More of the Same…
Off the keyboard of Steve from Virginia
Published on Economic Undertow on April 3, 2013
Detroit Packard Plant. The largest abandoned factory plant in the World.
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What is underway in this world right now is more of the same. It’s a song: ‘La la-la- la-la … more of the same!
There is more of the same thievery on the part of the establishment, everywhere in the world. There is more of the same poverty, there is more of the same denial … There is more of the same advertising for unlimited resources, more of the same consumer sales, more of the same real estate rebounds, more of the same freeway lane-miles added to more of the same freeways …
More of the same hollow, pointless ‘progress’.
More of the same, the management systems the world has relied upon since the end of World War Two are breaking down but more applications of the same failed management approaches are underway. To support more of the same failures there is more of the same moral hazard, more of the same credit provision, more of the same propaganda and lies. There is more of the same breakages with more of the same exponentially increasing consequences. There is more of the same corruption, more of the same outright pillage and bullying.
There more of the same indifference and refusal to face reality. There is more of the same flight out of banking deposits into risky currency traps even as there is more of the same flight into banking deposits! There is more of the same sense of foreboding, that there is no way out of the traps that we have built for ourselves, that the end of the ‘good old days’ is right around the corner. At the same time, there is more of the same begging/wishing for more of the same ‘good old days’.
With more of the same taking place right now, less of the same will certainly be a whole lot worse. Pray thee Lord for more of the same.
More or the same makes life easy for the analyst even as it makes it more difficult. More of the same becomes very hard to become outraged about. More of the same evil: how do Alex Jones or Yves Smith remain enraged at the highest pitch day after day about more of the same perfidy? The government will be just as conniving next year as it was ten years ago, the big Wall Street banks will still shove more of the same blood funnels seeking more of the same easy payoffs and more of the same bonuses. Who really cares?
The market can offer more of the same a lot longer than you can remain solvent!
At the same time, more of the same analysis becomes very simple: readers can turn to older articles to see how the same really was when it first emerged. It’s more of the same now! It can’t get any easier!
Singularity = self-writing analytical articles!
Unknown photographer: Dr. Edward Chapotin house and his medical practice next door in 1915, on Woodward Avenue @ Woodbridge Street, from the Burton Historical Collection, Detroit Public Library- University of Michigan. Note the streetcar tracks on Woodward. This business/residence was located within a few blocks of the Detroit River.
More of the same lurks on both sides of the political divide from Richard Alford by way of Yves Smith, (Naked Capitalism):
Richard Alford: Fed Policy – (more of the same) Old Wine in New Bottles
Yves here. This is an important post, in that it describes how the Fed, despite the unconventional look of some of its measures, is using more extreme variants of traditional policy approaches, and why that is not such a hot idea.One place where I quibble with Alford is in attributing the way Greenspan dropped short term rates dramatically in the early 1990s recession as driven by unemployment policy. At the time, there was considerable concern about the health and stability of banks in the US. It wasn’t just savings and loans that were hemorrhaging losses. Citibank nearly went under. Some major commercial banks in Texas and the Southwest had lent heavily to spec commercial real estate projects at just the wrong time. And although it was mainly foreign banks that hoovered up participations in LBO financings, like Campeau, that came a cropper, US financial firms had exposures as well. Greenspan’s driving short term rates to the floor created an extremely large spread between short and long term interest rates, enabling wounded banks to borrow short and lend long, and rebuild their capital bases out of artificially high profits.Another quibble is at the very end, where Alford is correctly concerned about our sustained trade deficits, but also is unduly exercised about our fiscal deficits. They are in fact necessary and desirable as long as the business sector keeps net saving, which it did even in the years immediately preceding the crisis. If capitalists refuse to play their proper role and loot rather than dedicate resources to future growth, government has to step in. But as we are seeing now, what is unsustainable about this arrangement is the politics much more than the economics.
Here’s Alford:
But Have We Seen It All Before?For all their differences in perspective and emphasis, most of the opposing evaluations of the merits of Fed policy have one element in common: They all appear to be largely prisoners of a Phillips Curve mentality. Policy is set based only on the current levels of unemployment and inflation. Policymakers, economists and pundits do not look beyond near-term changes in unemployment and inflation when evaluate the risks and returns of alternative policy responses.
However, there may be a more troublesome risk attached to current monetary policy. The risk is that the current policy stance – low interest rates as well as QE- is reducing the probability of a return to self–sustaining economic growth … “
Alford is a very bright guy and he’s paid his dues within the money management ‘racket’. Yves = ditto. Nevertheless, it’s impossible to take either one seriously. What does ‘sustainable’ mean? More of the same tract houses? More of the same auto sales? More of the same insurance and finance? More of the same strip malls and Pizza Huts? More of the same F-35 fighter jets? More of the same coal mines, gas pipelines, VLCCs … how about more of the same airports? What is sustainable about any of this? How about those tens- of thousands of tombstone-like concrete towers in China? How many more-of-the-same vacant apartments are needed before the Chinese get to sustainability heaven?
How does everyone get there? There are seven billion of us meat-bags right now on Planet ‘E’ and only 15% have automobiles. Do we ‘arrive’ when 30% become automotive? How about 50%? Where do we put the 800 million or so extra cars? Where do we get the fuel for them? Does the US build another 55,000 mile interstate highway system to go along with the 55,000 mile system we already have? We cannot afford to fix our roads now! How is more of the same sustainable again?
‘Sustainable’ is gross abuse of the language. In order to ‘have’ our desired industrial goodies we must borrow. Our machines do not pay their own way. If they did there would be no debts as deploying machines would retire them. That they do not do so is self-evident. With thousands of millions of machines there is an exponential increase in debt required to assemble them and provide them with fuel. This is debt that even the entire world’s bloated finance establishment cannot provide.
Credit is a resource in the sense that it is a means to allocate other resources: with less of these other resources to allocate, adding credit becomes pointless and unaffordable. US recessions from 1970- onward were the result of fuel shortages- and price shocks including the current version. Even the modest credit demands of the earlier time periods … were breaking. Today’s high real credit requirements are destructive in and of themselves without the added blows of high fuel prices.
People must understand: the Glory Days are gone and never coming back … ! Santa Claus is not going to come down the chimney with some kind of industry … to take the human race by the hand and lead it into the Promised Land. Our collective future is binary: we are either joint-and severally destroyed by shortages and inability to adjust to them … or we escape destruction by the skin on our noses.
Watch what the plutocrats are doing right now! They know what’s going on because they can afford ‘intelligence’ and are ruthless enough to take advantage! They use the time remaining … to steal … then leave the rest of us to Mad Max.
It will take every single inner resource the human race possesses … clarity, honor, courage, perseverance, helpfulness, strength, wisdom … the willingness to endure tremendous suffering and hardship for decades and perhaps centuries … what is absent in popular culture particularly among finance analysts … it will take all of these things and more to escape our self-constructed annihilation.
Right now, this isn’t happening. There is too much fantasy thinking and denial about redistribution … what is there to redistribute, exactly? Deck chairs on the Titanic?
Here is another variation on the theme … from Bill Buckler @ ZeroHedge:
The Puppet Master – Government For hundreds if not thousands of years of human history, the vast majority were all too well aware that the government “lives” on the backs of the people. Today, that long-held knowledge has been astonishingly, successfully reversed. Today, the perceived “wisdom” is that the people live on the back of the government. In the realm of the history of ideas, it took many centuries to bring forward the idea that a life might be lived without constant kowtowing to government. It has only taken one century – the time since World War One – to all but totally submerge that legacy in a new wave of government dependency.The old and tired phrase – “I’m from the government and I’m here to help you” – is met by as much derision as it has ever been when people bemoan the impositions of their rulers. But those same people rely on the government to insulate them from the consequences of any action they may choose to undertake.
The great myth is that our industrial economy is ‘productive’, that it is saddled temporarily by parasitic governments (fascists) or bankers (socialists). Get rid of one or the other and the industrial economy will spread its wings and fly off to consumer good paradise, taking the American Worker along with it.
