By on November 27, 2008

I live in Michigan. Not on the Detroit side of things, around here it’s mostly suppliers. I’m an engineer. As I write this, I’m off on unpaid furlough. I don’t work in the auto business; my company is in an industry about 10 bailout levels down. But around here, it all looks the same. Two years ago the Delphi fuel injector plant was shut down; two months ago the big GM stamping plant was stamped for extinction. Winter even came a bit earlier this year. It’s cold, damp, gray, and we got some snow before Thanksgiving. Not unheard of, but not exactly welcome. I think it was P.J. O’Rourke who remarked while flying over the “liberated” but still depressed Eastern Europe, “Communism is the only form of government you can see from 30,000 feet.” This economy is like that. You can see it of course, but it’s also cold and gray and it hangs in the Michigan air.

I sit on the couch and watch the TV news shows. I choose a network based on who I want to be mad at. It’s pretty easy to know what they’re going to say. They easily find experts who can easily toss out solutions based on villains that are easy to find. I can blame the UAW for greedily grabbing as much as they could with no thought to the future. Or I can change the channel, and blame the management for the same thing. It’s easy for me to pick my side and find a commentator or a website to validate my choice.

Feeling validated always makes me feel better, but I want things to be like they were. I’m mad at these people for screwing up my plans, screwing up the status quo, screwing up my life. But way deep down, there’s a quiet voice in my head that says, “this is life… this is how it goes.” Newton may have said, “an object in motion tends to stay in motion”, but he wasn’t accounting for friction. In life, there’s friction.

The voice tells me that maybe I’ve been ignoring the friction. I work hard… I “put in the hours”. But I do the work to pay for silly conversations on cell phones. I watch silly shows on cable TV. I pay credit card bills for too much silly shit. Maybe I wasn’t ignoring the friction; maybe I just focused on the wrong friction. When life is in motion at its usual pace, when there’s no obvious crisis, no worthy antagonist, I lose focus. I get caught up in the silly stuff.

I’d like to believe that the leaders of GM, the UAW, or the government don’t get caught up in the silly stuff. They’ve been vetted and validated. They’ve risen to the top through a series of tests that predicted these problems and revealed their solutions. But again, I hear the voice and it reminds me that just isn’t true. All these organizations are simply made up of people like my colleagues, like my neighbors… like me. And since the fate of the country rests with the likes of me, I look back out the window at the depressed economy and become, well… depressed.

But then, deep down, I’m forced to acknowledge that voice. Maybe it’s Newton again, “For every action there is an equal and opposite reaction.” But maybe it’s more along the lines of “we finally have a worthy antagonist…we have something to do.”

I easily conjure up more pundits, prognosticators, and keyboard jockeys that shout down the voice with an overwhelming onslaught of facts and scenarios describing insurmountable dooms. But I can’t quite drown it out. “Sure these guys may be a bunch of ass-clowns, unfit to lead during a real crisis…but it’s the crisis that will produce the real leaders. The vetting and validation can take place now. There can be focus.” I’d like to dismiss the voice as jingoistic pabulum. But still, it’s hard to ignore it.

It’s in my culture. Sure, people like to say “work is for suckers”…but most of them hear a voice too. They don’t respect any side that tries getting something for nothing. They don’t shy away from “putting in the hours”.

It’s in my DNA. My parents were immigrants. You can’t leave your whole life behind and not be willing to take a risk. If you were afraid of the worthy antagonist, you’d still be back in the Old Country.

So I just can’t ignore the voice. I have something to do. I have focus. Despite shouts of what may be the worst economic disaster we’ve ever faced… I can still hear the voice saying in it’s best Ed Harris / Gene Krantz imitation, “With all due respect, I believe this is gonna be our finest hour.”

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39 Comments on “Editorial: Winter Comes To Michigan...”


  • avatar
    derm81

    I am in SE Michigan/Metro Detroit and you can taste the sadness and despair in the air.
    Houses are empty with toy wagons still in the backyard waiting to be pushed again. Massive skyscrapers built in Detroit’s heyday stand with 35 floors of shattered windows…and dreams in some respect. People are scared of the unknown. Strip malls that were once thriving centers of commerce are now barren concrete deserts were teenage skateboarders roam.

