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Detroit is bankrupt. $US20 billion in debt. Reduction of manufacturing input to GDP.; Bankrupt Detroit Receives Less U.S. Aid Than Colombia
Topic Started: 19 Jul 2013, 01:02 PM (6,848 Views)
Gossamer
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I can see direct links between the plight of Motown and the state of the US economy. When Detroit was a thriving manufacturing hub the USA was economically strong. As the amount of GDP the manufacturing industry contributed to the US economy dropped, so in parallel did the US economy. Why has Germany been so strong economically even after being destroyed by two wars? Their manufacturing industries have helped rebuild their nation. And what has Australia been doing to its manufacturing industry? Slowly killing it.
Common sense is a curse - those who have it need to suffer dealing with those who don't have it.

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Nelson
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mel
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APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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newjez
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Gossamer
19 Jul 2013, 01:02 PM
I can see direct links between the plight of Motown and the state of the US economy. When Detroit was a thriving manufacturing hub the USA was economically strong. As the amount of GDP the manufacturing industry contributed to the US economy dropped, so in parallel did the US economy. Why has Germany been so strong economically even after being destroyed by two wars? Their manufacturing industries have helped rebuild their nation. And what has Australia been doing to its manufacturing industry? Slowly killing it.
This could be a nail in the coffin, or it could be a sign off change. Bit early to tell yet.

Germany has built it's name on quality. But this is fading. Bosch products always worked for ever. I always bought bosch. Now bosch is made in China and falls apart like all the other cheap crap from China. I buy LG now. The quality is no better, but it's cheaper.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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mel
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^almost EVERYTHING is like that now isn't it? Mid level quality is often the only option... at least prices have come down though
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Admin
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Quote:
 
Detroit bankrupt: almost $US20 billion in debt

July 19, 2013 - 10:21AM

Detroit, the cradle of America's automobile industry and once the nation's fourth-most-populous city, has filed for bankruptcy, the largest US city ever to take such a course.

The decision to turn to the federal courts, which required approval from both the emergency manager assigned to oversee the troubled city and from Michigan Governor Rick Snyder, is also the largest municipal bankruptcy filing in US history in terms of debt.

Not everyone agrees how much Detroit owes, but Kevyn Orr, the emergency manager who was appointed by Mr Snyder to resolve the city's financial problems, has said the debt is likely to be $US18 billion ($19.6 billion) and perhaps as much as $US20 billion.

For Detroit, the filing comes as a painful reminder of a city's rise and fall.

Founded more than 300 years ago, the city expanded at a stunning rate in the first half of the 20th century with the arrival of the automobile industry, and then shrank away in recent decades at a similarly remarkable pace. A city of 1.8 million in 1950, it is now home to 700,000 people, as well as to tens of thousands of abandoned buildings, vacant lots and unlit streets.

From here, there is no road map for Detroit's recovery, not least of all because municipal bankruptcies are rare. Some bankruptcy experts and city leaders bemoaned the likely fallout from the filing, including the stigma it would carry. They anticipate further benefit cuts for city workers and retirees, more reductions in services for residents, and a detrimental effect on future borrowing.

But others, including some Detroit business leaders who have seen a rise in private investment downtown despite the city's larger struggles, said bankruptcy seemed the only choice left - and one that might finally lead to a desperately needed overhaul of city services and a plan to pay off some reduced version of the overwhelming debts. In short, a new start.

The decision to go to court signalled a breakdown after weeks of tense negotiations, in which Orr had been trying to persuade creditors to accept cents in the dollar and unions to accept cuts in benefits.

All along, the state's involvement - including Mr Snyder's decision to send in an emergency manager - has carried racial implications, setting off a wave of concerns for some in Detroit that the mostly white, Republican-led state government was trying to seize control of Detroit, a Democratic-held city where more than 80 per cent of residents are black.

The debt in Detroit dwarfs that of Jefferson County, Alabama, which had been the nation's largest municipal bankruptcy, having filed in 2011 with about $US4 billion in debt. The population of Detroit, the largest city in Michigan, is more than twice that of Stockton, California, which filed for bankruptcy in 2012 and had been the nation's most populous city to do so.

