A Must Read: The Crash Of ‘09 - The Collapse Of ‘10

[DetroitDad]

Will the rest of the U.S. end up like Detroit?

http://pakalert.wordpress.com/2009/0...ollapse-of-10/

However, this is only the aperitif. Wait for the crash of US commercial real estate, which analysts think happen by autumn this year. Shops are closing down and there’s no one to rent them. Companies are retrenching and freeing up a lot of office space or closing down entirely and vacating even more precious office space with no one to rent it again. Huge skyscrapers are becoming ghost-scrapers. All this expensive commercial real estate is mortgaged to the hilt. With no rental income coming in, the loans against them will become difficult to service and there will be fearsome default. There’s insurance and re-insurance here also and the amounts involved are mind-boggling. No bailout plan would come even close to coping. When the commercial real estate collapse comes, all hell will break loose. And if multinationals like General Motors and Ford call it a day, it won’t just be thousands upon thousands of people unemployed [[though its heartless to use the word ‘just’ here). Two entire towns will be become ghost towns. That’s terrible. If you count the number of people ~ wives, children and parents ~ who are dependent on those incomes, it becomes worse than terrible. It becomes absolutely and totally unconscionable, while corrupt and greedy bankers and the likes of Bernie Madoff have made off with billions ~ perhaps trillions ~ of dollars and are still doing so because “our contracts say so.”

The article also discusses the U.S. breaking up. Putting all this into perspective, Detroit was once a super power of the U.S., and when it hit hard enough times, it broke up via suburbs. This is something that has happened in the U.S. before. What we saw in Detroit and New Orleans was a breakdown in order. Is it reasonable to think the rest of the country will follow suit?

[professorscott]

"Wait for" the crash? Let's see: General Growth Properties, which I think was like the second biggest operator of shopping centers in the United States, is now in bankruptcy. What are we waiting for, exactly? Of course there will be more such happenings; here's why.

We used to have an economy you could explain to a five-year-old: we make things; people want the things so they pay us money for the things, so we have money.

Somewhere between the 1960s and the 1990s, most of the country decided it was no longer necessary to make things. Detroit is a holdout, a dinosaur. They used to make textiles and clothing and radios and toys and video games and clocks in towns and cities all over America; now almost all of that is made overseas. We don't make anything here anymore, except cars, possibly for a little while longer. Oh yeah, we build our own houses; we haven't figured out how to import them from China yet, but we will.

Now what is our economy based on? Try explaining credit default swaps to a five-year-old. Shit, try explaining that to me! We have a fake economy and have had for some time now, and it's finally starting to collapse in on itself.

[reddog289]

I myself agree ProfScott. In my 40 yrs I have seen too much stuff sent overseas to be made. Learning from DetYes and other sources Detroit was home to many other industries besides the Automobile. Everytime I stack the folding chairs at the school I see a few of the old Samsonite chairs with the sticker Detroit, Pittsburgh, and ?. I agree with capitalism yet the capitalists in my mind have screwed them selves by cutting cost and messing with other peoples culture to raise their own net worth.

[Gistok]

Just look at the meltdown in the computer software industry. Now software is developed in India, while many educated USA computer programmer/analysts are out of work. The software comes into the USA business community with all the speed of the Internet.

There is NO tarrifs or controls or customs checks on software... it just gets here via high speed data networks... un-restricted, un-tarrifed, and un-controlled.

... and people wonder where some of the high paying jobs have gone...

[Hamtragedy]

Reddog, capitalism is dead. We're dealing with corporatism, which, by its foundation, is corrupt. As long as the main concern is rewarding stockholders, fuck the rest of us, we have no chance.

As long as trading houses [[which used to safeguard themselves to a handful of partners), and banks [[where's Glass-Steigal?) enslave themselves to the instant gratification of short term institutional investors' return on investment, capitalism has, itself, ceased.

[rid0617]

This is why I pulled our resources out of banks and dollars replacing them with gold and silver. If inflation does not destroy the dollar this countries policies and the fact we don't make anything hardly anymore will.

[Lowell]

"Will the rest of the US end up like Detroit?"

I think that question is at the nub of a 'frontlash' that is bringing a lot of Jay Leno style sympathy toward Detroit.

For years we have watched the slow motion destruction of our manufacturing base and consequent humbling of our work force, middle class and status. We were derided. Unions were blamed, management was blamed, Detroit was blamed, Michigan was blamed.