This is false: the product of industrial economies is waste. Because waste is not a good there are no organic returns for industrial activities. Instead, the cost of the activities must be met with credit. To provide the needed credit there are bankers, to service the debts there are governments.
That this is so is self-evident: if industry was productive — if there was any product at all other than waste — there would be no crisis and no debts. Any shortfalls would be met by deploying additional machines, which would pay for themselves, thereby retiring their own debts … and ours besides.
The intersection of Woodward Avenue and Woodbridge Street is long-gone, so are Doctor Chapotin’s restrained yet whimsical houses. All of them are replaced by the urban equivalent of the place-mat, the concrete pad and grassy area(s). Note the occasional tree.
Forsaken and bleak … the backdrop for a homicide, here is the adjacent 1 Civic Center Plaza. Perhaps Chernobyl is more soulless, then again … perhaps not.
Today, there are more and more machines, these do not pay anything. Instead these machines must be subsidized by robbing from savers, retirees, workers and business customers. Meanwhile, the world’s economies are burdened by hundreds of trillions of dollars worth of non-repayable debt … taken on to build and run the machines.
Without credit, there is no industry. Meanwhile, our precious fleet of machines strip-mines the world of credit along with resources. This stripping process is underway right now in Europe and elsewhere … coming soon to your town! (It’s already happened if you live in Detroit.)
The underlying cause is centuries’ long destruction of resource capital. The consequence is diminishing resource throughput, diminished capital with a large and increasing scarcity premium attached to it. There is simply no more (of the same) capital to waste affordably. What capital remains is too valuable: the cost of retiring debts is greater than the worth of debts themselves. Whether the managers admit it or not, the markets right now are pricing the true costs of waste beyond the reach of today’s wasters … also tomorrow’s.
Because ‘more of the same waste’ is a physical process, it doesn’t matter who manages it, Austrian or Marxist, neo-Liberal or Friedmanite, salt-water or fresh-water. All of them will fail. Regardless of who is in charge there will always be less.
Don’t let the common sense baffle you! It’s not that hard to figure out. If prosperity = waste, nobody can promise prosperity any longer.
The ONLY solution is stringent energy- and resource conservation. There is no other solution, only evasions: to do nothing or to attempt more of the same waste means conservation will occur ‘by other means’. See ‘Cyprus’ as the latest example.
Amerika is Detroit
Off the keyboard of Steve Lendman
Published on the Steve Lendman Blog on March 16, 2013
Detroit Packard Plant. The largest abandoned factory plant in the World.
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America’s economy is sick. It’s getting sicker. Coverup and denial conceal reality. Census data say record numbers of US counties are dying. It’s over one in three.
Homo Collaboratus
Off the keyboard of RE
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In his recent article The End of Technocracy and Zero Government, Steve from Virginia tracked the progress of the City of Detroit to the status of “Failed State”. Not just Detroit is in this situation of course, you see it progressing all over the world from Somalia, to Egypt to Greece…and not long to arrive in Italy or France either. Whose fault is this? Where does the BLAME lie for the failure of this model?
The ‘Blame the Victim’ Game in DetroitIn areas where technocracy has been installed such as Greece, both the initial conditions and the failure of the process is blamed on the inhabitants. Greeks are ‘corrupt tax-cheats and lazy’. Detroiters are ‘stupid, drug-crazed Negro savages bent on murder and destruction’, French are ‘near-communists and cowards’, Irish are ‘ugly … drunken child molesters’. The purpose of the blame game is distraction while retirement savings are stolen by the establishment. The elderly ‘deserve what they (don’t) get! The blame game hits the target by appearing to miss it.
In Detroit, the citizens didn’t chase retail stores away, they didn’t over-invest in the auto industry, they didn’t ghettoize the city with ill-conceived developments and a web of freeways, they didn’t pollute the city with lead, zinc, chromium, mercury, toxic petroleum-based chemicals, they didn’t sell the city out to billionaire developers.
The citizens didn’t pave the city over with parking lots or built thousands of monstrously ugly concrete box- buildings. Detroiters are being shot by criminals, being driven out by block busting and urban decay, losing what little property wealth they had, having already lost hundreds of thousands of jobs. Detroiters have been abandoned by their country not the other way around.
The US spends hundreds of billions of dollars in Afghanistan, why not Detroit?
Why not Detroit? Basically because it’s burned out, polluted flotsam of the Age of Oil, and costs too much to clean up. Predatory Capitalism doesn’t clean up the messes it leaves behind, it moves on to make new messes elsewhere, always promising the inhabitants a “better standard of living”, which a few Elites get while the rest of the herd is left hung out to dry.
Steve isn’t the ONLY Blogger tracking Failed State development, John Ward also has been cateloguing the collapse of the Greek State, as well as numerous others in Europe.
Greece is the first country Russell has ever cut to emerging from developed market status, although given the state of the EU it seems highly unlikely it’ll be the last. The Russells haven’t considered doing the same to Spain and Italy just yet, the paper says, because ‘we haven’t seen the same degree of decline as we’ve observed in Greece’. The two conclusions I draw from that are first, Russell guys need to get out more; and second, the company has a lot to learn yet about Spanish accounting, and Italian reporting accuracy. Don’t forget, this latter is the country whose Hadron Collider scientists only six months ago got the speed of Light wrong.
But the main thing it is still hard for the casual observer to get his head round is what you are if you emerge, having once been developed. The vagueness, it seems to me, lies in the interim bit between the two states of Being. In 1936, Nazi Germany was a developed State led by a lunatic, which was then crushed to a pulp by British, American and Russian forces who’d become a tad concerned about the Fatherland’s wanderlust habit. The interim stage was the crushing thing. This is what’s missing from the Russell Investments analysis about recent Greek history.
Why does it progress in this fashion? Going back to November of 2011, I wrote an article titled Homo Collaboratus on Reverse Engineering looking at the progress toward failed State in Egypt. I am going to quote the article in full, since it is not accessible to non-members of Reverse Engineering.
Egypt is now in its 3rd Day of an increasingly Bloody “Revolution”, where all that the Military Repression has succeeded in doing is bringing still MORE “Protesters” back into the streets….AGAIN. You can see here how and why even having vast techno power against protest eventually does FAIL, because of the Power of Numbers.
What I read in one MSM report was a quote from one member of the Military Junta currently running Egypt, which was that all this mayhem would succeed in doing was “Destroying the State”. That is a paraphrase, but essentially was his analysis, and its also quite TRUE.
The Hodgepodge of People out there on the street throwing Rocks have NO CLUE on how to set up a WORKING Goobermint, and once you pile them all together inside any kind of Newly Elected Parliament the Bickering will start all over again, and whomsoever they Choose to lead any new Goobermint will be just as powerless to bring any equity to their economic system as the last Dimwit Power Seeker was.
It’s the road obviously to a FAILED STATE, like say Somalia or Zimbabwe already are. The old soviet Union also turned into a Failed State, but they recoallesced into the smaller States it was composed of and briefly have slowed the devolution there. However, Eastern Europe is now on the brink of catastrophic debt collapse, and eventually here you will also get Failed States in places like Hungary and all the Balkan States.
Failed Nation States will become the Norm here over time, rather than the Exception that they are now in places like Somalia and Zimbabwe. In each Failed Nation State, people are dropping down to the next level of Organization, Tribal Affiliation. This as I see it is the medium term result which will occur through all Nation States as smaller groups of people Herd together for Self-Preservation.
In places like Afghanistan where they are not all that long removed from their Tribal Affiliations, the Pashtuns will gather together again fairly naturally, but what of Lazarus? Lazarus in this case being the vast multicultural diaspora of people who came to live in the FSofA, who have no real “Traditional Tribe” here and who have lived for generations under the political system of the Nation
State? Can they, WILL THEY be able to form up Tribes for mutual Survival and Protection?In my general POSITIVE Spin on this topic, I believe that they WILL in fact form up such Tribes SPONTANEOUSLY. My rationale for this is as follows.
