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 02, 2014 08:13 GMT

FINANCIAL MARKETS

UNDATED (AP) -- Financial markets got off to a rough start in October as disappointing economic news and Ebola fears drove stocks lower. Surveys indicated German and U.S. manufacturing had slowed last month.

Asian stocks fell Thursday amid similar anxieties.

Japan's Nikkei 225 index lost 1.7 percent to 15,815.45 points and South Korea's Kospi fell 0.9 percent to 1,973.31. Australia's S&P/ASX 200 declined 0.7 percent to 5,295.7. Stocks in Southeast Asia also lost ground. Markets in Hong Kong and China were closed for a public holiday.

In New York, investors dumped airline stocks amid concerns that travel will decline because of the Ebola threat, and bought a handful of drug companies working on experimental treatments for the deadly disease.

Nervous investors shifted their money to havens like bonds and gold.

The blue chip Dow index lost 238.19 points, or 1.4 percent, to 16,804.71. The Standard & Poor's 500 index lost 26.13 points, or 1.3 percent, to 1,946.16 and the Nasdaq composite lost 71.30 points, or 1.6 percent, to 4,422.09.

ECONOMY-THE DAY AHEAD

WASHINGTON (AP) --The Labor Department will report on the number of people who applied for unemployment benefits last week. Economists forecast that weekly applications rose a slight 5,000 to a seasonally adjusted 298,000.

Also today, the Commerce Department reports on U.S. factory orders for August. In July, factory orders rose 10.5 percent, the biggest one-month increase on record going back to 1992.

Freddie Mac will report on average U.S. mortgage rates for this week. Last week, the average for the 30-year loan eased to 4.2 percent from 4.23 percent the previous week.

EBOLA-AIRLINES

UNDATED (AP) -- The first reported case of Ebola in the United States has caused concern among airline investors and is raising the prospect that some frightened travelers might stay home.

Details of the man's 28-hour trip from western Africa emerged Wednesday. He flew on two airlines, took three flights, and had lengthy airport layovers before reaching Texas on Sept. 20.

Still, federal officials say other passengers on the flights are at no risk of infection because the man had no symptoms at the time of his trip.

Thomas Eric Duncan left Monrovia, Liberia, on Sept. 19 aboard a Brussels Airlines jet to the Belgian capital, according to a Belgian official. After layover of nearly seven hours, he boarded United Airlines Flight 951 to Dulles International Airport near Washington, D.C. After another layover of nearly three hours, he then flew Flight 822 from Dulles to Dallas-Fort Worth International Airport, the airline confirmed.

MINIMUM WAGE

WASHINGTON (AP) -- The Labor Department is following through on President Barack Obama's pledge to get the ball rolling on a higher national minimum wage in the absence of any congressional legislation to accomplish this goal.

Labor Secretary Thomas Perez has finalized a federal rule raising the minimum wage for employees of federal contractors to $10.10 an hour.

Wednesday's move puts in force a step that Obama announced last February. The Labor Department said nearly 200,000 American workers will benefit from the new minimum, which takes effect Jan 1.

The minimum federal wage is now $7.25 an hour. Obama has proposed the higher pay level for all workers, but that has drawn resistance from Republicans in Congress. In announcing the new rule, Perez says that by raising the minimum wage for workers on federal contracts, the administration "is rewarding a hard day's work with fair pay."

STOCKTON BANKRUPTCY TRIAL

SACRAMENTO, Calif. (AP) -- A federal judge dealing with the bankruptcy issue has struck at the sanctity of public pensions in California.

U.S. Bankruptcy Judge Christopher Klein ruled Wednesday that federal bankruptcy law allows the city of Stockton to treat pension fund obligations like other debts, meaning the city could trim benefits.

The city of Stockton argued that it must make its pension contributions for public employees before its creditors are paid the entire amount they are owned.

The case is being closely watched because it could help clarify who gets paid first by financially strapped cities around the nation -- retirement funds or creditors.

The ruling was prompted by a key creditor's contention that pension obligations should be treated like other debts.

DETROIT BANKRUPTCY

DETROIT (AP) -- Emergency manager Kevyn Orr has testified in bankruptcy court that when he took over Detroit's finances, he found a city with poor services for residents, next to no cash flow and significant neighborhood blight.

Orr, hired by the state in March 2013 to fix Detroit's finances, took the city into the largest municipal bankruptcy in U.S. history. He was called to the stand and questioned by a city lawyer in federal court in Detroit.

Judge Steven Rhodes is to decide whether Orr's plan to remove $7 billion in debt is fair to creditors. Orr has said Detroit's unsecured debt is about $12 billion.

Orr said Wednesday that before he filed for bankruptcy, every creditor wanted to be "paid in full."

DAIMLER ALLEGATIONS

PORTLAND, Ore. (AP) -- Oregon's labor commissioner has filed a complaint against heavy-duty truck and school bus manufacturer Daimler Trucks North America, alleging five employees at its Portland plant were subjected to racial slurs and threats.

A statement Wednesday from Commissioner Brad Avakian says the accusations will be investigated, and if they bear out, workers could be awarded damages including back pay if they've quit.

Among the allegations, according to the statement, is that a Daimler Trucks employee threatened a black co-worker with a noose, saying he'd drag the African-American behind a car.

A statement from Daimler Trucks said it doesn't tolerate discrimination and trains employees to avoid it. It also said the company is cooperating with the investigation and has hired an outside investigator to look into the allegations.

HEALTH OVERHAUL-RATES-MISSOURI

KANSAS CITY, Mo. (AP) -- A consumer group is suing the U.S. Department of Health and Human Services to obtain information used to justify insurance rates in Missouri.

The Consumer Council of Missouri filed the complaint Tuesday in federal court. The agency didn't immediately respond to an email to its press office seeking comment.

The consumer group says the new health insurance law requires the agency to make the rate information public so consumers have the chance to challenge the costs they pay for health insurance. But the suit alleges that HHS has denied its records request.

Missouri is one of several states allowing the federal government to run their health insurance exchange. The suit says Missouri is reliant on HHS for any information regarding health insurance plans to be sold in 2015.

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