Mike Duggan for Detroit Mayor

[Lowell]

Outstanding, thought-provoking and informative exchange Richard, Corktownyuppie and mam2009! [Returning to my lurker popcorn bowl]

[corktownyuppie]

I'll give you engineering, but what are the innovations in finance that you say occurred here?

The mechanism which allows banks to make loans is the relationship between the loan amount and the value of whatever collateral is held against. If I want to borrow $1,000, then the collateral needs to be worth a minimum of $1,000 to protect the bank in case I stop making payments. If the bank wants to be really safe, they might only lend me $800 against the $1,000 collateral. That way if they have to repossess, they can quickly turnaround and sell the $1,000 asset to someone else for $800 and have the loan paid back in an instant.

The bigger the difference between the two numbers, the easier it is for the bank to sell the repossessed asset...and makes the loan less risky.

Historically speaking, when banks made loans, they did so against collateral which was appreciating in value. The problem with car loans, however, is that the value of the automobile is depreciating every day. I don't know if Detroit invented it, but Detroit certainly *mastered* the business of lending money against depreciating assets without adding undue risk to the lenders.

This innovation also multiplied the number of existing buyers in the market. I might not have $5,000 to buy the car. But I do have $200/mo. I can afford. All of a sudden a willing lender appears...more cars get sold...more consumers get what they want.

Then Detroit went further and determined that if you could accurately pinpoint the amount of depreciation, then you could make it easier to move cars. Why?

Because if a $25,000 car will depreciate to exactly $20,000 over the next 2 years, then you can set up an agreement for the consumer to pay only the $5,000 difference in the two values. $5,000 is much easier to borrow than $25,000. And, voila, the concept of leasing was invented.

At one point, Detroit Bank and Trust [[now Comerica) was such a powerhouse in the financial industry college students from all over the country competed for their internship programs and entry-level hiring after graduation. Only the brightest and best minds in banking were even considered. To this day, some of the senior analysts in my firm [[based in another state) will talk about how they cut their teeth at Detroit Bank and Trust back in the 60s and 70s.

Mid-Century Detroit is a like a history book of corporate America. The Guardian Building was nicknamed the "Cathedral of Finance". Kresge's empire [[eventually K-Mart) was headquartered on Grand Circus Park in what is now the Kales Building. Northwest Airlines was also based here as well.

============

While Detroit is best known for the engineering innovation that came with manufacturing, what was just as crucial was the financial industry's ability to finance those innovations.

When you think about the timeline from initial design to final completion of an automobile or an airplane...that process can take 5+ years of work and effort without a single dollar to show for it until the first car is sold. What made that process possible was the 20th century innovations in banking that were practically unheard of in the past. Thanks to their creativity, bankers were able to invent systems which made these types of loans --once unthinkable in the past -- much less risky for the lenders.

This increased the amount of capital available for the captains of industry to work with. It resulted in extremely profitable banks. And it made everyone in the process extremely wealthy...from the owners who exploded their profits, the bankers whose loans were safer and more lucrative, and even labor -- whose powerful union leadership acted as a check and balance against new industries whose wealth was exploding faster than ever in American history. A new middle class emerged with second homes, boats, unheard of health care plans, and a generous pension after 30 years of work.

When the money was overflowing, the hardest battles were about how to make sure it was divided fairly. But generally everyone was happy.

But you're not going to get wealthy in manufacturing anymore. Unfortunately, the new frontiers of economic growth are in bio-technology, health care, genetics. Manufacturing will still be a part of everything, but it will be hard to continue creating wealth because the industry is mature and growth is hard to come by. And there are no money-making machines anymore. We have to invent new ones, just as our forefathers did 100 years ago.

What SPARK is trying to do is attract and create new upstarts in these types of fields because doing so will benefit everyone. More wealth to go around, more taxes to municipalities, etc.

There is a tale that is told about how you go from Rags to Riches in 3 generations and back to Rags in the 4th generation. The first generation, many times immigrants, with hunger and work ethic, builds the wealth. The second generation inherits it, but witnessed the hunger and work ethic and expands the family fortune. The 3rd generation, too young to witness any of the wealth building, knows more about spending it than creating it. And then the first generation is dead and gone long before the 4th generation is old enough to remember. The economy -- always shifting as the world changes -- continues to move, but this generation knows only about how to spend and not how to create. Ambition and hunger are all but gone, and all that remains is entitlement and incompetence.