Now that our one state recession is national, even worldwide, and blush is off the blossom of the concept that shifting electrons to create trillion of empty dollars by the financial products industry, the rest of the country is learning that you have to produce tangibles if an economy is going to survive longtime.

Finally we aren't being seen as the blamee and are being understood as the victim of unregulated and unbridled capitalism and trade policy.

[Ocean2026]

NO the rest of the nation won't end up like Detroit. People are still moving into Colorado and Texas, sure there's been a slowdown, but those places will pick back up with a vengence. You can bank on it- in fact there's a midsize bank in Colorado UWBK [[ United Western Bank ) who's shares have been hit hard and knocked down to $7.94 a piece, just like banks across the country. The thing is this bank is profitable and its reserves are double its bad loans [[ its usually the other way around). The book value without any frllls or intangibles is $19.04 at March 31.

At least in this case -stereotyping the entire country in the same way, will make me some money. The world and national economy affects everyone, however there are still vast differences state to state.

[iheartthed]

It depends on how you define "the rest of the nation". I think it will be the inefficient areas that begin to resemble Detroit...

I think that blog entry is part truth and part sensationalism. I have no doubt in my mind that the economy has yet to hit bottom. It would seem defy logic if indeed it were to have bottomed out yet, since they still haven't figured out how to prop up falling housing prices and halt foreclosures. Although the government has seemingly been interfering with the private sector, particularly the banking and automotive sectors, I don't think that the actions taken to fix the banks have been bold enough yet. This goes for both the Bush and Obama administrations.

This is one of the few times I'll give Bush a pass because they were apparently blindsided by what happened. On the other hand, the Obama administration appears to be hesitating [[for political reasons) to take really bold steps to get rid of the bad assets.

[R8RBOB]

Will the rest of the U.S. end up like Detroit?

http://pakalert.wordpress.com/2009/0...ollapse-of-10/



The article also discusses the U.S. breaking up. Putting all this into perspective, Detroit was once a super power of the U.S., and when it hit hard enough times, it broke up via suburbs. This is something that has happened in the U.S. before. What we saw in Detroit and New Orleans was a breakdown in order. Is it reasonable to think the rest of the country will follow suit?

First off, I was reading this article and it lost me when they started talking about Hawaii and Alaska going to Russia and splitting the US into six parts. What makes this writer think that Russia is better off than the United States?

Nevertheless, the writer reminded me of what else is going on in the world. Anyone from the Detroit area, vist Windsor before the passport or enhanced license thing kicks in June. You will see a downtown full of stores during the days when a US dollar gave you a loon, two quarters and a nickel closed and empty. Windsor is dying because Americans have no reason to go to Canada to shop, to party, to gamble. Who would ever think the dollar and the loon would be equal.

The comment about Detroit breaking up into suburbs. 100% true. So true that the suburbs have the mindset that they do not need Detroit yet the very suburbs are becoming the home for ex-Detroiters [[code for Black people). I wondered why L. Brooks Patterson woke up like he was in a new world.

[Russix]

Someone else posted this on the old board, http://jameshowardkunstler.typepad.c...erfuck_nation/