    Michigan is a divided state anyhow. The “Amway Dutch” on the west side wants nothing to do with Detroit’s arsenal-style democrats. Of course you will see Crain’s write up east-west journals and all that….it’s really just a taken thing. In reality, Michigan doesn’t have a sense of leadership. Governor Granholm is always off promoting stupid agendas in faraway countries when she is needed most here and now!

    I don’t really even want to type anymore because I will stay here for the next 5 hours on a soapbox when I should be celebrating as day of thanks and turkey.

  • avatar
    picard234

    Sad, but beautiful article. Happy Thanksgiving.

  • avatar
    NickR

    Very good piece.

    derm81…Detroit really looks like that? Sheat.

    On the other hand, where I grew up the single largest employer by far was a Ford plant (the one that currently makes the Edge and the Flex…my guess is they are having sleepless nights). If they closed my former hometown would suffer plenty.

  • avatar
    Martin Schwoerer

    I’ve never been to Detroit, but from what I have heard, it still has some very beautiful areas. I also liked this article on which I stumbled this summer:
    http://laughingsquid.com/escape-to-detroit/

  • avatar

    Thanks for the beautiful article. It takes me back to the short story I wrote about my 1 year stint in Detroit, and a walk I took to the (old) GM building to find myself. Or to make peace with myself, I can’t remember. Whatever.

    Thanks my Detroit recollections, I eventually found myself writing about cars on the Internet. Funny how these things work out.

    Detroit is a great town, and the automotive relics (past and present) make for great sightseeing. I took Bill Montgomery for a mini-tour when we attended the NAIAS, and I hope to do it again soon.

  • avatar

    Martin: Belle Isle is beautiful. And the RenCen is a stunning piece of modern architecture. So yes, there’s plenty of beauty in Detroit, even if a large chunk of it is more akin to the ruins of a great Greek Civilization.

  • avatar
    Stingray

    Great Piece. I found it sad but full of motivation.

    I’ve seen some pictures of Detroit. It’s sad that a city with so beautiful buildings let the rot until ruins.

  • avatar
    50merc

    Thank you, HeBeGB for writing this article. I hope 2009 goes well for you.

    A thousand miles south of Detroit, it’s hard to grasp what has happened to your area. Cognitively we understand the decline of the automobile industry. Emotionally, it’s difficult to accept things have changed. We always thought of Michigan as a rich powerhouse state, blessed with industries that paid wages twice what we earned. How could it not be one of the most prosperous states in the union? The Renaissance Center fits that image, not the great swaths of empty blocks where houses once stood. Perhaps once Detroit reaches equilibrium the rest of Michigan can again be a magnet for investment and jobs.

  • avatar
    derm81

    Nickr, Detroit still looks like that to an extent. However, you have to remember that for 50 years, Detroit was one of the wealthiest cities on the planet. The architecture is stunning with names such as Yamasaki, Kessler, Kahan, Kamper and more. I used to give architectural tours through Indian Village and Palmer Woods. The media seems to be infatuated with the look that Hollywood has given Detroit.

  • avatar
    Pig_Iron

    HeBeGB,

    Thanks for writing this. It’s been 3 years fo me. Hopefully there’s something in construction for me. It’s hard to swallow your pride when you used to be the ‘go-to” guy, but now you’re just some schmoe from a dying industry.

  • avatar

    Governor Granholm is always off promoting stupid agendas in faraway countries when she is needed most here and now!

    At least she can’t raise taxes when she’s out of the country or in Washington.

  • avatar

    derm81, HeBeGB, Pig_Iron,

    We should organize some kind of Detroit area get together to commiserate. Drop me an email to rokem@netzero.net.

    derm81, regarding Detroit architecture, I recall reading that Detroit has some of the finest early 20th century skyscrapers in the US. You mentioned Palmer Woods, so you probably know about the Frank Lloyd Wright house on Seven Mile. I presume you meant Albert Kahn, not Kahan, and know his work, but for those outside of the Detroit area, Kahn was closely tied to the auto industry, designing Ford’s Highland Park Model T plant, the Rouge Complex, the Packard factory, and the General Motors Building. Kahn’s pioneering work work with reinforced concrete made it possible to build plants with large open spaces that auto assembly needs. He also designed many of the more prominent buildings on the UofM campus, including acoustically perfect Hill Auditorium.

  • avatar
    eggsalad

    I lived within 10 miles of GM’s Stamping operation for 20 years, up until two years ago.

