of outrage with respect to the black-on-black crime that takes place in our community,” Councilman Kenneth Cockrel Jr. said. “How many people were shot — maybe even shot and killed this past weekend in the city — mostly likely by folks who look just like them?”
- Detroit Free Press, 23 Jul 2003

On reflection, it seems like the council is taking rather sober and measured steps. One can only assumes that Mr Vop condones violence in the community.

[webberf1]

Dear god, some of the non-American Obama-sympathising wannabe know-it-alls on this site make me want to vomit. Not only has he repeatedly shat all over the US constitution, he's been an economic disaster and not only continued but accelerated along the failed chain of the monetary policy of Clinton and Bush... and yet they'd have you think he s**ts tiffany cufflinks.

[webberf1]

Frankly the conservative Americans on here are 100% right. Its not the free market that's holding back any chance of a real economic recovery, its the fact that Obama's stimulus, socialistic economic interventionism keeps propping up incredibly sh***y assets and underperforming sectors. Instead of letting bad businesses collapse and have the housing market reset, Obama is printing $90 billion A MONTH to buy US mortgages and government treasuries to artificially keep these markets afloat. All he's doing is delaying an inevitable crash and making it much, much worse when it does arrive.

Remember when Obama was bailing out GM and said 'we will not let Detroit go bankrupt'? Nice to see that one turn out so well.

[anthonyvop]

Another reason why Detroit is bankrupt.

New $444 million hockey arena is still a go in Detroit - Jul. 26, 2013 (http://money.cnn.com/2013/07/26/news/economy/detroit-bankruptcy-arena/index.html)

$444 Million dollars for a hockey stadium. Of course they have all kinds of documentation explaining how it will boost the economy and, of course, there are still morons who believe that crap.

[webberf1]

Sounds ridiculous doesn't it. Sadly It'll probably turn out like so many other derelict buildings in Detroit.

There's only one way Detroit can climb back to any kind of prestige and thats by seeing manufacturing return. But the government has already proven themselves incapable of this. They have to get their grubby hands out of the economy, stop reinflating asset bubbles, stop propping up the sovereign bond market, stop delaying the inevitable crash V2.0, let the market correct itself, let the US currency drop to its true value... and only then will the conditions be right for US manufacturing to get back on track and start generating its own wealth instead of borrowing it from China.

[anthonyvop]

Actually the article which Mr Vop mentions nothing about money.



You do realize that a city council meeting costs money right? Staffers, security, Lighting, publication, broadcast, A/C,....etc

[anthonyvop]

Another reason why Detroit is Bankrupt:

Detroit had the highest property tax rates of 50 biggest cities on homes, apartment buildings, commercial buildings, and industrial buildings.

Detroit (http://finance.townhall.com/columnists/chrisedwards/2013/07/29/detroits-high-property-taxes-n1651149)

[airshifter]

Another reason why Detroit is Bankrupt:

Detroit had the highest property tax rates of 50 biggest cities on homes, apartment buildings, commercial buildings, and industrial buildings.

Detroit (http://finance.townhall.com/columnists/chrisedwards/2013/07/29/detroits-high-property-taxes-n1651149)

If those rates shown are accurate, it's surprising people stayed even when the economy was doing better.

[Starter]

If those rates shown are accurate, it's surprising people stayed even when the economy was doing better.
They didn't. Detroit has been on the decline for many years. This is a racing board, anyone ever go to the Detroit race when it first was on Belle Isle? You had to travel through abandoned neighborhoods; few buildings were occupied and those that were had tall fences topped by concertina wire; trash everywhere and the only businesses which seemed to really be open were liquor stores. All this only a few blocks from downtown.

[BDunnell]

One can only assumes that Mr Vop condones violence in the community.

A very reasonable assumption, given his apparent desperation to commit violence himself.

[BDunnell]

Sounds ridiculous doesn't it. Sadly It'll probably turn out like so many other derelict buildings in Detroit.

There's only one way Detroit can climb back to any kind of prestige and thats by seeing manufacturing return. But the government has already proven themselves incapable of this. They have to get their grubby hands out of the economy, stop reinflating asset bubbles, stop propping up the sovereign bond market, stop delaying the inevitable crash V2.0, let the market correct itself, let the US currency drop to its true value... and only then will the conditions be right for US manufacturing to get back on track and start generating its own wealth instead of borrowing it from China.