Note: Hope = Truth
People of good intentions and progressive predilection are scratching their heads wondering just how President Barack Obama managed to turn himself into George W. Bush Lite with sugar-on-top just twelve weeks after that fateful walk down the US Capitol's east stairway to the waiting helicopter. I'm hardly the first observer to note that Mr. Obama's actions in the face of an epochal finance fiasco and economic collapse are a mere extension of the pre-January-20 policies, carried out by much the same cast of characters.
The assumption up until now was something about the reassuring value of continuity -- if we could just prop up an ailing set of banks for a little while, the US public could resume a revolving credit way-of-life within an economy dedicated to building more suburban houses and selling all the needed accessories from supersized "family" cars to cappuccino machines. This would keep everyone employed at the jobs they were qualified for -- finish carpenters, realtors, pool installers, mortgage brokers, advertising account executives, Williams-Sonoma product demonstrators, showroom sales agents, doctors of liposuction, and so on.
This was a dumb strategy for such a supposedly bright group of people surrounding Mr. Obama. That old economy was dead on arrival January 20th. Even the kindest physicians don't put corpses on life support. This particular corpse has been placed in the world's cushiest intensive care unit, with transfusions running about a trillion dollars a month -- not to mention hefty bonuses for the attending nurses. Instead, a fast and furious wake might have been held, with the corpse of the old economy laid out on a granite countertop for all to toast and bid farewell. President Obama might have led this exercise with some aplomb -- even while directing his new justice department warriors to round up a host of suspects in the old economy's suspicious death.
What it comes down to, apparently, is a leadership elite across all sectors -- politics, business, academia, media -- that is incapable of processing the truth, and then conveying it to the broad American public. Alas, this also appears to be a common theme in history, with a commonly tragic outcome, which is that elites get ruthlessly dumped and replaced by new elites, often composed of zealots, maniacs, nincompoops, and others generally ill-disposed to the able management of complex affairs. It's called the "circulation of elites," and in times of crisis it tends to take on a kind of downward spiraling flavor, with each gang of discredited leaders tossed out for a progressively worse one until a kind of exhaustion is reached -- whereupon the archetypal man-on-a-white-horse arrives on the scene.
Mr. Obama looked to be the man-on-a-white-horse -- on the exhaustion of Reagan-Bush Jesus-Republicanism -- but he's coming off more like Philippe Égalité [[Louis Philippe Joseph d'Orléans, duc d'Orléans) in 1793, with perhaps Newt Gingrich waiting offstage to become Robespierre in 2012 -- and some obscure US Army captain now toiling in Kirkuk slated to become the American Napoleon of 2015. As you've surely heard a thousand times now, history doesn't repeat itself but it rhymes. The enormities of Wall Street today are a little like those of the French Ancien Régime at Versailles. If America encounters the sort of disruptions of food and energy supplies that are brewing on the horizon, and unemployment keeps arcing up its current trajectory, civil uproars could easily follow. Readers think I joke about the Hamptons going up in flames. But the antics of the bankers, hedge funders, the CEOs, the Madoffs, and even the P. Diddy's of our time, are liable to attract murderous attention as the public mood moves from sour to wrathful.
So, what people of good intention and progressive predilection want to know is how come Mr. Obama doesn't just lay out the truth, undertake the hard job of cutting the nation's losses, and get on with setting this society on a new course. The truth is that we're comprehensively bankrupt, and no amount of shuffling certificates around will avail to alter that. The bad debt has to be "worked out" -- i.e. written off, subjected to liquidation of remaining assets and collateral, reorganized under the bankruptcy statutes, and put behind us. We have to work very hard to reconfigure the physical arrangement of life in the USA, moving away from the losses of our suburbs, reactivating our towns, downscaling our biggest cities, re-scaling our farms and food production, switching out our Happy Motoring system for public transit and walkable neighborhoods, rebuilding local networks of commerce, and figuring out a way to make a few things of value again.
What's happened instead is what I most feared: that our politicians would mount a massive campaign to sustain the unsustainable. That's what all the TARP and TARF and PPIT and bailouts are about. It will all amount to an exercise in futility and could easily end up wrecking the USA in every sense of the term. If Mr. Obama doesn't get with a better program, then we are going to face a Long Emergency as grueling as the French Revolution. One very plain and straightforward example at hand is the announcement last week of a plan to build a high speed rail network. To be blunt about it, this is perfectly fucking stupid. It will require a whole new track network, because high speed trains can't run on the old rights of way with their less forgiving curve ratios and grades. We would be so much better off simply fixing up and reactivating the normal-speed track system that is sitting out there rusting in the rain -- and save our more grandiose visions for a later time.
I don't like to be misunderstood. With the airlines in a business death spiral, and mass motoring doomed, we need a national passenger rail system desperately. But we already have one that used to be the envy of the world before we abandoned it. And we don't have either the time or the resources to build a new parallel network.
But grandiosity is just another way that we lie to ourselves about where we're at and what is really possible. Surely Mr. Obama knows that hope fades where the light of truth doesn't shine. He is a charming fellow. I don't especially want to see Newt Gingrich chop his head off.
____________________________________

My 2008 novel of the post-oil future, World Made By Hand, is available in paperback at all booksellers.

[Russix]

I think he took High-Speed train to mean 200MPH+ bullet train, not upgrade existing trains to 110 MPH.

[DetroitDad]

The comment about Detroit breaking up into suburbs. 100% true. So true that the suburbs have the mindset that they do not need Detroit yet the very suburbs are becoming the home for ex-Detroiters [[code for Black people). I wondered why L. Brooks Patterson woke up like he was in a new world.