    I sold my $175,000 house for $109,900 in ’06 and ran as far as I could. It’s 75 degrees on Thanksgiving for me now.

    It has been “winter” in Michigan since at least ’05, and it’s only gonna get darker and colder.

    Good luck.

  • avatar
    Matt51

    The true cost of the Iraq/Afghanistan wars is $5 Trillion. This is adding in the cost of borrowing money to finance the wars, replace worn out equipment, wounded veterans care, cost of CIA operations, all of which are usually not accounted for. This number is larger than the 1 Trillion “supplemental” funding usually quoted by our government as they understate the true cost of the wars. The cost in real, inflation adjusted dollars now exceeds the total cost of WWII.
    You cannot mis-allocate resources to this extent without it impoverishing we the people. We can no longer afford homes and cars. This is the real problem for the entire industry, not just Detroit. New cars are no longer affordable to the masses, only to the upper 10%. Even with six year financing.
    GM and Ford are burning through 2B each per month in losses. Chrysler 1B. So you would need 24B each per year for GM and Ford, 12B for Chrysler. To bail out the domestics, they need two years of funding, plus money for product development. On a conservative basis, they would need about $100B aid to get through the next two years. But, they still have to have customers who can afford their product, which is not a given.
    This is the largest industrial melt down in US history, and Michigan is bearing the brunt.
    Michigan should buy the tiny three – their market caps are quite low. Then Michigan should lead the re-organization, before spinning them off back to public ownership.

  • avatar
    50merc

    Matt51: “The true cost of the Iraq/Afghanistan wars is $5 Trillion. … The cost in real, inflation adjusted dollars now exceeds the total cost of WWII.”

    Did your data come from some fever swamp? A trillion is a thousand billion. For perspective, the entire DoD budget runs about $500 billion, and it wouldn’t be zero even if we didn’t have a soldier in Iraq or Afghanistan. Wars are expensive, but so is doing nothing about threats to our nation and western civilization. That’s why during WW II the military budget was many times higher as a percent of GDP than it is today.

  • avatar
    Matt51

    http://www.washingtonpost.com/wp-dyn/content/article/2008/03/07/AR2008030702846_pf.html
    The Washington Post had us at 3 Trillion back in early March. They said this was the conservative estimate, it likely was going to cost more. This is for Iraq only. So I round to 5 Trillion based on another year of war, plus the Afghanistan war.
    But beyond this is the cost to the already sputtering U.S. economy. All told, the bill for the Iraq war is likely to top $3 trillion. And that’s a conservative estimate.

    “President Bush tried to sell the American people on the idea that we could have a war with little or no economic sacrifice. Even after the United States went to war, Bush and Congress cut taxes, especially on the rich — even though the United States already had a massive deficit. So the war had to be funded by more borrowing. ”

    “Another worry: This war has been particularly hard on the economy because it led to a spike in oil prices. Before the 2003 invasion, oil cost less than $25 a barrel, and futures markets expected it to remain around there. (Yes, China and India were growing by leaps and bounds, but cheap supplies from the Middle East were expected to meet their demands.) The war changed that equation, and oil prices recently topped $100 per barrel.”

    “It’s a bleak picture. The total loss from this economic downturn — measured by the disparity between the economy’s actual output and its potential output — is likely to be the greatest since the Great Depression. That total, itself well in excess of $1 trillion, is not included in our estimated $3 trillion cost of the war.”

    http://www.amazon.com/Three-Trillion-Dollar-War-Conflict/dp/0393067017

    Readers may be surprised to learn just how difficult it was for Nobel Prize-winning economist Stiglitz and Kennedy School of Government professor Bilmes to dig up the actual and projected costs of the Iraq War for this thorough piece of accounting. Using “emergency” funds to pay for most of the war, the authors show that the White House has kept even Congress and the Comptroller General from getting a clear idea on the war’s true costs. Other expenses are simply overlooked, one of the largest of which is the $600 billion going toward current and future health care for veterans. These numbers reveal stark truths: improvements in battlefield medicine have prevented many deaths, but seven soldiers are injured for every one that dies (in WWII, this ratio was 1.6 to one). Figuring in macroeconomic costs and interest-the war has been funded with much borrowed money-the cost rises to $4.5 trillion; add Afghanistan, and the bill tops $7 trillion.”

    So a better number is 7 Trillion.