You seem to be ignoring one crucial point: that industry needs to make products that people actually want to buy. Does the world want to buy American cars? Apparently not.

[D-Type]

Is it that simple? For example, do the American car manufacturers want to build cars in Detroit? I understand that many cars are built in other parts of the USA and that pick ups and trucks branded as Chevrolet, Ford, etc are made in the Far East. A couple of simplified examples of unfettered market forces at work.

[Starter]

Is it that simple? For example, do the American car manufacturers want to build cars in Detroit? I understand that many cars are built in other parts of the USA and that pick ups and trucks branded as Chevrolet, Ford, etc are made in the Far East. A couple of simplified examples of unfettered market forces at work.
American brand cars have been made in many other places than Detroit for a long time. A number of other plants in the US as well as Mexico and Canada for instance. Pick ups made outside North America by Ford, Chevy And Dodge were in the days of the mini pick ups of the 80s and early 90s. Pretty much all of the major pick ups are now made in North America. Do you also count Honda, Nissan, BMW, Suburu and Toyota as American made? They all have major manufacturing plants in the US.

[BDunnell]

Is it that simple? For example, do the American car manufacturers want to build cars in Detroit? I understand that many cars are built in other parts of the USA and that pick ups and trucks branded as Chevrolet, Ford, etc are made in the Far East. A couple of simplified examples of unfettered market forces at work.

I was making the point more generally than just about Detroit, but ought to have been a bit more specific. Would there be such a malaise among the 'traditional' US manufacturers and their 'traditional' manufacturing heartlands if they were turning out products people wanted in sufficient numbers?

The same could be said of most manufacturing or retail collapses. People are quick to blame all sorts of other factors — taxes, underhand practices and so forth — without considering the simple fact of market forces. We saw it in the UK with people crying over Rover.

[anthonyvop]

If those rates shown are accurate, it's surprising people stayed even when the economy was doing better.

They didn't......Detroit has been witnessing an for generations from when it was once one of the US's largest cities.

[anthonyvop]

3 things the left is doing with the news of Detroit's bankruptcy.

The left insists on pointing to the auto big bad auto industry as the culprit for Detroit's demise.


They refuse to acknowledge that Detroit has not seen any significant drop in auto related employment in the last 15 years.


They fail to acknowledge that high taxes combined with deficit spending is the real cause.

[D-Type]

I don't see how high taxes can cause bankruptcy as an immediate cause. It may drive businesses away which in turn leads to a reduction in the total income which might lead to bankruptcy.
Bankruptcy, whether of an individual, a company, a city or a country comes from one thing: spending more than your income (is that what deficit spending means?)
What Keynes recognised was that under certain circumstances a country (and by corollary a city) can manipulate the market by making a cash injection into parts of the economy. The cash being spent stimulates other elements of the economy and as a whole society benefits. But it doesn't always work.
What I think you are advocating is a return to 'laissez-faire' policies - ie a government makes no attempt to govern the economy and leaves it entirely to market forces. This doesn't always work either.
Whatever action a government takes, including 'do nothing', someone will say it's the wrong one if it affects them negatively. The balance a government always has to maintain is 'the greater good for the greater number' - a cliche I know. If it's a democracy that includes everyone and it's the greater portion of the population as a whole; while if it's an oligarchy it means the greater proportion of those in power and to hell with the rest.

[BDunnell]

What I think you are advocating is a return to 'laissez-faire' policies - ie a government makes no attempt to govern the economy and leaves it entirely to market forces. This doesn't always work either.

It is ironic that the people on this thread blaming everyone else for these failures other than businesses themselves are those who believe most strongly in the notion of an unfettered market economy.

[Starter]

I don't see how high taxes can cause bankruptcy as an immediate cause. It may drive businesses away which in turn leads to a reduction in the total income which might lead to bankruptcy.
What part of this has been going on for a long time didn't you get?


Bankruptcy, whether of an individual, a company, a city or a country comes from one thing: spending more than your income (is that what deficit spending means?)
Yes. Sooner or later others are no longer willing to lend you more money. You also wind up with ever larger interest payments as the debt mounts and pretty soon you're borrowing money just to make interest payments on old debt. You can see where that leads.