Homo Sapiens demonstrates BOTH the traits of Predatory Animals and Herd Animals alternately, depending on circumstances. It’s likely one of the main reasons Homo Sapiens has been such a successful species overall, the adaptability to take on different survival paradigms dependent on circumstance. Real Herd Animals like Buffalo can never become Predators, and real Predators like Lions can never function as Herd Animals, but Homo Sapiens can function either way, pretty much equally successful either way also.
The circumstances we have been living under for the last few 1000 years is one of general Surplus in the environment, which Favored the Predatory paradigm. We have many Herd Homo Sapiens and a few Predators who live well by predating on most of the Herd. However, as the herd is Culled here, the Predators will die in greater numbers by percentage than the Herd does. If you look at any complex ecosystem with predators and prey, once the prey drops below a certain level the predators drop off a cliff. They essentially disappear. The “Ponzi” that is the Food Chain works from the Bottom Up, the Predators cannot be successful until the Prey is available in sufficient quantity to support them.
The Herding tendency in Homo Sapiens is evident any time the species is confronted by massive external stress. You see it whenever a Tornado Hits a Small town. All of a SUDDEN, people who otherwise simply can’t stand each other are all Pulling Together to dig others out of the Rubble. You see it in OWS. All of a sudden, generally Middle Class people become ACCEPTING of the long term Homeless in their midst, and they in fact LEARN from them strategies to handle living on the Street. Don’t drop your Tent onto the Ground, put it up on Pallets so you’re not losing Heat into the ground from your Sleeping Bag. Etc.
IMHO, OWS is the BEGINNING of a NEW TRIBAL Paradigm here in the FSofA, with those who are already off the cliff or close to it gathering together in HERDS for self-protection and SURVIVAL in the face of the Predators, exemplified by the Gestapo who Pepper Spray them and fire the Tear Gas Canisters at them.
MANY of the Herd will DIE here. But NOT as many by percentage as the Predators. The very ACT of Protest and Forming Up the Circle of the Herd is what will PROTECT the Herd in the end. They will lose many on the periphery. But they will also STAMPEDE the Predators.
In the end, they will almost all go to the Great Beyond. However, some of the herd will make it through, some of them will retreat into the Mountains, the Great Wall that GOD built to protect the Independent Souls of the World. The Predators will Die Off, and over time, the Herd will reproduce and RETURN from the Mountains to once again populate the Flatlands.
Where once again, if all goes as it has gone here so many times and in so many ecosystems, the predators will emerge once again. For Homo Sapiens however, who remain adaptable and who DO have the ability to LEARN, perhaps in the next go round we can make the LEAP to a new species, Homo Collaboratus, the first Species EVER to jump beyond the Predator and Prey paradigm. it is my great HOPE that those who do survive this latest incarnation of Armageddon will be the progenitors of Homo Collaboratus. Certainly, the incarnation of Homo Industrialis has been a Magnificent FAILURE here, and one we will not repeat again.
Sadly, I will not be around to see this from this side of the Great Divide, unless perhaps I do return in another corporeal incarnation. Even if that does not occur though, I’ll see it to be sure.
I’ll see it, and you, from the Other Side.
RE
The progession to Failed State is inexorable, baked into the cake of the monetary system. Depending on the resources and technology available, it can expand itself for a few Centuries, perhaps a Millenia before it reaches the Growth limits. Although the Collapse is Gathering Steam now, it’s been underway a LONG time for anyone with their Eyes Open to see.
When I was in HS in NY Shity, the City was BROKE. The Subways were dilapidated, apartment complexes built in the 40s and 50s were Roach Motels. My Aunt and Uncle lived in an awful complex called Vanderveer in Brooklyn. Fortunately they lived on the 1st floor, because the elevators never worked. Nothing was ever maintained, and none of it ever paid for itself in terms of “increased productivity”. That was always just a euphimism for increased energy wastage.
The folks in charge of Credit Creation financed all of it through Debt, even JP Morgan didn’t have Gold enough in his Basement Safe to finance building the Railroads. He also sure was not going to pay Irish and Chinese Coolies in Gold either.
These folks have refinaced themselves innumerable times, back in the 70s about ALL the major Banking Houses should have gone broke from Bad Loans made to South America in the 5os and 60s, when my dad was in the Biz of making those loans. Financial Legerdermain kept it rolling, but it doesn’t work FOREVER.
You can’t create new Resources by issuing more credit. Without copious resources to waste, its pointless to issue more credit. The ONLY reason more Credit gets extended to Greece now is to keep the whole House of Cards floating another day. Nobody in their right mind can possibly believe Greece can ever pay its debts.
So, one by one they collapse, the Somalias, the Egypts, the Greeces and the Detroits. The Money Masters and the Political Class work together in a Kabuki Theatre, trying to manage the collapse by blaming the Victims while preserving their own wealth and status.
The fact the collapse is accelerating now makes it clear these folks cannot control it anymore. The last 40 years since the 1970s has been all about Financialism as a means of containment, but it is running out of steam. The old tricks just ain’t WORKING anymore.
All due respect to John Michael Greer and fans of the idea of a Slow “Boiling Frog” form of catabolic collapse notwithstanding, systems as complex as this one eventually reach a “tipping point”, beyond which they can no longer function. 5 years ago when I began writing on collapse topics, NOBODY ventured the opinion a European Nation like Greece or now also Italy and Spain would be on the cusp of Failed State status, with numbers like 50% Youth Unemployment and GDP figures dropping like a rock.
It may seem “slow” to you on the span of your life for it to take 5 years for Greece to descend from “functioning” industrial economy to FAILED STATE, but even on the scale of the industrial revolution as a whole that is mighty fast. If you figure the Industrialization of Greece began with the Marshall Plan in the aftermath of WWII, it took them about 60 years from 1945 to 2005 to reach the Zenith of Industrialism there, and it has just about ALL been undone in the last 5 years. Greek “factories” are not producing Jack Shit, if they ever did. About the only big Industry out of Greece was Shipping, and their Shipyards are Ghost Towns now, there is overcapacity of ships, international trade is collapsing and the Baltic Dry Index is so low you could hire a ship wit your Unmployment Check.
How long do we have HERE in the FSoA before it also is a Failed State? The takeover of Detroit by the State of Michigan is a Canary in the Coal Mine which should let you know the collapse has begun in earnest now here. Michigan itself is of course no more solvent than Detroit, so eventually will be “taken over by Da Federal Goobermint. Who will take them over? The Ferengi?
That the FSoA will devolve to a Failed State is not a hypothetical, it WILL occur, and based on the timelines already apparent in Europe, it will not take more than another decade to be apparent even to those Ostriches with their heads most deeply buried in the sand.
The fact though that it probably will take that long gives people in the FSofA aware of this a short Window of Time to prepare for it, and Reverse Engineer for themselves a non-industrial way of life. You have to get started NOW in Collaboration with others to make such a transition possible.
Homo Industrialis and Homo Predatorus is going the way of the Dinosaur. Only Homo Collaboratus and Homo Herdus can survive the Zero Point. Form your Tribe NOW! Circle the Wagons. Defend the weak and the innocent. STAMPEDE the PREDATORS.
Bring ON the POWER of NUMBERS. We are not Sheeple. We are BISON. In number, NOTHING can stop us. It is time now to STAMPEDE.
RE
The End of Technocracy and Zero Government
Off the keyboard of Steve from Virginia
Published on Economic Undertow on February 26, 2013
Figure 1: Detroit city tax map from WDWOT (click on for interactive big), (HT Atlantic Cities): Detroit is a good model for the rest of the United States as the country sinks into post-petroleum depression. One symptom is the inability of the city to provide basic services for its citizens because of shrinking revenue. Owners in the city are unable or unwilling to pay property taxes.
