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 October 23, 2014 07:29 GMT

ECONOMY-THE DAY AHEAD

WASHINGTON (AP) -- The Labor Department will report today on the number of people who applied for unemployment benefits last week. Economists forecast that weekly applications increased 16,000 to a seasonally adjusted 280,000.

Also today, Freddie Mac will report on average mortgage rates for this week. Last week, the average for the 30-year loan slid to 3.97 percent.

The Conference Board will release its index of leading indicators for September as well. In August, the index - a gauge designed to predict the economy's future health - rose but at a much slower pace than the previous month

On the business side: Southwest Airlines, United Continental, American Airlines, Union Pacific, 3M, Comcast, General Motors and Caterpillar will report quarterly financial results before the market opens.

Amazon and Microsoft will report earnings after the market closes.

APPLE PAY GLITCH

SAN JOSE, CALIF. (AP) -- Bank of America is apologizing for double-billing customers who made purchases using Apple's new mobile payments service.

A bank spokeswoman said Wednesday that the glitch involved about 1,000 transactions and that all duplicate charges will be refunded.

Some customers who used Apple Pay with debit cards issued by Bank of America have complained they were charged twice for a single transaction.

Apple says it was aware of the glitch, which it said affected "a very small number of Apple Pay users." The Cupertino, California-based company has not disclosed how many customers have used Apple Pay since it became available Monday.

HARVARD-STAPLES-POSTAL WORKERS

CAMBRIDGE, Mass. (AP) -- The American Postal Workers Union called upon Harvard University's president to oppose a deal between Staples Inc. and the U.S. Postal Service, or resign her seat on the office supply company's board.

Staples, based in Framingham, Massachusetts, began providing postal services at some of its stores last year, under a partnership with the financially-struggling Postal Service.

The union, which represents some 200,000 workers, took out a full-page ad Wednesday in the Harvard Crimson, the Ivy League school's student newspaper, saying President Drew Gilpin Faust should use her position on the board to push for an end to the deal or resign from the company board. The union says Staples is using poorly-trained workers to handle mail in a low-security environment.

Neither Faust nor Staples responded to requests for comments.

YAHOO-CEO AT CROSSROADS

SAN FRANCISCO (AP) -- Signaling her reign has reached a pivotal juncture, Yahoo CEO Marissa Mayer is trying to convince restless shareholders that the long-struggling Internet company is heading in the right direction.

Mayer staunchly defended her strategy during a Tuesday presentation that addressed recent criticism leveled by activist investor Starboard Value LP, a New York hedge fund with a history of leading shareholder mutinies.

Starboard contends that since Mayer became CEO in July 2012, Yahoo has been wasting money on ill-advised acquisitions and a bloated payroll while mismanaging its lucrative stake in Chinese e-commerce company Alibaba Group.

In her rebuttal, Mayer described the $1.6 billion spent her more than 30 acquisitions as smart investments that have made Yahoo more competitive in the increasingly important mobile-device market. She also highlighted cost-cutting measures.

And she insisted that Yahoo wouldn't have been in a position to make as much money as it has on its Alibaba holdings if she hadn't taken steps to ease "years of tension and hard feelings.

CHINA-ZUCKERBERG

Zuckerberg speaks Chinese; Beijing students cheer

BEIJING (AP) -- China may ban Facebook, but not its co-founder Mark Zuckerberg, and he entertained an audience of students with a 30-minute chat in his recently learned Mandarin Chinese at a prestigious Beijing university.

There was no explicit discussion of the ban or any Facebook effort to enter the China market during Wednesday's question-and-answer session at Tsinghua University.

But Facebook CEO Zuckerberg noted during his talk that the social media giant already helps some Chinese companies gain customers abroad. He cited computer maker Lenovo's ads on Facebook in India.

Zuckerberg married Chinese-American Priscilla Chan in 2012 and said he was learning Chinese.

His pronunciation was far from fluent, but he maintained the conversation for a half hour and the students responded with warm cheers for his effort and laughter at his humor.

CHINA-MANUFACTURING

BEIJING (AP) -- A gauge of the health of China's manufacturing industry inched higher in October but factory output was at a five-month low in a sign of slowing domestic and foreign demand.

HSBC said Thursday the preliminary version of an index based on a survey of factory purchasing managers rose to 50.4 from 50.2 in September. Figures above 50 on the 100-point scale indicate expansion.

HSBC's chief China economist says manufacturing likely stabilized in October but the "economy continues to show signs of insufficient effective demand."

Earlier this week, China reported economic growth in the third as growth based on trade and industrial investment runs out of steam.

WORLD SERIES-RATINGS

KANSAS CITY, Mo. (AP) -- A World Series opener involving the San Francisco Giants set a record low TV rating for the second time in three seasons.

San Francisco's 7-1 win over Kansas City drew a 7.3 rating and 12.2 million viewers Tuesday night on Fox, according to fast national ratings by Nielsen Media Research.

That broke the previous low of a 7.6 rating and 12.2 million for the Giants' 8-3 victory over Detroit in 2012. San Francisco's 11.7 win over Texas in the 2010 opener got an 8.9 rating.

The rating for this year's opener began with a 6.9 from 8:05-8:30 p.m. EDT and peaked at 8.5 in the half hour starting at 9 p.m. With the Giants scoring three runs in the first inning and leading 5-0 by the fourth, the rating ended at 5.7 from 11:30-11:41 p.m.

Still, Fox said Wednesday it expects to win the prime-time night and have its best Tuesday night since February 2012.

Fox Deportes averaged 273,000 viewers, a record for Spanish-language World Series coverage.

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