As the economies continues to shift away from the family's once formidable wealth creation, this generation desperately tries to cling to a past which no longer exists. It uses whatever remaining power and influence it has to try to slow the pace of change rather than create the next big thing. Eventually those efforts are in vain, and much if not all of the fortune is eventually gone.

We are the 4th generation

======

Long answer. TL;DR, I know. Financial innovation is kinda hard to describe and I wanted to make sure it all made sense.

[Detroitej72]

Mike Duggan is an interesting person. He has stayed away from controversy and kept his nose clean throughout all the McNamara scandal's. Some have said he's been shielded from any connection to Big Eddie.

Yet he gave up a prominent position as Wayne County Prosecutor to go into the private sector.

On one hand, I think he is worth a second look, on the other, Big Eddy gave us Bernard and Kwame...

[hortonz]

White mayor + Michigan Democrats=same old crap. White Mayor + Republican party= real change for the city and state.

[firstandten]

White mayor + Michigan Democrats=same old crap. White Mayor + Republican party= real change for the city and state.

So tell us what kind of change would a Republican mayor bring to Detroit ?

[Richard]

Hm. Some of the stuff you say has me concerned but others I have a hard time getting on board with.

First, for some reason, people around here equate "service sector" jobs to pushing fries at McDonalds. And I take issue with that. If that's not what you mean, then I'm sorry in advance for setting up a straw man argument.

The service sector is the primary engine of the USA GDP. It makes up over 2/3 of our production. While some people think of Burger King when they hear "service sector", I hear information technology, consultancy services, retail, technical, and professional services. This is the heart of the modern day economy. This is why cities with highly educated workforces have so much money...the people high levels of education do this stuff. You add financial and insurance services, you get New York and Chicago.

If this is the future of Detroit, that's the future I wanna sign up for.

Warehouses and factories will eventually become more obsolete. They won't [[and shouldn't) disappear completely, but the future of this country's economy is not going to be based on making and shipping stuff. Other [[lesser paid) countries are going to make the things. Higher paid countries are going to invent and improve the things.

So when I hear about warehouses disappearing, I don't think about "losing our soul", I think about "shedding the past". When I think about NYC or Chicago or San Francisco or Dallas, I don't imagine shipyards and factories and giant plants. I imagine centers of finance, creativity, innovation, invention.

By the way, this is how Detroit became one of the wealthiest cities in the world in 1950. We were the hub and center for innovations in engineering and finance. If we want to escape the identity of one of the poorest American cities, we need to embrace that creative spirit again.

Service sector jobs: There are three categories of service sector jobs,the one I was referring to was the original one which is the sector that produces non consumable goods ,so yes it includes hospitality.landscaping, general the barely above minimum wage.

When you say that there are no manufacturing or that is a dead industry once again you have to look at the big picture of what is happening globally,
jobs went to Mexico, now Mexico is returning with the next elections back to the old guard, bombings and kidnappings are occurring at US owned corporations because they pay so those business leaders are coming back across the border.

China , the workers are working at the factories and wondering why they cannot afford the products they are producing, weekly there are demonstrations demanding better pay and working conditions .

Remember history and developing nations and the cycles ,china is reaching the top of the cycle as are other countries where it will become a point that it is cheaper to produce here verses overseas,it is already happening with call centers.

There are a lot of powerful political people on the fed level that have had enough and know no boundaries in realizing that this country needs to start producing again,every gov contract states made in America using US labor and made in US products.There are also other bills that are added at to last second to ensure that this country begins to stand on their own two feet again.

RE: AREO
Lindsay said the biggest possible negative of the aerotropolis is that it could attract companies that might otherwise locate in a revitalizing downtown Detroit.
“The larger question is whether building a whole new business district around those airports is the best thing to do,” he said.

This is the guy that wrote the floor plan for Areo telling you hey this is what to expect.

I find it hard to believe that 8000 hotel rooms ,20,000 homes ,10,000,000 sqft of warehousing,etc. etc. will not have an adverse affect on Detroit.
RE Spark and VC. I cannot say that Spark and VC is all bad and have not done good but the bottom line is VC is hard money,the exit plan is within two years most cases and more geared towards apps and such like let me invest 20 mill to build the app so we can sell it for 50 mill ,fast money and you have already explained and most know what happens with fast money.


Detroit has everything already in place to be a major player in this country,just no leadership or direction,every city large or small has a future growth plan,not Detroit, so you have to see what everybody is doing and what their plans are in order to figure out where the city is going,nobody is going to invest in me without a plan the city needs a plan for those to invest in and not speculate, which is what is happening now.

