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 December 22, 2014 08:26 GMT

ECONOMY-THE WEEK AHEAD

WASHINGTON (AP) -- This is a shortened trading week with the stock and bond markets closed on Christmas Day.

However, there are some interesting government economic reports being released ahead of the holiday.

Today, the National Association of Realtors will report on how many existing homes were sold in November.

On Tuesday, the government will report on last month's new home sales, as well as November's durable goods numbers and personal income and spending for November. It will also report the third-quarter gross domestic product

This week, the government will be releasing last week's jobless claims number a day early, on Christmas Eve. Also on Wednesday, Freddie Mac will report this week's mortgage rates.

SKOREA-ECONOMY

SEOUL, South Korea (AP) -- South Korea has lowered its growth forecast for next weak citing the persistently weak sentiment among consumers and businesses.

The finance ministry said Monday that Asia's fourth-largest economy will expand 3.8 percent in 2015. Six months ago, it forecast 4.0 percent growth.

The downward revision, representing some improvement from 3.4 percent growth this year, shows the government's challenge in encouraging consumers to spend more and businesses to boost investment despite its expansionary policies and the central bank's two rate cuts this year.

Director-General Lee Chanwoo said the recovery in consumer spending and capital expenditure remains weaker than expected in the last two months.

Lee said consumers and businesses still have great uncertainties about next year and the last quarter's improvement in the economy stemmed mostly from the government policies.

SAFEWAY SALE-HAGGEN

BELLINGHAM, Wash. (AP) -- The Washington state-based grocery chain Haggen Inc. plans to buy 146 Albertsons and Safeway stores in Washington, Oregon, California, Nevada and Arizona.

The Bellingham Herald reports the sales are required under the federal review of Safeway's sale to an investment group that owns Albertsons.

If Haggen's plans announced Friday get Federal Trade Commission approval, the Bellingham-based company would expand from 18 stores and 16 pharmacies in the Northwest to 164 stores and 106 pharmacies in the five states.

Details of the deal haven't been released.

This is the largest of several sales related to the $7.6 billion sale of Safeway to investors led by Cerberus Capital Management. Associated Food Stores is buying eight stores in Montana and Wyoming, Associated Wholesale Grocers is purchasing 12 stores in Texas, and Supervalu is buying two Albertsons stores in Everett and Woodinville, Washington.

GAS PRICES

CAMARILLO, Calif. (AP) -- The average price of regular gasoline nationwide has dropped another 25 cents a gallon in the past two weeks, to $2.47.

Industry analyst Trilby Lundberg said Sunday that prices will likely keep falling.

Lundberg says the average price of regular gasoline is the lowest it's been in more than five years.

She says lower crude oil prices are driving prices down, along with an abundant oil supply and the rising value of the U.S. dollar.

The highest-priced gas in the Lower 48 states was found in Long Island, New York, at $2.82 a gallon. The lowest was in Tulsa, Oklahoma, at $2.06 a gallon.

California's lowest average was in Sacramento, at $2.58 a gallon.

The average price for midgrade gas in the U.S. is $2.71. For premium it's $2.87.

MINE EXPLOSION-INSPECTIONS

LOUISVILLE, Ky. (AP) -- Deaths and injuries at the nation's coal mines have been declining since a West Virginia underground mining disaster killed 29 workers less than five years ago.

Coal mines are on pace this year to set a new low mark in mining deaths. So far in 2014 there have been 15 coal mine-related deaths, and with less than a month left in the year, the number could stay below the record 18 set in 2009.

Federal mine safety officials say increased enforcement efforts since the Upper Big Branch mine explosion in 2010 have improved the safety at all the nation's mines. Assistant Labor Secretary Joe Main says officials focused on making coal mines safer after the West Virginia tragedy.

MIDEAST OIL

ABU DHABI, United Arab Emirates (AP) -- Saudi Arabia's oil chief is dismissing allegations that his kingdom conspired to bring down oil prices in order to harm other countries and told a summit of Arab energy leaders that he was confident the market would stabilize.

The kingdom, which is dependent on oil revenues, is able to weather lower oil prices due to large reserves built up over the years. Non-OPEC member Russia and other nations like Iraq, Iran and Venezuela need prices substantially above present levels to meet budget goals and want to drive prices up.

Saudi Arabia maintains it is opposed to cutting production because of fears its market share could erode.

The price of U.S. crude has dipped below $60 a barrel, its lowest in five years. Naimi said he was certain that the oil market would recover with the improvement of the global economy.

An OPEC meeting last month failed to agree on production cuts, mainly because of Saudi opposition to curb its own exports. OPEC controls about 40 percent of the world oil market and Saudi Arabia is the cartel's largest producer.

DISH NETWORK-FOX BLACKOUT

NEW YORK (AP) -- Dish Network subscribers were unable to watch Fox News Channel and the Fox Business Network on Sunday when the channels were taken down as part of contract negotiations.

The Fox blackout is just the latest skirmish as cable and satellite TV providers fight with networks over subscription fees. Dish Network just settled disputes that led to the temporary blackout of some local CBS stations and a separate blackout related to Turner Broadcasting channels -- including Cartoon Network, CNN, Boomerang and Turner Classic Movies.

Dish has more than 14 million satellite TV customers.

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