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The map illustrates properties which are current, properties in arrears and those in states of foreclosure. Only a handful of neighborhoods within the city are home to owners current on their property taxes. You can adjust the map to determine the degree to which property in the city is impaired, for instance half the city looks to be in tax arrears and under threat of tax auction.
Here’s Atlantic Cities:
Detroit’s Property Tax Black Hole, in Map Form John MetcalfeTo get a handle on how bad of a tax mess Detroit is sitting in right now, look no further than (above) depressing map showing every property in the city suffering “tax distress.”What looks like a big hunk of moldy cheese is in fact the property-tax status of 384,861* properties, as logged by Wayne County’s online tax portal. The lighter yellow boxes represent more than 59,000 distressed buildings where the owners haven’t paid their taxes. Squished among them are a honeycomb of orange boxes, indicating that these properties have such a large backlog of delinquent taxes that they’re now subject to foreclosure. (Count those up and you arrive at about 74,000 doomed properties.) The plots shown in red, meanwhile, are the 18,246 properties that have already been foreclosed.On the bright side, gray areas mean those places don’t have tax issues. Lucky!
The gray areas are highways and city streets, parkland, commercial structures that earn enough in rent to pay expenses and non-taxable city property.
Detroit does not currently have a purely technocratic city administration but one looms over the horizon. Perhaps the establishment in Michigan can rethink the process as technocracy is an endgame, it will fail in Detroit as it has in Greece and Italy.
What is technocracy? It’s an establishment- installed ‘non-political’ manager with powers to restructure a jurisdiction to protect big business interests regardless of social or political consequences. Jurisdictions that have lost the ability to borrow and thence roll-over debts and pay interest are candidates for the technocratic ‘fix’. Meanwhile, the same inability to borrow strands the technocrats who have no tools to work with.
Technocracy tends to be the last step before default/repudiation of non-payable debts. After technocracy comes ‘zero-government’; the capitulation of the establishment, its dissolution into factions and chaos. This is part of the transition to a post-petroleum economy and breakdown of the status quo. Arguably, Detroit has endured ineffective, paternalistic ‘pro-business’ leadership since World War Two: the non-government is a necessary precondition to technocracy which surrenders shortly afterward to zero-government.
Hat meet rabbit: an emergency managers cannot magically deliver the means to repay tax arrears or interest on loans. To do so requires the creation of thousands of new jobs which is never within managers’ scope of employment. Their duty is to cut jobs. Technocrats lack imagination, they are repo-men They provide administrative smokescreens behind which the creditor interests pick over and privatize remaining marketable assets that have previously been too costly to pillage. The problem is … when governments reach the technocratic inflection point assets aren’t worth anything.
Here is the current Emergency Manager of the Detroit Public School System:
Roy S. Roberts was appointed by Gov. Rick Snyder in May 2011 to serve as Detroit Public Schools Emergency Manager under the Local Government and School District Fiscal Accountability Act. Mr. Roberts, who was most recently Managing director at Reliant Equity Investors, has decades of managerial, financial and organizational experience, having served as the highest-ranking African-American executive in the U.S. automobile industry as Group Vice President for North American Vehicle Sales, Service and Marketing of General Motors Corporation from July 1999 to April 2000. Prior to that, Mr. Roberts also served as Vice President and Group Executive, North American Vehicle Sales, Service and Marketing of General Motors Corporation from October 1998 to July 1999. He was Vice President and General Manager in charge of Field Sales, Service and Parts for the Vehicle Sales, Service and Marketing Group of General Motors Corporation from August 1998 to October 1998. He served as General Manager of the Pontiac-GMC Division from February 1996 to October 1998, presiding over the merger of Pontiac-GMC …
Do you laugh or cry? Roberts offers management expertise to a bankrupt school system gained from within the bankrupt General Motors as a glorified car salesman! Roberts is not expected to improve learning in Detroit, but to facilitate the flow of public funds toward the private sector … this is what technocrats do.
3.1 Salary The Emergency Manager’s salary for services rendered under this Contract shall be $250,000.00 per year, paid by the District.
He is additionally compensated for personal expenses. Unsurprisingly, the citizens refuse to pay taxes. Tax evasion/declining government revenue is a characteristic of technocracies: why throw good money after bad? Here’s Mike ‘Mish’ Shedlock:
Half of Detroit Properties Have Not Paid Taxes; Update on Detroit Bankruptcy The hollowing out of Detroit is nearly complete. All that’s left is a bankrupt shell of a city with no services and scattered citizens that do not pay taxes.The Detroit News reports Half of Detroit Property Owners Don’t Pay Taxes.“Nearly half of the owners of Detroit’s 305,000 properties failed to pay their tax bills last year, exacerbating a punishing cycle of declining revenues and diminished services for a city in a financial crisis, according to a Detroit News analysis of government records.The News reviewed more than 200,000 pages of tax documents and found that 47 percent of the city’s taxable parcels are delinquent on their 2011 bills. Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library.
Delinquency is so pervasive that 77 blocks had only one owner who paid taxes last year, The News found. Many of those who don’t pay question why they should in a city that struggles to light its streets or keep police on them.
“Why pay taxes?” asked Fred Phillips, who owes more than $2,600 on his home on an east-side block where five owners paid 2011 taxes. “Why should I send them taxes when they aren’t supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came.”
Shedlock’s ‘solution’ is technocratic: to quash the unions and fire workers. It would be far better to fire the automobiles instead. Raising taxes in a depression is a failure, blaming the city workers is blaming the victims.
In Detroit, homeowners are broke and unable to pay, others are in dispute with the city over the amount of tax due: real estate worth has plummeted over the past 20 years and assessments are ‘uncertain’. There are questions about durable title particularly on foreclosed properties. The large banks and mortgage servicers own multiple properties they look to shift the burdens each property represents onto the taxpayers.
Many thousands of houses in Detroit are burn-outs or dilapidated and require demolition. By not paying taxes, the banks force the city to take over properties and demolish buildings at city’s- rather the banks’ expense. In Detroit, the cost of demolition is not much less than the average cost of a house.
Occasionally the government runs amok: houses in Detroit are demolished after people buy them … to save them from demolition. Why pay taxes and support ineptitude or criminals?
It is likely to be difficult for Michigan’s governor to find another car salesman willing to become Detroit’s Next Great Technocrat! Pre-failure failure in Detroit, (Huffington):
Asked during a short, one-on-one session with The Associated Press if any potential candidates for such a job (emergency manager) had already declined it, Snyder responded: “Oh yeah. There were quite a few people who were in that camp. Because if you think about it, and this is not to imply we’re going to do one, but it would be an extremely challenging position.” Challenging may be an understatement.Mayor Dave Bing has placed the city’s current budget deficit at about $327 million. The report given to Snyder Tuesday by the state-appointed review team said the accumulated deficit as of June 30, 2012, would have topped $900 million if Detroit leaders in recent years had not issued bonds to pay some of its bills.Long-term liabilities, including underfunded pensions, is more than $14 billion, and in recent months the city has relied on bond money from an escrow account to meet its dwindling cash flow needs and to pay city workers.The review team also said that because of its cash deficit the city would have to either increase revenues or decrease expenditures, or both, by about $15 million per month between January and March to “remain financially viable.”
In areas where technocracy has been installed such as Greece, both the initial conditions and the failure of the process is blamed on the inhabitants. Greeks are ‘corrupt tax-cheats and lazy’. Detroiters are ‘stupid, drug-crazed Negro savages bent on murder and destruction’, French are ‘near-communists and cowards’, Irish are ‘ugly … drunken child molesters’. The purpose of the blame game is distraction while retirement savings are stolen by the establishment. The elderly ‘deserve what they (don’t) get! The blame game hits the target by appearing to miss it.
In Detroit, the citizens didn’t chase retail stores away, they didn’t over-invest in the auto industry, they didn’t ghettoize the city with ill-conceived developments and a web of freeways, they didn’t pollute the city with lead, zinc, chromium, mercury, toxic petroleum-based chemicals, they didn’t sell the city out to billionaire developers.