  • avatar
    Andy D

    A trillion is difficult for me to conceive. Say a dollar bill is 6 inches long, 2 to a foot. 10560 to a mile. Round off to an even 10,000. 240,000 miles to the moon. Round up to 250,000 for simplicty. 250,000 X 10,000 = 2,500,000,000. So a 1,000,000,000,000. So a trillion $ placed end to end would reach the moon 4000 times.
    The number is so large it is beyond comprehension. It can only be used to describe something unreal, such as national debt.

  • avatar
    Matt51

    The cost of the wars has been largely hidden from the American public. Remembering my economics classes from long ago, here is the problem. All the money sucked out for the wars has damaged our standard of living for decades to come. The conservative economists would have either eliminated the increase in the national debt (Tom Delay says the increase under Bush was purely due to wars), or would have provided additional tax cuts which would have grown the economy. Liberal economists would have invested in education, infrastructure, alternative energy. Either way, or with a combination of both, we would have had a higher standard of living. Because all the money spent on wars did not provide houses or cars or roads or other means of achieving a higher standard of living.

    Michigan is collateral damage of the wars.

  • avatar
    AG

    The problem is that low interest rates coupled with a political leadership hellbent on keeping money in wall street hands oversaw a ridiculous speculative bubble that effectively killed our consumption-oriented economy.

    Now that prices are falling like lead bricks people can actually afford things. Another fun consequence is that maybe adjustable rate mortgages will have their rates adjust downward, stopping the flood of foreclosures.

  • avatar
    Matt51

    The Fed only controls short term rates. Long term rates are based on market conditions, therefore it is wrong to blame the Fed for a housing bubble. There is only so much money available in the capital markets, and so much of it was sucked up to fund the wars, not enough was left for the consumer economy.

    Unfortunately, cars are no more affordable now than they were a year ago, and probably will not be more affordable for the foreseeable future.

  • avatar
    windswords

    “Michigan is collateral damage of the wars.”

    I’m sorry, but that is a rediculous statement. Michigan is the “collateral damage” of an inept big 3, which are dragging down all the suppliers with them, and an inept and clueless governor/legislature. That and maybe demographic trends. How deep does your BDS go?

  • avatar
    windswords

    This is too easy. The percentage of GDP spent by the defense department is low compared to other years. And were not just talking WWII folks,. The highest was during the Kennedy administration (google “missile gap”). What the writers of these slanted pieces don’t tell you is that if we pulled out of Iraq and Afghanistan completely spending levels for defense would remain at least 80% of what they are now (unless Obama cuts it further, I think you can count on that, it’s the only part of government that Democrats like to cut). All we’re doing is putting the expenditures under a different category. It still costs the same amount of money to equip, feed, house, and pay salaries and benefits to a combat division whether they’re here or somewhere else. The only increase is in greater use of equipment and medical costs because of combat situations. But since the situation is now a low intensity conflict without major campaigns or battles this is not a huge number, nothing like WWII, Korea, or Vietnam were it’s height. Remember, you can’t evaluate a wars true cost in dollar figures alone. You have to use percentage of GDP. That’s because the ability of a nation to wage war depends on it’s GDP. Our GDP is much bigger today even adjusted for inflation than in past eras (I know with all the doom and gloom it’s easy to think everything was better in the past and that the US has only been getting poorer over the years but it’s just not the case). That’s why Japan had NO CHANCE to win against the United States, and many Japanese, including Adm. Yamamoto knew it. If they could get the US to sue for a quick peace to end the hostilities they could hold on to all or most of their gains in the Pacific. But if the war were to carry on and the US to mobilize its economy and fight to a final victory there was no chance. I wonder what would have happened had we had the same characters running around then as we do today saying the war is lost (I’m looking at you Senator Reid).

    War Cost as % of GDP for WWII: 15.52, for Korea: 2.15, for Vietnam:1.77, for Iraq: 1.06

    War Cost as % of Total Federal Expenditures for WWII: 238.6, for Korea: 60.6, for Vietnam: 36.7, for Iraq: 18.3

    Total Federal Expenditures as % of GDP in WWII was 6.51. That makes sense. The same figure today including Iraq is 5.76. Think about that. We had 15 million men under arms in WWII. We had 11 or so complete air forces stationed overseas, each one with hundreds of aircraft. We had 2000 ship navy. Thousands of tanks. This is not what we today. Yes our ships, planes, and tanks are more expensive and more capable but it’s obvious when looking at the numbers today that the 5.76 percent of federal expenditures is not all from the war in Iraq.