What Keynes recognised was that under certain circumstances a country (and by corollary a city) can manipulate the market by making a cash injection into parts of the economy. The cash being spent stimulates other elements of the economy and as a whole society benefits. But it doesn't always work.
What I think you are advocating is a return to 'laissez-faire' policies - ie a government makes no attempt to govern the economy and leaves it entirely to market forces. This doesn't always work either.
Whatever action a government takes, including 'do nothing', someone will say it's the wrong one if it affects them negatively. The balance a government always has to maintain is 'the greater good for the greater number' - a cliche I know. If it's a democracy that includes everyone and it's the greater portion of the population as a whole; while if it's an oligarchy it means the greater proportion of those in power and to hell with the rest.
The proper role of government is not to govern the economy, but rather to play referee and insure a fair playing field for the various segments of the economy. Unrestrained markets tend, over time, to be manipulated by special interests. So too do governments, over time, become more controlling. Keeping the balance is key to a healthy free market economy.

[BDunnell]

The proper role of government is not to govern the economy, but rather to play referee and insure a fair playing field for the various segments of the economy. Unrestrained markets tend, over time, to be manipulated by special interests. So too do governments, over time, become more controlling. Keeping the balance is key to a healthy free market economy.

And key to succeeding in said market economy is producing products people want to buy. This has patently not been the case with large sections of the 'traditional' US motor industry.

[anthonyvop]

It is ironic that the people on this thread blaming everyone else for these failures other than businesses themselves are those who believe most strongly in the notion of an unfettered market economy.

One of the great things about a "unfettered market economy" is that poorly run business fail. That is a good thing. It improves the product/service.

[BDunnell]

One of the great things about a "unfettered market economy" is that poorly run business fail. That is a good thing. It improves the product/service.

Which is exactly what I'm saying, yet no-one, it seems, seeks to blame car manufacturers for their own failures. It's always someone else's fault.

[anthonyvop]

Which is exactly what I'm saying, yet no-one, it seems, seeks to blame car manufacturers for their own failures. It's always someone else's fault.

I blame both the Car manufacturers for caving to the Unions and the Government & the Government for forcing the Auto Companies to suck up to the unions and imposing draconian taxes and regulations.

For example.

In Michigan, if you work in a factory for a Auto manufacturer you have to be a member of the United Auto Workers union. You have to pay dues. No exceptions.
It is the law.
Doesn't matter if your politics are 100% different than that of the union's. Freedom of choice and association is not allowed.

Reminds one of life in Nazi Germany or the former Soviet Union where one had to be a member of the "party" in order to have a good job.

[D-Type]

Come on Tony! If you were elected mayor of Detroit what action would you take? And explain why and what your action should lead to.
Yes, "Do nothing" is an option.

[Starter]

Come on Tony! If you were elected mayor of Detroit what action would you take? And explain why and what your action should lead to.
Yes, "Do nothing" is an option.
I can't answer for Tony, but things are so far gone there that it would seem that filing bankruptcy was the only really viable alternative left. The current city administration didn't get things the way they are and they had little hope of fixing it on their own.

[anthonyvop]

Come on Tony! If you were elected mayor of Detroit what action would you take? And explain why and what your action should lead to.
Yes, "Do nothing" is an option.

Simple.

Cut all Non-Essential services. Maintain vital, police and fire services and cut all feel good programs. Privatize Sanitation and transportation services.

Cut property taxes by 35%.

Go through the entire employee list and offer anyone making over $75K a choice. Either take a pay cut or take a pink slip.

Eliminate all business taxes and streamline licensing & Permitting. Apply in the morning/Start ur biz in the Afternoon.

Declare Detroit a "right to work" city and that all city employees will be hired and and retained solely on job performance.

Eliminate all hiring or government business based on race, color, ancestry, sex, or sexual orientation.

Any Government employee or elected official found guilty of any crime above a basic traffic violation(Government related or not) shall serve an extra 5 years of incarceration in maximum security beyond the regular sentencing guidelines.

Police will follow and act in a proper manner as outlined in the US constitution but I will also require a ZERO tolerance of all crime. The only public works project I will approve is the building of a new prison if needed. It won't be because as soon as the word gets out the rest of the scum will leave just like they did in NY when Giuliani did it.

[BDunnell]

I blame both the Car manufacturers for caving to the Unions and the Government & the Government for forcing the Auto Companies to suck up to the unions and imposing draconian taxes and regulations.