The citizens didn’t pave the city over with parking lots or built thousands of monstrously ugly concrete box- buildings. Detroiters are being shot by criminals, being driven out by block busting and urban decay, losing what little property wealth they had, having already lost hundreds of thousands of jobs. Detroiters have been abandoned by their country not the other way around.
The US spends hundreds of billions of dollars in Afghanistan, why not Detroit?
Detroit’s notorious crime problem appears to be the result of lead pollution from fuel additives and manufacturing residues in the soil along with fumes from burning lead paint spewed into the air from the thousands of building fires taking place every year in the city … rather than skin color.
The black establishment in Detroit has never been able to stand up to the white establishment which owns everything important, which controls the city’s budget, which anoints various city administrations, which constantly looks for opportunities to blame blacks for everything gone wrong.
Since 1920 the auto industry has run Detroit like a coal mining ‘company town’. Most of the housing stock in Detroit was sub-standard as built: cheap frame houses thrown up as rapidly as possible on an unrelenting grid. Detroiters are learning the hard way: land use and urban design matter. The citizens did not design the buildings or lay out the streets. What charm the city once possessed has been swept away for parking lots and cheap commercial and institutional ‘facilities’. The citizens did not do this, it was business interests seeking the quick buck for themselves at the expense of everyone else.
Following the Great Wave of European master craftsmen to the city in the 19th century, most of the emigres in decades following have been unskilled, uneducated agricultural workers seeking assembly-line jobs. They added little to the community other than modest paychecks and a burning desire to relocate themselves to the suburbs as soon as possible. Even in the 1950s, when the auto workers union gained touted increases in pay and benefits, the companies they worked for were shrinking, first by way of automation then by ruinous competition and business failure.
The unraveling of the US car industry has been the decline and fall of Detroit: the population has shrunk from 1.8 million to less than 700,000. Who is to live in the abandoned houses? Even without the fires and the blight, half of the ‘original city’ would be empty. Where are the jobs?
Meanwhile, the Detroiters are on the hook for tens billions of dollars of debt taken on to run the ossified city government, pay pensions, build football and baseball stadiums … arenas, improvements for casinos and retail ‘big-box’ stores. The reason Michigan keeps Detroit at arm’s length is because the state is as bankrupt as the city. If it does nothing, the city’s finance burdens will crush the state, if it tries to ‘fix’ the city the effort will crush the state just as well.
The establishment has created this mess, not the Detroiters. Meanwhile, technocracy marches over the edge of the cliff around the world:
– Japan’s ‘democracy’ has been a facade that masks control by business cartels, in this way all recent governments in Japan are technocratic. Japanese citizens are confronted with the doubling of consumption taxes by 2014: these are taxes levied to meet the spiraling cost of servicing Japan’s monumental debt. Enter the new ‘Shinzo Abe 2.0′ government promising to borrow more, faster … presuming Japan’s total debt burden can be added to without causing a crash. Increasing numbers of Japan’s citizens are elderly, they do not consume, they are unwilling to pay more taxes. Meanwhile, Japan’s overseas customers are broke. They cannot buy Japanese products and by doing so lend to the Japanese.
The outcome is a currency market panic … that is not likely to end well.
– The Greeks are bankrupt, the European Union has bailed out (some of) Greece’s lenders while burdening Greeks with higher taxes that the Greeks refuse to pay. The technocratic government installed by the IMF, European Central Bank and the EU has collapsed, the country now has post-technocratic ‘zero government’.
– Italians have been confronted with higher technocrat-imposed taxes: they evade them or refuse to pay. Voters have just now jettisoned the current IMF-supported technocrat regime. The outcome is post-technocratic zero-government in Italy.
– The French unraveling is well underway the current government is the precursor to a technocracy. The Socialists are incoherent, they appear to have no set strategy or clear understanding of their dilemma which is the consequence of extinguished capital. When the French cannot borrow cheaply, they will be given the ‘Italian Choice’: to install a technocratic regime or be frozen out of credit markets.
– Sequester in the US is technocracy-by-the-numbers, the theft of retirements under the guise of ‘responsible government’ for the benefit of lenders. After technocracy fails comes zero-government.
Moderns look to waste resources but the outcome is to become Detroit in every sense. Japan and Greece have passed their respective points of no-return. Their ability to waste resources is collapsing because their external debt subsidies have been curtailed, they cannot borrow to repay their debts so they cannot borrow to obtain fuel. Meanwhile, working out of debt is beyond what can be done with human labor or what modest remaining capital can leverage.
The wild card in Italian politics: by John Hooper and Lizzy Davies (Guardian UK):
Italy on Monday night risked pitching into political turmoil as projections of the result of its general election pointed to a hung parliament and confirmed that the anti-establishment Five Star Movement (M5S), led by an ex-comedian, Beppe Grillo, had exploded onto the national stage. So far, Grillo has ruled out supporting either side in his drive to sweep away Italy’s existing political parties and the cronyistic culture they support.
Ambrose Evans-Pritchard (Telegraph UK):
In an earthquake result, the Five Star protest movement of comedian Beppe Grillo looked likely to emerge as the biggest single party in the lower house. The scourge of bankers and corrupt elites, Mr Grillo has campaigned for a return to the lira and a restructuring of Italy’s €1.9 trillion (£1.64 trillion) public debt. The conservative bloc of ex-premier Silvio Berlusconi looked poised to win the senate, coming back from the political grave with vows to rip up the EU’s austerity plans and push through tax cuts to pull Italy out of deep slump.“The majority of Italians have clearly voted against the Brussels consensus. That is a damning indictment,” said Mats Persson from Open Europe.A euphoric rally on European bond and stock markets early on Monday gave way to abrupt selling as it became clear that Italy would be left with a hung parliament and no consensus over fundamental policies, leaving the country almost ungovernable.
There is little chance of escape for Italy from zero-government, just like Detroit. The innovation of the Five Star Movement is that it spurns TV and the need for officials to sell themselves to business interests in order to raise advertising money. Five Star candidates offer their platforms on Facebook and Twitter. None of this addresses our evaporating capital problem. Italy and the rest need new ideas about how to wisely use what capital remains: to husband it for the future rather than burning it up faster and faster.
Our current economy uses the destruction of capital as collateral for ‘infinite’ loans. This process must be voluntarily ended or it will be ended for us with zero-government as a component of the process.
Europe and the rest of the world is being de-carred: this is because cars are unaffordable luxuries. For some reason, this is too complex and difficult a problem for economists and policy makers to grasp! What is ‘growth’? Always more and more cars. Why isn’t there any growth? Because adding more cars amplifies the car-cost problem, which is the increasingly efficient destruction of capital. The solution to our capital destruction problem isn’t baling out lenders … presumably so they might lend again … but to end cars and their monstrous claims against capital!
The world’s fuel supply is shrinking along with credit availability. Without a constant supply of new fuel there are shortfalls. Economic activity is curtailed as a result. Without that constant supply of new credit, nobody can retire old loans or service them, nobody can obtain fuel. Credit is constrained further in a vicious cycle … there is no way out.
The establishment insists that the problems in Detroit and elsewhere is the social safety net/excess savings. Lenders complain about the safety net, insisting savings impinges debt repayment. Yet gutting it represents only a temporary reprieve, the debts cannot be repaid because the collateral for the debt is waste and the instrument of waste is cars. In a way, Detroit is a victim of its own success.
The cars’ days are numbered: the car and tire manufacturers, the fuel industry, the highway construction industry, the tract house industry, the big-box retailer industry, the truck-transport industry, the gigantic 80-story concrete penis in the middle of town industry, the military industrial complexes, the finance and insurance industries … all of the automobile dependencies are bankrupt, a gigantic, worldwide dinosaur that has cut its own head cut off by way of its pointless success … too stupid to lay down and die.
Die it will and very soon, children, very soon … not before threshing everything in the world to bits, first.