Our suburbs can't even get along with other suburbs. They look down on each other for petty reasons, they all fiercely protect their assets and resources from each other, and some fight to keep certain groups out. It really is like Rome during the Middle Ages. Are gated communities, cement bermed office buildings, and exclusive suburbs really that different from the giant fortresses that everyone moved to during the Middle Ages? They let our differences divide us, and I don't know if it's unreasonable to think the track record proves that this is human nature in the face of crisis. If that is the case, it's not unthinkable to consider that this could happen to the U.S. as a whole.

[Bobl]

quote: "...the rest of the country is learning that you have to produce tangibles if an economy is going to survive longtime..."
One kernel of truth that describes much of the problem. Add to this the complete deregulation of the financial giants, and the tombstone epitaph is complete.

[lpg]

Didn't we import part of our homes from China in the 90's ?? The contaminated drywall that is just now starting to cause problems in the South.

[MrJones]

This article was written by no friend of the US. He's blatantly trying to disspirit his Christian enemies, thereby helping bring about the Armageddon he forsees.
Granted, there is the possibility much "paper" wealth to be lost, but the Balkanaization of the US? Alaska and Hawaii being given over to Russia? Please.
Those in this counrty who have lived willingly on scraps will continue to do so, but those with enough pride, balls and intelligence will overcome the obstacles we must face and bring the country into a brighter future. Sad, but we're better off without those who jump off overpasses. Don't join them.

[casscorridor]

Capitalism may or may not continue. The market economy may or may not continue. Never assume one way or the other, or that you don't have a role in deciding what happens.

Under capitalism, those who has the most say are those who have the most bargaining power: in the form genetics [[natural talent, strength, intellegence) or property [[real estate, factories, stocks). How one is rewarded is also based on these criteria, and while a small number of individuals sit in comfort and with little effort sacrafice get rewarded great amounts, most of us give way more effort and way more sacrafice in order to make their life of pleasure possible. Under capitalism, those who endure the most costs get rewarded the least. Under capitalism, it has been said, "good guys finish last." I prefer to say under capitalism, garbage rises.

I saw we reward people for the effort and sacrafice alone [[assuming everyone can work, if not then they should be rewarded based on need, such as children). Payment is not equal from person to person, but it is also not grossely inequal. It is rather based on how much a person freely chose to work, and how much effort/sacrafice went into that work. Those who chose to work more, would be rewarded for it.

And I saw we have democratic workplaces and a balanced mix of work, so that no person has a more/less empowering 'job complex.' No longer will one huge group spend all day doing boring, repetative, and onerous tasks, while a much smaller group enjoyed creative and empower tasks. No, now everyone will right to a balanced mix of tasks. Just as before women entered the workforce, and the talents, skills and potential of half the human population were held down, freeing around 80% of the population and allowing them to meet their fullest potentials will prove the increase productivity, efficiency and innovation.

You might ask: what if we got rid of the worst parts of capitalism, and tried to have democratic workplaces, and tried rewarding people based off their efforts rather than bargaining power while maintaining market allocation over resources? What would happen is that slowly the market would errode the participatory democratic workplace, and errode conditions in the workplace due to the pressures of the market. Many workplaces might find themselves hiring managers again, and to begin rewarding based on sheer output rather than effort and sacrafice.

Markets undermine solidarity, diversity, equity and democratic self-management. Not to mention, they are horribly inefficient, and almost never achieve equaliberium [[supply meeting demand) so we have a overabundance of missles, tanks and prisons, and a undersupply of food, health care, education, housing, and other neccesities.

I advocate that we abolish markets as an economic system, and move toward democratic planning over the economy. With a participatory planning process, we could ensure that we attain self-management [[having say of the decisions that effect me, in proportion to the degree in which I am affected) and solve the classic my rights impinging on your rights problem. Now production, consumption and allocation will be determined democratically, assisted by technology, on a mass scale. Entire industrial economies will be planned, participatorily, by millions of people. Information on all economic activitiy will be available instantly to everyone, allowing for innovations to be made availible to all [[not hid, as in capitalism), and allowing workers and consumers to deliberate about economic activity in workers and consumers councils federated up to the regional and national level, assited by facilitation boards [[workers and consumers working together, rather than pitted against each other). Each actor in the economy would propose a plan, [[invidividual workers or individual consumers and entire communities, workplaces, regions and industry federations), that would be made available to all other actors. At first the plans will not corespond... too high of consumption request and too low of production. But after succesive "iterations," facilitated by iteration facilitation boards [[IFBs), the plans would converge to result in a single "plan" for the entire economy. One that takes into account the needs and desires of the individual, without undermining the needs and desires of other individuals and the collective society, and social and environmental impact.