    It doesn’t take a brainiac to realize we are spending A LOT more federal bucks on something else than Iraq. I wonder what it could be?

    The spending we are about to embark on for SSN with the upcoming retirements of the baby boomers will dwarf the GWOT. At that point we won’t be able to conduct a war (or have a substantial military) because we won’t have the money.

  • avatar
    jckirlan11

    Detroit: one of my favourite cities. Was so beautiful and vibrant at one time. Here’s a great website to demonstrate that, http://www.detroityes.com/home.htm.
    Just looked at the pic. Sturgeon Falls , that my home. Seems to look nicer when your here.

  • avatar
    Matt51

    I would ask you to look at the links I provided as to the true cost of the wars. The amounts you are quoting are propaganda designed to cover the magnitude of the screw-up. For one example, we have a 150,000 man private contractor army in Iraq, which costs many times the 150,000 uniformed US Army which is in Iraq. The low percentage GDP is based only on the yearly supplemental budget, which is only a tiny fraction of the total war cost.

    It is the minds of the intolerant and stupid who must question the patriotism of those who truly seek a strong American, which cannot occur if we are economically weakened. I support a strong US military.

  • avatar
    Dr Lemming

    Nicely done piece. I hope TTAC continues to branch out with different writing styles.

    It’s one thing to read about the decay of the rust belt, and quite something else to live with it daily. I spent four years in Cleveland, which is similar to Detroit in its decay. For months after my arrival I was still viscerally shocked by the relentless blight of boarded up buildings stretching out block after block. People tended to have a sad, weary look in their eyes. Nasty arguments broke out in the post office over inconsequential stuff. Trash and potholes were everywhere. When I first arrived a native warned me not to fall asleep in my chair for five minutes because my mustache might get stolen; I learned that he was only half joking.

    The voting ballots are exceptionally long because they appear to elect everything down to dog catchers. But because old-style political machines — and racism — dominate, promises of change tend to result in another round of corrupt and inept business as usual.

    I also met some brilliant, resourceful and infinitely compassionate people who were working hard to revive their communities. They could have left for sunnier climes but made conscious decisions not to.

    Some blogospheric commentators seem to want to find a simple target to blame for the collapse of America’s once invincible industrial heartland. That’s the easy way out. The decline of Detroit and Cleveland has been going on long before Barney Frank, the Iraq war and Wagoner’s reign of error. That decline might have continued to occur even if the Not So Big Three had played its cards a wee bit better in recent years. After all, once a city surpasses a tipping point, it can be terribly difficult pulling it back from the brink.

  • avatar
    97escort

    It is not just the Iraq and Afganistan wars that are pouring money down a rat hole with nothing to show for it.

    Over 50 percent of oil is imported. Those funds go to oil exporters and do not return for the most part. If they do return, it is in form of loans on which we must pay interest.

    The Federal debt continues to increase to record levels which sucks money from the economy to pay interest and principle to foreign lenders.

    Not only that we run a large trade deficit partly because we prefer foreign cars rather than domestic ones thereby sucking more funds out of the economy.

    Add to all this the bursting of the housing bubble which has sent billions to money heaven.

    It is a wonder that the economy continues to function at all.

  • avatar
    Matt51

    Dr Lemming and 97 Escort you both make good points. I just want to add, the US struggled to pay for the Vietnam war, from the inflation of the 1960’s, to the stagflation of the 1970’s, to the high interest rate regime of the early 80’s. My point was not to argue politics, but to point out the impact of war costs on the domestic economy. I agree we have a trade deficit issue, we cannot import so many manufactured goods and oil, we have to choose which. There are other problems which caused Detroit’s decline, the horrible cars of the 70’s and 80’s, when Toyota had such a huge technological and quality lead, certainly hurt.
    A general deflation is quite rare, and I understand what Bernanke is trying to do. He is face with a real estate deflation. Many feel the Great Depression was caused by the Fed not acting quickly enough to replace bank losses, which losses cause a direct decline in the money supply.
    I would just ask for those who have an open mind, to look at the true cost of the wars, and see if this was a primary cause of our deflation – I believe it is.
    Overall the Bush economic policy was not that bad, but the wars went on for much longer than expected, and the costs are very real.
    I do not accept everything was the fault of Fannie Mae and Freddie Mac. 93% of mortgages are current. The primary problem was not 100% loans, it was a house which appraised for $500,000 declined in value to $250,000 a year later. A general deflation, just like in the 1930’s.