For example.

In Michigan, if you work in a factory for a Auto manufacturer you have to be a member of the United Auto Workers union. You have to pay dues. No exceptions.
It is the law.
Doesn't matter if your politics are 100% different than that of the union's. Freedom of choice and association is not allowed.

Reminds one of life in Nazi Germany or the former Soviet Union where one had to be a member of the "party" in order to have a good job.

And still you don't blame the car manufacturers for making products insufficient numbers of people want! This has nothing to do with unions. Their products obviously weren't good enough.

[555-04Q2]

"It's the end of Detroit as we know it...it's the end of Detroit as we know it...it's the end of Detroit as we know it...but I feel fine."

Could make a song of it :p :

[D-Type]

I'm glad I don't live in Detroit. If I did I would be doing everything I could to get away.

[Mark in Oshawa]

Mr. Dunnell, if you know Detroit up close like Starter has, and I have seen having lived opposite it for four years, and watching Detroit news ( my American TV stations off the satellite dish are from Detroit) , you would know it is actually pretty much the city fathers ignoring economic reality. The Auto Industry has not been what it once was since the 80's. Flint was decimated worse than one can imagine, but the City of Flint didn't declare bankruptcy. Lansing, all the Burbs of Detroit like Dearborn and Farmington Hills, Taylor and the like have felt the loss in tax revenues as well. If it was just one size fits all, they all would be in the red ink. Alas, it hasn't happened. Why? Because their Mayor and council were not MORONS. If you think it was just the decline of the auto industry in Michigan that did Detroit in you are turning a blind eye to the government incompetance, fraud and stupidity as they catered to the public sector unions in Detroit and played crony politics. Detroit politics makes Chicago look honest. Detroit is broke because everyone who has run for council and has been elected in approximately the last 4 decades has chosen to ignore economic reality and kept playing the game.....and you can try and tell people it wasn't this...but it WAS...because no one of any of the suburban cities of the Detroit Metro area is even close to the desparate straits Detroit is in....and if it was JUST the decline of the auto industry, then you would maybe see some issues in the burbs....and it hasn't happened. Every left of center pro union guy I know who I am friends with just REFUSES to admit what was going on in Detroit City government was wrong.....and it was WRONG on so many levels. The catering to the unions, filling the government with middle management, the ignorance of not even attempting to make any cuts in service in light of the falling revenues....it is whistling past the grave yard stupidity; and when you look at the corrupt mayors like Coleman Young in the 80's, and Kwame Kilpatrick, you realize these guys were just vermin lining their own pockets....

[anthonyvop]

And still you don't blame the car manufacturers for making products insufficient numbers of people want! This has nothing to do with unions. Their products obviously weren't good enough.


Just like I blame the British car manufacturers of the 60's and 70's who caved to the unions and allowed them to produce crap which virtually destroyed a once vibrant industry.

[BDunnell]

Just like I blame the British car manufacturers of the 60's and 70's who caved to the unions and allowed them to produce crap which virtually destroyed a once vibrant industry.

In what sense did 'caving in to the unions' have anything to do with British manufacturers 'producing crap'? Your comments betray a simplistic ignorance of the British car industry at that time — including the remark that it was a 'once vibrant industry'. That's a view all too commonly held, but was it ever really vibrant? I don't think so.

[BDunnell]

Mr. Dunnell, if you know Detroit up close like Starter has, and I have seen having lived opposite it for four years, and watching Detroit news ( my American TV stations off the satellite dish are from Detroit) , you would know it is actually pretty much the city fathers ignoring economic reality. The Auto Industry has not been what it once was since the 80's. Flint was decimated worse than one can imagine, but the City of Flint didn't declare bankruptcy. Lansing, all the Burbs of Detroit like Dearborn and Farmington Hills, Taylor and the like have felt the loss in tax revenues as well. If it was just one size fits all, they all would be in the red ink. Alas, it hasn't happened. Why? Because their Mayor and council were not MORONS. If you think it was just the decline of the auto industry in Michigan that did Detroit in you are turning a blind eye to the government incompetance, fraud and stupidity as they catered to the public sector unions in Detroit and played crony politics. Detroit politics makes Chicago look honest. Detroit is broke because everyone who has run for council and has been elected in approximately the last 4 decades has chosen to ignore economic reality and kept playing the game.....and you can try and tell people it wasn't this...but it WAS...because no one of any of the suburban cities of the Detroit Metro area is even close to the desparate straits Detroit is in....and if it was JUST the decline of the auto industry, then you would maybe see some issues in the burbs....and it hasn't happened.

