The fate of Detroit

Updated: Saturday, August 3, 2013
The fate of Detroit story image
KALAMAZOO, Mich. (NEWSCHANNEL 3) - On Wednesday, one week after it declared itself bankruptcy, the City of Detroit celebrated its 312th birthday.

Tonight, in Tom's Corner, Tom Van Howe says Detroit's troubles, decades in the making, are only just beginning.

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I'd like to be a rah-rah guy for our state's largest city. But the truth is, no matter how I twist it and turn it and shape it...I Just can't.

The City of Detroit is the result of a train-wreck 50 years in the making. We all watched it happen, one slow-motion, hair-raising leg at a time.

How many times have you seen someone shake his head and say, helplessly, "well...that's Detroit."

And there are so many things to blame it on. Blame it on incompetent or corrupt leadership. Blame it on an auto industry that seemed unable to compete with the rest of the world. Blame it on unfunded pensions.

Blame it on NAFTA that did take hundreds of thousands of jobs south. Blame it on OSHA, which required companies to spend millions to make workplaces safer. Blame it on the cost of oil from the Persian Gulf. Blame it on white flight.

Blame it on loss of tax revenue.

Blame it on what or whomever you please.

The fact is, Detroit is a gigantic mess. It is a failed city.

In 1960 it was the fifth largest, and richest, per capita, city in the country with a population of nearly two million.

Now, with a population of just 700-thousand, 60 percent of its children live in poverty. Unemployment plods along at nearly 20 percent.

Some 30-thousand current and retired city workers are wondering if they'll have any of the pension they helped pay for.

A full third of Detroit's 140-square miles—an area the size of Grand Rapids—is now vacant or desolate.

It's a city that finds it difficult to even maintain street lights.

In the city itself, there is anger and outrage at the predicament people are finding themselves in...as if they believed the city could go on borrowing and running up bills that it never intended to pay. That day is now over.

I thought the defiant column by Mitch Albom, the celebrated Free Press writer, was terrific.

"Yeah, we're broke," he wrote, "But we got up this morning and had breakfast. Yeah we're broke. But we'll carry on...We'll still be here. We're not going anywhere."

It's nice and its easy to be defiant. But its not going to pay any bills. Its not going to bring back people who've already left. It's not going to raise tax revenues. Its not going to make leaders anymore honest.

For the record...Stockton, California, declared bankruptcy 13 months ago. And its parks are reportedly populated with drug dealers, its courts with lawsuits, its business districts with boarded up windows—with little relief in sight.

Are there positive signs in Detroit? Yes.

The Tigers are in first place. Consumer Reports says the new Chevy Malibu is hands down the best car on the road in just about any price range. Private developers want to build a new soccer stadium downtown. The state has agreed to issue $450 million in bonds to help develop a new Red Wings hockey stadium—and $200 million more to help develop 45 blocks near downtown.

So yeah...some things have the patina of progress.

But bright spots aren't enough.  Detroit is in for a long painful recovery. If, in fact, its up for it. There will be no bailouts.

We know that now.

So, in a very real way, Detroit is a new frontier—an urban frontier—waiting for courageous and creative private investment to mold something new from the rubble.

We have our fingers crossed. In the meantime...Happy birthday.

In this corner...I'm Tom Van Howe.

Business News

Last Update on March 30, 2015 07:27 GMT

ECONOMY-THE DAY AHEAD

WASHINGTON (AP) -- It's all about the consumer and housing early this week.

Today, the Commerce Department will release personal income and spending for February and the National Association of Realtors will report on pending home sales index for February.

On Tuesday, Standard & Poor's will issue the S&P/Case-Shiller index of home prices for January and the Conference Board will release the Consumer Confidence Index for March.

NABE ECONOMIC FORECAST

WASHINGTON (AP) -- A new survey finds economists are expecting much stronger growth this year and next.

The National Association for Business Economics survey finds' a median forecast of 3.1 percent growth in real gross domestic product in 2015, compared a 2.4 percent gain in real GDP last year.

NABE President John Silvia, who's also the chief economist of Wells Fargo, says there's promising news for jobs too. The panelists' median forecast is for net job creation to average approximately 250,000 per month in 2015 and 216,000 per month next year. NABE says the unemployment rate is expected to continue its downward trend over the next several quarters, reaching 5 percent by the second half of 2016.

As for what the Federal Reserve will do, Silva says 88 percent of the panelists believe the Fed will start tightening monetary policy in the second or third quarter of 2015.

AUTO SHOW-LINCOLN CONTINENTAL

DEARBORN, Mich. (AP) -- Elvis Presley had one. So did presidents from Kennedy to Reagan.

Now, the Lincoln Continental is back.

Ford Motor Co. is resurrecting the Continental with a concept car debuting at this week's New York Auto Show. The full-size sedan goes on sale next year.

The Continental dates to the late 1930s and was once the pinnacle of luxury. But Ford stopped producing it in 2002 when sales slowed.

Now, it's returning the Continental to the top of Lincoln's car lineup. The concept car has a new, smaller grille and a more elegant look. It also has new technology, including hidden door handles.

Ford hopes to take advantage of luxury sales growth in China, where customers appreciate Lincoln's history. It's opening more than 20 Lincoln dealerships in China this year.

AUSTRALIA-ASIAN BANK

CANBERRA, Australia (AP) -- Australia has announced that it will join negotiations to establish a new a Chinese-led Asian regional bank.

The U.S. has expressed concern the new Asian Infrastructure Investment Bank, or AIIB, will allow looser lending standards for the environment, labor rights and financial transparency. The U.S. also worries the new bank will undercut the World Bank, where the U.S. has the most clout, and the Asian Development Bank, where it is the second-largest shareholder after Japan.

Prime Minister Tony Abbott, Foreign Minister Julie Bishop and Treasurer Joe Hockey said in a joint statement on Sunday that the government will sign a memorandum of understanding that will allow Australia to participate as a prospective founding member in negotiations to set up the bank.

DUKE ENERGY-CEO

RALEIGH, N.C. (AP) -- Duke Energy's CEO is paying a price for a massive spill of collected coal ash that coated 70 miles of a North Carolina river in sludge containing toxic heavy metals.

An annual statement released ahead of the Charlotte-based company's May shareholder meeting says Chief Executive Officer Lynn Good's $8.3 million compensation in 2014 was cut by about $600,000. The top financial officer and three other executives saw similar 35 percent reductions in compensation tied to annual performance.

Directors of the country's largest electric company said in the company proxy statement released this week that the executives were docked because the spill will cost Duke Energy more than $190 million in cleanup, legal fees, and fines to settle a pending criminal case involving Clean Water Act violations.

BRITAIN-MENINGITIS VACCINE

LONDON (AP) -- Britain says it will become the first country to offer all babies a vaccine for potentially fatal meningitis B after it reached a price deal with GlaxoSmithKline PLC.

Government health advisers recommended use of the Bexsero vaccine last year, and the government has spent months negotiating over the cost.

The drug was owned by Novartis, which recently sold most of its vaccines business to GlaxoSmithKline.

Health Secretary Jeremy Hunt said Sunday he was "very proud that we will be the first country in the world to have a nationwide Men B vaccination program."

Babies will receive the vaccine at two months, followed by two further doses.

Meningitis is a bacterial infection of the lining surrounding the brain and spinal cord that most commonly affects children and teenagers.

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