  • avatar
    50merc

    Matt51: “I would ask you to look at the links I provided”

    I did. And I noted the axes being ground. A reader need only reach the second and third sentences of the WaPo piece to see the first clues: “Iraq adventure” and “a failed war.” Accountants call this working the P&L from the bottom up. The authors are looking for evidence to support their view, even if that requires confusing correlation with causation. (Say, I noticed Saddam is gone and the price of gasoline has been falling recently. Thanks, Iraq! But AIG went critical. Damn you, Iraq!) Look, everyone knows wars are expensive.

    “It is the minds of the intolerant and stupid who must question the patriotism of those who truly seek a strong American, which cannot occur if we are economically weakened. I support a strong US military.”

    No quarrel there, as long as all fiscal burdens including expenditures people like Stiglitz always call “investments” are cautiously undertaken. And I do disagree with people such as Hollywood deep thinkers, who admire our armed forces only when they’re not fighting.

    Thanks, jckirlan11, for mentioning the detroityes website. It really is terrific, and I’ve enjoyed it for several years. Anyone who is interested in automotive history should at least look at this page from the site:
    http://www.detroityes.com/industry/02modelt.htm

  • avatar
    Matt51

    Merc50 – I never said you had to like the authors (although I do). Their totaling of the costs is unassailable though. The cost of the CIA operations are off budget. The cost of caring of wounded veterans is not in the annual supplemental budget submitted by the Bush Administration. The cost of interest on the money borrowed to finance the war is part of the war cost. And so on.

    The French Revolution was largely caused because the French King insisted on becoming involved in the American Revolution against the advice of his financial advisor.

    If you look at the money supply in circulation, and the true costs of the wars, it has to negatively impact our standard of living. It should also be food for thought as to where our economy is headed for the next several years, as war expenditures will be large for some time to come.

  • avatar
    philipwitak

    being a michigan native who relocated to san diego more than 25 years ago and yet one who still retains a certain undeniable fondness for the place, i was quite interested to read the write-up and the reader comments it generated – and enjoyed them all. but why was an image of the weyerhauser plant in sturgeon falls, ontario, canada, chosen to illustrate the editorial?

  • avatar

    It is the minds of the intolerant and stupid who must question the patriotism of those who truly seek a strong American, which cannot occur if we are economically weakened. I support a strong US military.

    Ah, so your calling people intolerant and stupid is morally superior to those who question your patriotism. Okey dokie.

    If you support a strong US military, would you agree that defense spending, apart from Iraq and Afghanistan, should return to more than 4% of GDP? Can you offer us any hypothetical cases where you support US military action outside the borders of the United States? Should we continue to operate 7 supercarrier battle groups to project our power worldwide? What weapons programs would you continue to fund? Which would you end? What about missile defense systems? Should we continue to develop them? Is terrorism a military problem? Is terrorism a law enforcement problem? Is terrorism the result of us making enemies in the Muslim world?

    It’s easy to say that you support this or that. Let’s hear some specifics.

  • avatar

    I do not accept everything was the fault of Fannie Mae and Freddie Mac. 93% of mortgages are current. The primary problem was not 100% loans, it was a house which appraised for $500,000 declined in value to $250,000 a year later. A general deflation, just like in the 1930’s.

    While only 1/4 of even the subprime loans are not performing, the problem is systemic because of how mortgages were bundled. It’s not just that those bundles are now worth bupkis (because all those supersmart guys on Wall Street were acting as though statistical risk factors are the same as real life and didn’t count on the “risk” part of those factors ever really happening – guess what? It happened). Those bundles (which included some good loans and some risky loans to balance out the risk – which is a little like saying that the bushel will get along fine with a small number of rotten fruits) were used to back securities. Institutions took on debt to buy those securities. Credit default swaps, essentially insurance against someone defaulting on debt, were traded to transfer the risk of that debt, exposing even more institutions.