Model City…
Off the keyboard of Steve from Virginia
Published on Economic Undertow on December 15, 2012
Unknown Photographer, Jacob Farrand house on Woodward Avenue between Sloat and Trinity streets in Detroit (1881). Burton Historical Collection @ University of Michigan Library.
Discuss this article at the Epicurean Delights Smorgasbord inside the Diner
People say California is a good model for the rest of the country, it is “The Place Where The Future Happens First!”
Detroit is a much better model than California: it is the place where the future happened a long time ago. Persons seeking that ‘Mad Max’ dystopia — where law and order is very much a sometimes thing, where the house next door is a burnout and the neighbors down the street are dope-addled zombies — need look no further than the ex-Motor City.
How it got this bad in Detroit has become a point of national discussion. Violent crime settled into the city’s bones decades ago, but recently, as the numbers of police officers have plummeted and police response times have remained distressingly high, citizens have taken to dealing with things themselves. In this city of about 700,000 people, the number of cops has steadily fallen, from about 5,000 a decade ago to fewer than 3,000 today. Detroit homicides — the second-highest per capita in the country last year, according to the FBI — rose by 10 percent in 2011 to 344 people.
…Average police response time for priority calls in the city, according to the latest data available, is 24 minutes. In comparable cities across the country, it is well under 10 minutes.The number of justifiable homicides, in which residents use deadly force in self-defense, jumped from 19 in 2010 to 34 last year — a 79 percent rise — according to newly released city data.
The city with the highest murder rate in the US is New Orleans, another post-future model. More information about world homicide rates can be found in the UN Global Study on Homicide in 2011. Places with highest homicide rates are third-world hell-holes such as Venezuela, Jamaica, Honduras and El Salvador, districts of northern Mexico adjacent to the US border and south-central Africa. These futures are a step or two down the ladder from Detroit into the energy abyss.
A consistent theme in this letter has been the connections between items that may seem to be far removed from each other but are actually linked at the very core. If you push on one end you get a reaction in what would seem to be the most unlikely spots. Today we explore the connection between the fiscal deficit and energy policy. Everyone in Washington is starting to “get religion” about wanting to fix the deficit, with serious thinkers on all sides acknowledging that there must be reform and a path to a balanced budget. Burgeoning healthcare and Social Security costs are rightly pointed to as the problem, and entitlement reform will soon be front and center. But the fiscal (government) deficit in the US cannot go away unless we also deal with the trade deficit. As we will see, it is a simple accounting issue, and one based on 400 years of accepted accounting principles. And dealing with the trade deficit in the US means working with our energy policy.The trade imbalances among the partners in the eurozone are at the heart of the problems there as well. And while we will get back to Europe in a few weeks (remember when we seemed to be focused on Europe and Greece for months on end?), today we will explore the trade problem from a US perspective. Happily, this problem, while serious, does have a workable solution. And it might even happen in spite of government policy, though if a proactive energy policy were developed, it could ignite a true economic renaissance.
Mauldin carries on telling readers how friendly tycoons are going to save us all with huge reservoirs of crude oil:
I have been wanting to explore the implications of the shale oil revolution. Old oil fields are wearing out, as peak oil advocates point out. Where can we find the huge and cheap-to-exploit oil fields to replace them? Hasn’t all the easy oil already been found?
Because language is infinitely malleable, words can mean or imply anything the utterer wishes them to mean. Hasn’t all the easy oil already been found? What is ‘easy oil’? What does ‘easy’ mean: “Easy for me, hard for you?” Mauldin does not use the word affordable, nor does he mention costs. Over the course of five-thousand two hundred words the consumption side of the energy equation is never discussed … this is surprising/misleading because our crisis is the direct product of consumption. Decades of industrialized, highly-efficient guzzling of the cheapest, easiest fuels have bankrupted us! Because of our incredible ‘success’ we must now deploy unorthodox extraction techniques that might indeed be ‘easy’ but are unaffordably costly. Can anyone see anything wrong with that?
If cheap and easy have bankrupted us … what will expensive and difficult do?
Mauldin invests many words on the US trade imbalance, noting:
Not Everyone Can Run a Surplus … we are spending more for energy even as we use less of it, and that drives up our trade deficit. Let’s see why this matters. As long-time readers know, I have often written about how you cannot balance private and government deficits without a positive trade balance. Let me quickly review.It is the desire of every country to somehow grow its way out of the current mess. And indeed that is the time-honored way for a country to heal itself.
No country has ever ‘grown’ itself out of debt or a debt crisis. Debts have been repudiated or restructured. Countries have abused foreign exchange, waged war and conquered or have been destroyed. Governments have bankrupted creditors or sent them to the gibbet. They have stalled for time until able to take on orders-of-magnitude greater debts from new- or the same creditors … thereby refinancing existing obligations.
In a global economy all the creditors have been tapped. There is no new source of credit except Bankers from Mars.
The increase of debt masquerades as growth. The US appears to grow which allows more debt to be taken on to create the appearance of still more growth which in turn enables additional debt. Right now the Establishment lies about growth in order to take on more debt. This scam of ‘growth-to debt-to growth-to debt’ is all there is to industrial prosperity … along with fuel-wasting garbage that breaks down and is thrown out in a few years. Unlike real output of goods and services which is constrained by thermodynamics, debt has no limits as long as the increases can be supported with good ‘progress’ stories.
Frakking and ‘shale oil’ are part of the narrative that serves to generate loans for energy tycoons. ‘Energy Independence’ is the empty abstraction that is offered as the narrative’s objective. Business customers and ordinary citizens are required to repay the debts … and their children and grandchildren.
But let’s look at an equation that shows why that might not be possible this time. We have here another case of people wanting to believe six impossible things before breakfast.
Good grief … the narrative is complete with Mauldin ‘folksy-isms’.
Let’s divide a country’s economy into three sectors: private, government, and exports. If you play with the variables a little bit, you find that you get the following equation. Keep in mind that this is an accounting identity, not a theory. If it is wrong, then five centuries of double-entry bookkeeping must also be wrong. Domestic Private Sector Financial Balance + Governmental Fiscal Balance – the Current Account Balance (or Trade Deficit/Surplus) = 0.
This is correct but not particularly relevant. America’s current account is not a problem. America creates its own dollars as needed, the oil sheiks recycle their imported US dollars back into the US economy. The imbalance that really matters is at home, at the end of Americans’ driveways:
These machines are not farm tractors or delivery vehicles, they are not used for work, they are luxuries, a drug, a form of crack cocaine. What they earn is zero, their cost must be met with debt, the cost of the fuel they consume is also met with debt, so is the cost of the infrastructure that these machines require. If the individual users are unable to obtain the needed credit then the economy as a whole- and the state must obtain it in the individual’s place. Otherwise, the consumption components of the string economy are deprived of funds. This credit starving process is underway, even as the cost of debt has become unmanageable. While frakking costs are extraordinary, the consumption side debts are galactic! Realistically, nobody/nothing can hope to repay them.
The consumption side is a money-loser. Sez Mauldin: “Play with the variables a little bit, you find that you get the following equation. Keep in mind that this is an accounting identity, not a theory. If it is wrong, then five centuries of double-entry bookkeeping must also be wrong:”
The Cost of Fuel + The Cost of Credit Needed to Pay for Both Fuel and Fuel Use/Waste Infrastructure – Returns on the Use of the Fuel = 0
Right now, returns are juiced with credit otherwise the process would have failed a long time ago. The means to set a price is also the means to meet that price. If a price is bid by access to credit, the consumers must have access to the same credit to meet that price. In model cities such as Detroit where the consumption side started losing purchasing power in 1929 the consequences of rationed credit are obvious: welcome to the death spiral, where costs race ability to meet them into the basement!
The banality of future world: the Woodward Avenue location in 2009. The towers at the rear of the photo are abandoned as are other structures in the area.