Did you know that Detroit is a EB-5 regional center? There are cities crying to become one of these right now and hers is sitting in the drawer.

EB-5 is foreign investment visa where it takes a min $500,000 investment employing X amount of workers at a livable or higher wage ,so someone else in another country gets their buddies and puts together a few million and you have investment capital.

The tools are there so I guess it really does not matter who gets elected as long as they can show a plan, both the newly elected mayor and city council needs to show a plan first of where they are going to take the city and neighborhoods from this point on.

I am not sure about Mr Bing ,maybe with a more involved city council he can do better but his lack of connection with the people hurts him not to even mention the constant flip flopping shows instability in government..

A state run city I have my doubts as to the real reason and a puppet city has no identity.

Mr Duggin I cannot say yet I guess I can try and speak with him and see if he is for the state or for the city and then make my decision.He certainly has the background to maneuver the politics and if channeled right could maybe a good thing for Detroit but me personally I have to give him the benefit of the doubt and not judge him for the past just as I cannot judge the city for what has happened in the past . Just look forward.

[drjeff]

White mayor + Michigan Democrats=same old crap. White Mayor + Republican party= real change for the city and state.

Yeah, the white mayor in Troy has done a real bang-up job.

The problem with the modern republican party is that it is totally disconnected from reality.

[swiburn]

I'm not sure why anybody would want to be mayor of Detroit. I guess it's just another challenge,just like Romney wants to be president. I mean,who would want to deal with Joann Watson?

[Lowell]

Detroit has everything already in place to be a major player in this country,just no leadership or direction,every city large or small has a future growth plan,not Detroit, so you have to see what everybody is doing and what their plans are in order to figure out where the city is going,nobody is going to invest in me without a plan the city needs a plan for those to invest in and not speculate, which is what is happening now.

Did you know that Detroit is a EB-5 regional center? There are cities crying to become one of these right now and hers is sitting in the drawer....

The tools are there so I guess it really does not matter who gets elected as long as they can show a plan, both the newly elected mayor and city council needs to show a plan first of where they are going to take the city and neighborhoods from this point on....

A state run city I have my doubts as to the real reason and a puppet city has no identity.

That^ gets to the nub of the challenges facing whoever will be mayor [and if he/she actually gets to be mayor after being elected]. Detroit has tremendous assets and its downtown core has been gathering momentum even through the economic downturn. Coherent planning and skillful leadership that will have to juggle many constituencies will be required to make our assets work for us.

However long term lack of revenue will still dog any efforts. Unless Detroit's burden of having to service so many of the metro's and states poor and all the problems that come with them are lifted, whether by state aid, de-annexations, or some other miracle all will come to naught and any bandaids will be temporary.

A better scenario in my eyes would see someone like Duggin [or even some enlightened Republican] run for and win the Oakland County Executive seat to open the door for the regional cooperation required to ease Detroit's plight. Patterson has been a thorn in the side of regionalism and I believe he is vulnerable to strong challenger as the politics of the county have steady moved blue over the past decade. Ficano should likewise step aside and 'spend more time with his family' as he is unfortunately so discredited now.

[poobert]

White mayor + Michigan Democrats=same old crap. White Mayor + Republican party= real change for the city and state.

Imagine - all these years it was that simple! We're saved!

Now...let's see which of these champions we could recruit...I know, Thaddeus McCotter! It is tough with such a deep talent pool. I mean, look at the Republican Presidential candidate.

[p69rrh51]

Imagine - all these years it was that simple! We're saved!

Now...let's see which of these champions we could recruit...I know, Thaddeus McCotter! It is tough with such a deep talent pool. I mean, look at the Republican Presidential candidate.

And the president is the right choice?? Both candidates are lousy leaders and very bad choices.

[poobert]

And the president is the right choice?? Both candidates are lousy leaders and very bad choices.

Total sarcasm to illustrate how stupid such a simplistic world view is. For someone like that the R after someone's name is like sainthood and the D is the scarlet letter. Yet you'd be hard pressed to find a bigger bunch of sociopaths than the current crop of Republican politicians.

[p69rrh51]

Total sarcasm to illustrate how stupid such a simplistic world view is. For someone like that the R after someone's name is like sainthood and the D is the scarlet letter. Yet you'd be hard pressed to find a bigger bunch of sociopaths than the current crop of Republican politicians.

With the Demcrats in step with them ! By the way I am NOT a republican nor can I afford to be a democrat!