This is NOT central-planning like the soviet union, and neither central-planning or markets could never take into acount the diverse needs, desires, aspirations and concerns of millions of people. Gone will be the days of boom and bust and people not getting what they need. Come will the days of every human meeting their fullest potential. The outcomes will be truely beautiful. Imagine a world where nice guys raised up and instead of pushed down, and where garbage no longer rises and instead gets put in the dust bin of history.

I call this Participatory Economics, or Parecon for short. And although my description is brief and may not be that great or articulate, I invite you to learn more and decide for yourself. Because I feel we can all agree that our economy is messed up, and we need a solution. What will it be?

[R8RBOB]

Didn't we import part of our homes from China in the 90's ?? The contaminated drywall that is just now starting to cause problems in the South.

Can we stop with the importing of Chinese goods? It has been proved over and over that they don't give a F&%$ about Americans. Lead-based toys, contaminated toothpaste and drywall made with fly ash. The same type of fly ash that spill in eastern Tennessee late last year.

[MrJones]

CassC - You post is articulately expressed, but I feel your idea of what passes for value in the real world is off.
God bless the heart of anyone who works hard at his/her job in life, but hard work alone is no criteria for the value of the work. Neither is how many "votes" someone can gather for himself from his peers. The USA is as wealthy as it STILL IS because Capitalism works. Its not always kind or fair, but more people will prosper under it.
The skills of someone who can create a software program that people will give a million dollars for is always going to be more valuable to the world than someone's laying a nice path with brick pavers. [[Unless he paves the road to a diamond or gold mine)
Frankly IMO, the idea of deciding Democratically the compensation of a worker is something likely taught at Slip-and-Fall School. Sorry if that offends.

[Retroit]

I find the "Anti-Capitalism" sentiments expressed above quite disturbing. casscoridor, your detailed description of Parecon sounds wonderful in theory. But the problem is that theories that are contradictory to human behavior are very hard to enforce.

The U.S. economy isn't lagging because Capitalism has failed, but rather because Capitalism has taken of like wildfire in Japan, Taiwan, Korea, Singapore, China, India, etc. The more competition you have the smaller the U.S.'s share of the Global Economy Pie.

[DetroitDad]

I find the "Anti-Capitalism" sentiments expressed above quite disturbing.

I don't understand why. I would think it's always good to ask questions and explore options in this country.


CassC - Capitalism works because it motivates people. If someone has to do a boring task no matter how much they contribute, they aren't really going to care much for the system, and have no motivation to contribute to it. It might work at first out of novelty, but would probably not work once the idea becomes old, and all the next generation knows. It's the game and the never ending pursuit of happiness that makes capitalism work.

1. The main problem is that too few people know how to play the game.
2. The other problem is that there is no secure opt out option for those who don't want to play.

[jiminnm]

Who would ever think the dollar and the loon would be equal.

They're not. The U.S. dollar is worth about C$1.21 [[or the C$1.00 is worth about $0.82 U.S.).

[Mind field]

capitalism works my ASS! It is an antiquated scam of an economic system. I really like Casscorridor's thinking about redesigning our economic system to parecon.

I really love the idea of resourced based economics tho. Eliminating money, politicians, and obsolete careers including everything dealing with money. Focusing on technology and providing the needs to sustain life in great abundance that a monetary "cost" would not be associated with such basic needs as housing, transportation, food, water, or medical care. These things would be automatically provided to a participating member of society on a need basis. Everything would be designed and built with superior quality and longevity and advanced technology to elminate waste and inferior products that malfunction. War, greed, crime, pollution, hunger, poverty, disease, and many other social injustices would be greatly reduced or eliminated. It is technology that can raise everyones standard of living, not money.

[oladub]

Casscorridor, What exactly is preventing you and/or people like you from starting up a business that could be run along the lines you suggest? Everyone could take turns doing creative and empowering tasks. All workers could be allowed to participate in the participatory planning process. The workers could do this in house rather than have a government agency making decisions for the co-workers of this hypothetical enterprise. If the planning commission wasn't spending most of its time "doing boring, repetative, and onerous tasks", it would violate the terms you set down. Therefore, the planning must be done on a co-equal basis by everyone within the business rather than be imposed by outside powers such as government planners.

[R8RBOB]

They're not. The U.S. dollar is worth about C$1.21 [[or the C$1.00 is worth about $0.82 U.S.).

My bad....my mind is back in 2008 when the two were equal.