The best way to look at the peak oil dilemma is to ignore physical production — which has little to do with anything — and to consider the City of Detroit as the model customer for all of John Mauldin’s newly frakked crude oil. The shattered city filled desperately impoverished people is somehow supposed to afford more costly fuel when it can barely afford what it has now.
Energy products can be obtained but only if someone’s grandmother is gunned down inside her house by a gang of dope-crazed teenaged hoodlums. The reason for the hoodlums has been the success of industries in pauperizing the city. Either consumers must become richer or costs of fuel-plus-credit must decline. Since the trend — as seen in the model city — is for consumers to become impoverished the outcome is for costs to be unmet and the production/credit side to be de-funded …
When customers cannot afford fuel it remains in the ground. Right now, Detroit — that model for America’s future in today’s present — cannot afford cops. It cannot afford firefighters, it cannot afford basic services. It has been bankrupted by the short-term success of its own consumption tycoons … hard to see how it can pay for high cost petroleum!
“We got to have a little Old West up here in Detroit. That’s what it’s gonna take,” Detroit resident Julia Brown told The Daily. The last time Brown, 73, called the Detroit police, they didn’t show up until the next day. So she applied for a permit to carry a handgun and says she’s prepared to use it against the young thugs who have taken over her neighborhood, burglarizing entire blocks, opening fire at will and terrorizing the elderly with impunity.“I don’t intend to be one of their victims,” said Brown, who has lived in Detroit since the late 1950s. “I’m planning on taking one out.”
The Detroit model of house-bursting brigands is scalable: for the country to afford energy products Congress must rob grandmothers in their own houses by absconding with their retirements.
Fuel Costs + Credit Costs – Returns on Fuel Use = 0.
The implications of this little formula are profound. As with current accounts, the sum of costs and real ability to pay are always zero. As returns on fuel use are negligible, fuel and credit costs must decline … and they are. Underway right now is the desperate, last stand pillaging of what remains of the world’s wealth to obtain fuel and credit, every bit wealth is up for grabs. The real cost of fuel and credit must fall to what the fuel and credit users can afford. Looking at Detroit, the affordable amount is very small indeed.
The question is whether there will be any fuel available and the affordable price? Time will tell.
The String Economy…
Off the keyboard of Steve from Virginia
Published on Economic Undertow on December 9, 2012
Discuss this article at the Epicurean Delights Smorgasbord inside the Diner
After five years of ‘The Great Financial Crisis’ there is a sense of relief as Christmas approaches. There is nervous talk by central bankers and economists, but also hope of ‘recovery’and a following new period of prosperity … tomorrow.
It’s always tomorrow: where this recovery is going to come from or what will drive it nobody really knows, It is just taken on faith that a recovery is certain to arrive because recoveries have always arrived in the past. “Why not?” the economists ask, “It’s never different this time!”
The sense of security is misleading and unsettling. We are like a person wearing a sweater with a thread caught on something, we are walking away … Pulling the string does not blow up the sweater or cause it to crash. The sweater diminishes without our being too much aware of it. There is little drama, only a Great Unraveling. Instead of a strong economy, we have a string economy, the pulling of which is invisible to economists.
(Unknown photographer) Fairy-tale palaces for the well-to-do in the Paris of the Midwest, on Alfred Street in Brush Park in Detroit in 1881. It was all a fantastic dream, a stage-set for Victorian manners and unimaginable prosperity without end, a gilded age, the product of the settlement of the far West, of the overreaching railroads and steamships … and of millions of highly skilled immigrants from Europe.
Brush Park was a psychedelic dream-scape of hundreds of extravagant, gilded mansions, with hundreds more throughout the city: not so much an idea but an escape from the necessity of having to think about anything at all. It was as if the prosperity wasn’t real but needed physical manifestations, each more outlandish than the next … to reassure those with the most that most was indeed what they had.
What the most have today is an irksome and uncertain non-crisis, a fake. Relief resides entirely in the form of central bank credit. These banks offer trillions in low-cost loans to both governments and the finance industry so that these establishments might dodge the consequences of the gigantic debts they have already taken on. There is no gilded palace on Alfred Street for this debt for it must squirreled away out of sight. Managers hope that ordinary citizens will ignore the creaking colossus until it is safe to set it loose again, debt giving rise to still more debt against a renewed backdrop of ‘growth’.
The only gain from the central bank lending/hiding strategy is a reduction of the interest cost and an escape from accountability. Both the reduction and the escape are temporary: the banking sector receives the benefits of interest reduction while the costs are shifted to the citizens. Escape keeps finance scoundrels out of jail until the statute of limitation expires. Nothing is done to reduce the overall debt burden, indeed nothing can be done! Modernity and industry both require a constant increase of debt and cannot tolerate any decrease. ‘Growth’ is a measure of the increase in debt and therefor a measure of wealth! Without the general increase of wealth it is impossible for tycoons to gain more beyond what they already have. In a debt-constrained world, one tycoon can only gain when other tycoons lose. It is a pitiless world indeed that sets one tycoon against the others.
Any increase in debt must take place in the private sector because wealth cannot exist unless it can be extracted at great pain from the citizens. This is because money, wealth and debt are all interchangeable claims against the non-tycoons’ vanishingly small allotment of time. A tycoon can always obtain more money but no human can gain more time: for wealth to have meaning it must be worth what is dear to everyone, not just tycoons! To be a tycoon is to have a great surplus of others’ time.
Debt repayments must therefor be extracted from the public, the higher the cost to the public the more useful/satisfying wealth is for the tycoon … being a sadistic libertine is a characteristic which enables an individual to become a tycoon in the first place.
Sadly, the private sector is unable to increase its supply of debt as there is already too much debt for ordinary economic activity to manage properly. Enter the central banks, which lend in the place of the private sector. Inflationists cry that this is horrible, like beating a dog with a curtain rod … Having the central banks or the government write checks to tycoons simply will not do, it’s bad manners, the payments do not represent wealth, in fact do not represent anything. The certainly do not represent anyone’s time.
This concern is misplaced for two reasons. One is because lending to tycoons is what central banks do constantly: lending-plus-sadism is how tycoons get to be that way. Second, because the absence of real money is considered to be temporary. With the loans offered by the central banks, there is certain to be more private sector credit made available … tomorrow.
There is no inflation because the central banks do not really replace the private sector, they only fake it. Whatever amounts of credit the central bank offers is less than what is retired or destroyed by private sector deleveraging. Even as the central banks’ expand their balance sheets, the private sectors’ balance sheets contract … without the efforts of the central banks there is no credit to be had with dire consequences all around!
The governments could issue currency without borrowing and use it to retire some of the debt. This would not add to the supply of money because retiring the debt would extinguish newly-issued currency at the same time. The governments so far have refused to do this. Bankers would object … as would the tycoons who desire to extract wealth from the workers’ bloodstreams, not from the government. The government could issue sufficient currency so that the supply of money expands enough for the tycoons to gain more of it. Having the government write checks to tycoons simply will not do, it’s bad manners, etcetera …
Meanwhile, the Establishment attempts to prop up key men everywhere around the world by any means necessary. Any institution that is deemed to be ‘systemically important’ is supported with the ordinary citizens’ credit … except for those things the same Establishment deems worthy of being blown up by drones or commandos. Non-key institutions such as Detroit and other American cities are abandoned to molder then collapse.
The citizens mutter, they are under a cloud that grows longer and darker with each pull of the string. Unemployment relentlessly increases, there are rumors of ‘austerity’ to be added onto the thermodynamic variety that emerges from diminished energy availability. The establishment has only one tactic: to add more debt, which has typically increased since the beginning of the industrial revolution. Debt has become non-productive, we have the unraveling sweater economy as a consequence … there needs to be another approach.
We are caught between what we want and what we need. We want it all, we feel entitled: we are like children. We cannot help ourselves. The yarn is pulled and the sweater becomes very small, the bottom is now at our armpits. We know there are steps that we must take … we must stop pulling the string … but we refuse to take them.