[jackie5275]

D or R, it doesn't matter. Whoever gets elected mayor will have a hazmat job of clean up to do for Detroit.

[corktownyuppie]

RE: AREO
Lindsay said the biggest possible negative of the aerotropolis is that it could attract companies that might otherwise locate in a revitalizing downtown Detroit.
“The larger question is whether building a whole new business district around those airports is the best thing to do,” he said.

This is the guy that wrote the floor plan for Areo telling you hey this is what to expect.

I find it hard to believe that 8000 hotel rooms ,20,000 homes ,10,000,000 sqft of warehousing,etc. etc. will not have an adverse affect on Detroit.
RE Spark and VC. I cannot say that Spark and VC is all bad and have not done good but the bottom line is VC is hard money,the exit plan is within two years most cases and more geared towards apps and such like let me invest 20 mill to build the app so we can sell it for 50 mill ,fast money and you have already explained and most know what happens with fast money.


Detroit has everything already in place to be a major player in this country,just no leadership or direction,every city large or small has a future growth plan,not Detroit, so you have to see what everybody is doing and what their plans are in order to figure out where the city is going,nobody is going to invest in me without a plan the city needs a plan for those to invest in and not speculate, which is what is happening now.

Did you know that Detroit is a EB-5 regional center? There are cities crying to become one of these right now and hers is sitting in the drawer.

EB-5 is foreign investment visa where it takes a min $500,000 investment employing X amount of workers at a livable or higher wage ,so someone else in another country gets their buddies and puts together a few million and you have investment capital.

The tools are there so I guess it really does not matter who gets elected as long as they can show a plan, both the newly elected mayor and city council needs to show a plan first of where they are going to take the city and neighborhoods from this point on.

I am not sure about Mr Bing ,maybe with a more involved city council he can do better but his lack of connection with the people hurts him not to even mention the constant flip flopping shows instability in government..

A state run city I have my doubts as to the real reason and a puppet city has no identity.

Mr Duggin I cannot say yet I guess I can try and speak with him and see if he is for the state or for the city and then make my decision.He certainly has the background to maneuver the politics and if channeled right could maybe a good thing for Detroit but me personally I have to give him the benefit of the doubt and not judge him for the past just as I cannot judge the city for what has happened in the past . Just look forward.

All good points. I appreciate your informed commentary. Detroit's identity is definitely going to shift. To what? For better? For worse? Still TBD. Is a really bad identity better than no identity? I don't know.

As for Aero. All I can say is that you've given some good points to mull over. I'm still unsure where I stand. Cheers - CY

[Richard]

I think the biggest part of a regional aspect is the negativeness of Detroit as a city's past,you hear it in conversations and see it in posts. Me personally I think the best thing the city can do is put a strong city government in place without the aid of the state and show everybody else that she is serious,I have seen a lot of positive changes in the last two years and it does seem that there are enough now in the city that do care and are taking action.

I think or hope once that happens the rest of the region will be a bit more receptive to the city.Because there will be so much positive energy created that it will be a pleasure doing business with.

Ficano is a mess or has created one, I give him a little bit of credit for passing the currant economic reductions which in turn does put the brakes on Areo and he was one the the heaviest supporters of the project. Hopefully now he realizes that if you put the same effort and diverting of funds into the existing city and county you can build both as a strong healthy place to live work play and visit. But the message is clear,the times of not acting in the best interests of the city or county by diverting for personal gain are over.

[Danny]

Let's say Mike Duggan has won the Mayoral Election for the City of Detroit. What to do about his ideals to save the cash strapped city:

Detroit 2014

population 756,988

77.4% black, 14.2% white, 8.9% hispanic, 4.1% Asian

First year as mayor, Duggan will proposed to close down certian Detroit neighborhood streets that are blighted and have few homes standing. Neighbors who lived in that area
will be located into occupied Detroit neighborhoods. Detroit neighorhoods that are closed down will be reserved for future development.

Mike Duggan will make fewer cuts to its payroll of city employees by next fiscal year. This comes when the financial review team claims that the city will be low on cash by July 1, 2014. City unions will protest and file lawsuits to counteract Duggan's cuts.

To save the city up to 50 million dollars annually Duggan will plan to hand over its payroll division of Detroit Department of Transportation to Regional Authorities.

Duggan will recieve 100 million dollars of federal grants to hire 200 Detroit police officers and 500 firefighters. He will open 5 firehouses in certian occupied Detroit neighborhoods.