With respect, this isn't really what I was saying, which was specifically about the car industry itself, rather than the wider problems afflicting Detroit. I have no doubt these run wider than merely relating to motor manufacturing.

[Brown, Jon Brow]

In what sense did 'caving in to the unions' have anything to do with British manufacturers 'producing crap'? Your comments betray a simplistic ignorance of the British car industry at that time — including the remark that it was a 'once vibrant industry'. That's a view all too commonly held, but was it ever really vibrant? I don't think so.

Well in the 1950's Britain was the 2nd largest car producer (largely because Europe was flattened) and even in the 70's British cars still held over 50% of the market share.

The problems with British Leyland were mostly in the hands of the weak management. This is shown by the success of foreign managed car manufacturers that have been thriving in the UK over the last 20 years. GM is closing its Opel Astra plant in Germany so it can increase production at the more efficient Astra factory in Luton.

[BDunnell]

Well in the 1950's Britain was the 2nd largest car producer (largely because Europe was flattened) and even in the 70's British cars still held over 50% of the market share.

But 'vibrant'? With some high-profile (mainly niche) exceptions, the output of British manufacturers could almost never be described as such. 'Workmanlike', maybe. This was due not least to the fact that our industry was complacent — it knew it had a large guaranteed market in Britain and the Commonwealth.

[Brown, Jon Brow]

But 'vibrant'? With some high-profile (mainly niche) exceptions, the output of British manufacturers could almost never be described as such. 'Workmanlike', maybe. This was due not least to the fact that our industry was complacent — it knew it had a large guaranteed market in Britain and the Commonwealth.

I think you can apply 'vibrant' to what we were making in the 60's. E-Types, MkII Jags, Mini, Austin Healy, DB5 etc.

But the downfall was caused largely by the arrogance of the managment who ignored what the Germans were doing with the attitude of 'we beat them in the war so we know better'.

[BDunnell]

I think you can apply 'vibrant' to what we were making in the 60's. E-Types, MkII Jags, Mini, Austin Healy, DB5 etc.

Which sort of proves my point — with the exception of the Mini and possibly the MkII Jag, all of those were high-profile niche products — exceptions rather than the mainstream rule.



But the downfall was caused largely by the arrogance of the managment who ignored what the Germans were doing with the attitude of 'we beat them in the war so we know better'.

It wasn't just the Germans, but also, to some extent, the French and the Italians.

[Brown, Jon Brow]

Which sort of proves my point — with the exception of the Mini and possibly the MkII Jag, all of those were high-profile niche products — exceptions rather than the mainstream rule.


Well name a country that had a more vibrant car industry than Britain did in the 1960s?

[Starter]

Well name a country that had a more vibrant car industry than Britain did in the 1960s?
Easy, the US. It was the heyday of Ford, Chevy, Plymouth/Dodge, Pontiac, etc. Big motors and big sales. The Mustang, probably the best selling initial car offering in history, came out in 1964.

[Bagwan]

I remember , somewhere around 1968 or 69 , going on a trip to Toronto (about one and a half hrs) , and counting over 100 red mustangs . That's how popular they were .

[Brown, Jon Brow]

Easy, the US. It was the heyday of Ford, Chevy, Plymouth/Dodge, Pontiac, etc. Big motors and big sales. The Mustang, probably the best selling initial car offering in history, came out in 1964.

Yes, but you can hardly expect the same level competition from a country so much smaller. :p

[Rollo]

The Mustang, probably the best selling initial car offering in history, came out in 1964.

"Probably" is an understatement. The Mustang sold a million units in 20 months.

The first of the Baby Boomers had turned 19 and Ford gave America a party. It gave post-Austerity Britain the Cortina.
Companies like Ford and GM also gave the Baby Boomers retirement pension plans which were never saved for; that in part helps to explain GM's Chapter 11 bankruptcy.
More generally, the Baby Boomers as a group will start to draw on pension plans around the world and that's going to cause a mass-write down of capital as they go into a period of dissaving.