Alfred street in 1993 (Unknown photographer for City of Detroit). The house behind the car is the third house from the left in the top photo. Modern Detroit, a first-world slum:
Slums are a product of modernity just the same as automobiles and jet airplanes. They are economically segregated areas, places where society’s losers are swept. Modernity washes its hands of the slum-dwellers then moves onto other business … the creation of more slum dwellers. Slums are the end product of social Darwinism, the necessary ‘yin’ to business success ‘yang’.
More success = more slums. Failure of the process also = more slums. Modernity asserts that it eliminates poverty. Slums stand as evidence that modernity creates poverty. More modernity = more poverty.
As with Mumbai and Nairobi, so goes Detroit and other slum-cities, the product of- as well as destination for industrial prosperity.
Detroit was undone by the extraction of time from tens-of-millions of Americans by Detroit’s auto- and other business tycoons. At the end of the day, America had no time for Detroit. The stock market crash of 1929 and the following Depression ruined many of the old Detroit families. The manors were sold or divided into apartments or configured as rooming houses for auto workers. Others were demolished and replaced with cheaply built stores, shabby institutional buildings or parking lots. In 1935, the immense Brewster-Douglass public housing project for the ‘working poor’ was built at the far end of Alfred Street, just out of range of this photograph. War production saw the city filled with hundreds of thousands of job-seekers and factory workers who required housing. Many of these job-seekers were Negroes from the American south. Blacks were undesirables in nearly every Detroit neighborhood. As a consequence, housing was very expensive in neighborhoods where they were allowed to settle, much more so than for whites who could live anywhere in the city. Housing for blacks was also in far more advanced states of decay. Tension between races exploded in 1943 with a city-wide race riot that killed 34, with thousands arrested and soldiers patrolling the streets.
After the war, whites who could fled the city for the ballooning suburbs, a period of migration that lasted for decades. Cities are made and broken by flows of capital and human beings. Detroit originally grew and took form from the incoming tide of European immigrants who built in the manner and with the materials they were familiar. The craftsmen who built the fairy castles were replaced with unskilled agricultural workers looking to toil in the expanding automobile factories, these workers had no background or interest in city-building. They needed a paycheck, the city would take care of itself.
Instead, big business ‘took care’ of the city. Beginning in 1908 came the machines: the city was steadily made over as an auto habitat. It didn’t take much: Detroit’s street plan was laid out before the automobile — the width of the streets and boulevards and vast spaces anticipated it. The distances were too great for walking, often there was no ‘place’ to walk to. Starting in the 1950s and 60s, the city was divided by superhighways. the Chrysler and Edsel Ford freeways were built north and east of Brush Park, flattening the commercial districts and cutting off neighborhood from the rest of the city … by 1970, after another race riot, the Brush Park neighborhood was abandoned to street criminals and drug addicts. The fairy palaces grew furry and gray with rot, they collapsed or were demolished one at a time, the housing projects were also abandoned then stripped. Today there are a couple of dozen occupied houses in this neighborhood, the rest is weed-covered vacant space dotted with gaping ruins and some low-quality replacement housing and commercial buildings.
Not just Detroit: the machines overran neighborhoods and commercial districts in cities all over the country, this happens to be Buffalo, New York (Atlantic) James Howard Kunstler calls this the suicide of Midwest American cities, instead it is inadvertent suburbanization. The post-auto density and the form of building within the cities is identical to that of the surrounding suburbs. Replacement construction in places like Brush Park is identical to that of the suburb: quickly constructed low-rise apartment complexes or ‘pods’ of identical, cheaply designed and built vinyl-sided shacks.
Brush Park- Alfred Street by way of Google. It is only a matter of time before these ‘new’ buildings go the way of their predecessors. There is no reason for anyone to care about them, any more than they did for the housing projects or the fairy palaces.
Nothing in the Brush Park neighborhood or the rest of the city was made to withstand the test of time, the appeal of the place was narrowly immediate and instant. There was no ‘greater place’ that the original neighborhood could be an indispensable part of. Detroit was a collection of unrelated buildings and occupation districts. The Park was created as a ghetto, a place of confinement for rich people who had no choice but to look at each others’ wealth every day and become bored with it. The vast endeavor could never be re-purposed into anything other than a self-referential institution, the same as an insane asylum or a water tower. There was nothing transcendent, every building was a single-function enterprise, created to mandate/channel behavior.
No doubt there are many who could rebuild the entirety of Brush Park as it was … as a museum piece. The Federal government could certainly do it for the cost of one mile of urban freeway. The fashion impulse that made the place possible 140 years ago no longer exists. Americans have nothing in the way of tools that would give such a project form other than nostalgia and wonder over building and design skills that were common in the late-nineteenth century but no longer exist. We don’t know how to create engaging urban spaces and we don’t know how to inhabit them. We have forgotten how to be Victorian merchants. We know how to get in our cars and drive.
Which is why we cling to the immediate present so desperately, we really don’t know how to do anything else. For us to learn is too dangerous because we don’t have the luxury of time, it has been stolen by the tycoons! By the time … we find out what danger we are in it will be to late to do anything about it.
Motown Memories
Off the keyboard of Newzhound Joe
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The Diner’s most prolific Newz Aggregator Newzhound Joe debuts here with his first Diner Article, Motown Memories. Detroit is often held up as the Canary in the Coal Mine for Industrial Cities from Berlin to Moscow to Beijing to Tokyo. The rest here from Joe…
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Since I’ve travelled to the Detroit area many times over the years, I thought I’d share some of my experiences there. Some of this involves “restaurant talk” because much of my travel in the area is about getting to different restaurants while visiting the mother-in-law. There’s been some “fatty talk” in the commentary recently. Just for the record, I like to eat a big dinner – but I’m not a “fatty”. 
Mother-in-law lives in Grosse Ile which is about 25 miles South of Detroit. A favorite place of mine to eat dinner is R.P. McMurphy’s in Wyandotte. It’s home is a 1890′s red brick building and is described as “turn-of-the-century saloon”.
RP’s has a very good NY Strip and Prime Rib at very affordable prices. Next door is a Merrill Lynch office. Here’s a picture of the bull sculpture in front of the office:
It was constructed by manipulating water heater cores. It’s ironic to me that the bull sculpture is completely hollow.
Down the street from RP’s is Frank’s Restaurant & Pizzeria. This is the best pizza place in the area.
On some of these trips, we used to drive a little further north and eat at the Auburn Cafe located in River Rouge. They serve up a pretty good “family style” Greek meal. I’d guess the abandoned Packard Plant is about 10-15 miles from this restaurant. The landscape really changes once you cross from Wyandotte into River Rouge – it gets very “industrial”. The population of River Rouge peaked around 1950 with over 20,000 people. It currently has under 8,000 inhabitats. From the map below, the railroad action (gray lines) picks up north of Wyandotte. This is also where you notice some really large abandoned plants off West Jefferson Street (east side). It really looks apocalyptically post-industrial to me.
The landscape probably gets even more “industrially toxic” (or “post-industrially toxic”) a little further NE of Auburn Cafe. This is where Zug Island is located. The reason I say “probably gets even more industrially toxic in Zug Island, is because the island is off-limits to the public for the most part (cameras are prohibited on the premises). It was once a robust hub for steelmaking & processing. Notice the gray RR lines in the image below:
Probably a good thing I never made it to Zug Island – from Wikipedia:
On some trips we would drive through Detroit to get to Canada via the Ambassador Bridge. Much of the drive from Grosse Ile to the Ambassador Bridge is one depressing sight after another of urban decay. After crossing the bridge, we travel through Windsor, Ontario and then south to Colchester where Uncle Phil has a vacation home. Once you get out of Windsor, the landscape changes to something very different. It almost looks Amish. Lot’s of farming and very rural. Speaking of Amish, I shared a house with four Mennonite guys for a year back in the college days. I think there are alot of similarities between the two groups. It was really different for me – maybe I’ll tell ya about it sometime.