Other major cities, including New York and Cleveland in the 1970s and Philadelphia two decades later, have teetered near the edge of financial ruin but ultimately found solutions other than federal court. Detroit's struggle, experts say, is particularly dire because it is not limited to a single event or one failed financial deal.

Instead, numerous factors have brought Detroit to this point, including a shrunken tax base in a big city; overwhelming health care and pension costs; repeated efforts to manage mounting debts with still more borrowing; annual deficits in the city's operating budget since 2008; and city services crippled by aged computer systems, poor record-keeping and widespread dysfunction.

Read more: http://www.theage.com.au/business/world-business/detroit-bankrupt-almost-us20-billion-in-debt-20130719-2q8cv.html
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The motor capital of the USA? I find this hard to believe with all the massive increases in oil and gas production from their tight oil and fracking fields over the last 4 years. Unless of course that new energy is so expensive to extract that its sale only benefits a select few at the top of the food chain, and none of it flows down to the general public as the rock oil profits from 1905 till 1970 did.
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mel
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A one world currency would sort everything out..
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MMM
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Homes still selling for $1 in Detroit. The end result of western economies being unable to compete with emerging economies offering far cheaper labour. Why have one employee for $25 an hour when I can have 10 for the same price overseas....
As you can see above six years of falling house prices, now like I have said, it does not matter how cheap interest rates are, if you don't have a job you cannot pay rent or buy a home even with the fed on near zero interest rates , 0.25% from memory.
We are now in unchartered territory, fed rates have never been so low for so long.
So whats their solution...keep screwing things into the ground , what Is the solution ....I don't know , you cannot compete with these emerging economies anymore, a once thriving US economy has been bought to its knees because of it, the only thing keeping anylife in it at all is the near zero interest rates and also the 80 billion bond buying every month. they have tried to borrow/Keynesian their way out of this with no success, like I have said take out the 80 billion per month bond buying would be like pulling the plug on the bath.
Almost 50 million americans on food stamps and heading towards 20 trillion in debt , yet jokers talk about how the US is improving. Let me tell you this , if the US was improving , interest rates would be going up not down , bond purchashes using borrowed money would not be needed, yet a little while a go ,they bought out the bs they would reduce this bond buying , I mean 80 billion a month ,the number of people on food stamps would be falling not rising to almost 50 million people and their debt level would be falling not rising. And I guess house prices in Detroit would be more than $1. So does this like like an improving economy to you ?

So I guess the only way to compete now is to lower wages to match emerging economies or simply have no business , so that's about a 90% pay reduction . This cannot sustain their house prices , so I guess they will need to be matched also aka Detroit.
This is like the falling of Japanese economy and realestate where it has been falling for over 20 years. The difference between the US and Japan though is that they do things much smarter, unemployment in Japan is about 4.5% yet house prices have been dropping for twenty years.They let their bubble pop for the sake of the economy, but in the US its a case of keep the bubble going for as long as possible at the detriment of the economy.

The world is a smaller place now , compete or fail, that is where we are now. We don't want to compete with $2 an hour , I mean it is a big slap in the face, so I guess its fail . Aussies, like the US also cannot compete , we cannot build a car for around 10k like overseas , that's why Detroit has failed , that's why ford has failed and holden is failing , only backed by the government, just like they do in the US. A mere bailout package. this is not only a reflection on the motor industry but many other industries now falling, just like here, manufacturing, production ,retail ect, just like the US . Detroit just shows a clearer example of where things are headed and also shows the bigger picture on what is really going on.

http://www.couriermail.com.au/realestate/homes-for-1/story-fnczc1bg-1226559204461
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Shadow
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Some nice images from Detroit... I think they possess a certain beauty...

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Edited by Shadow, 19 Jul 2013, 03:52 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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herbie
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Shadow
19 Jul 2013, 03:51 PM
Some nice images from Detroit... I think they possess a certain beauty...
Hmmm - That reminds me - I must try to get around to painting the window surrounds in my joint some day ...
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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