    Then, when folks started to default on mortgages, both subprime and regular, it started a cascading effect. Many financial institutions, not just mortgage issuers, but banks, insurance companies, hedge funds, money market funds, were exposed to huge amounts of debt. When the stock market started to nosedive, that was due to companies selling off whatever assets they had to pay obligations so they, like Lehman Bros., wouldn’t go belly up.

    Here’s a good summary of the problem.
    http://www.jewcy.com/post/financial_crisis_six_easy_pieces
    The writer is a Democrat and he tends to emphasize the role of the Bush admin (and treats Phil Gramm as a villian), so other than failing to mention the efforts of Barney Frank (whose lover was a VP at Fannie Mae in charge of “new product initiatives” i.e. new kinds of risky mortgages:manufactured housing, home im-
    provement loans, low down payment mort-
    gages, energy loans, and reverse mortgages) to keep the FMs pumping out those loans, as well as the efforts of Chris Dodd D. Countrywide, and Joe Biden D. MNBA, it’s a pretty good summary of how a relative handful of risky mortgages put the entire economy at risk because of some very bad hubristic investments by some allegedly smart folks on Wall Street (most of which contributes and votes on the Dem side of things.)

  • avatar
    Matt51

    Ronnie Schreiber-

    I will take one last shot at this thread.

    “Ah, so your calling people intolerant and stupid is morally superior to those who question your patriotism. Okey dokie.”

    If anyone who disagrees with Bush administration war policies is called unpatriotic, I will call those assholes any name I want in return. This is not a question of moral superiority.

    “If you support a strong US military, would you agree that defense spending, apart from Iraq and Afghanistan, should return to more than 4% of GDP? Can you offer us any hypothetical cases where you support US military action outside the borders of the United States? Should we continue to operate 7 supercarrier battle groups to project our power worldwide? What weapons programs would you continue to fund? Which would you end? What about missile defense systems? Should we continue to develop them? Is terrorism a military problem? Is terrorism a law enforcement problem? Is terrorism the result of us making enemies in the Muslim world?”

    First of all the Bush Administration should have followed the Powell Doctrine which still makes a lot of sense. Eric Shinseki’s advice should have been followed. The lesson of Vietnam was we should not be involved in long protracted wars, we need to plan ahead and win decisively and overwhelmingly, and have an exit strategy.

    What I would cancel – the JSF – I would purchase more F22s (much higher performance) F16s and F18s. The Air Force and Navy would be happy, the Marines would not be. I would cancel the V22 tiltrotor, which has only proven it will never be used in combat. I would buy weapons systems which would be used. Crusader artillery system, fixed wing aircraft of all types as much of what we have is worn out, helicopters of all types. In other words, have a capable military, do not transform the military into a police force.

    I would not automatically say 4% is a magic number. If we can provide defense at 3% that is good. If it requires 4%, we need to do it. I assume you are referring to the base defense budget. Defense spending has to be high for a period of time, to replace everything which has been worn out at an accelerated rate in Iraq and Afghanistan.

    Terrorism – Iraq was not involved in 9/11 and was not the major source of terrorist activity in the world by a long shot. Iraq was a war of choice which has weakened the US. I would abolish the Department of Homeland Security and turn those functions over to the FBI. I would push for a Mideast peace deal between Israel and the Palestinians, which the Bush Administration put off until too late. I would hold the Saudis accountable for the terrorism they fund. I would negotiate with the Iranians, using carrots and sticks to move them. But, as Teddy Roosevelt said, speak softly and carry a big stick.

    I would scale back missile defense spending, as the Russians can easily evade it. There is no valid reason to put missiles in Poland. Missile defense should be focused on rogue countries such as Iran and North Korea. Parts of missile defense should be used to defend our carriers.

    We have 12 carriers? Maybe 10 is the right number, I would have to look into this and do not have a firm opinion at this time. They are becoming more vulnerable to missile attack.

    Terrorism is primarily a State Department responsibility, as part of the executive branch. Military power is just one tool which can be used. Long occupations of nations which do not want us is colonialism and is doomed to fail. It also bankrupts us.

    If we want to maintain our independence, and not become a colony of China and Japan, we need to have financial independence, which means we also have to reduce our imports from Asia.

  • avatar
    ZoomZoom

    Matt51 :

    What I would cancel – the JSF – I would purchase more F22s (much higher performance) F16s and F18s.

    I am glad you’re not in charge here. Our nation’s defense should be diverse and varied. Both planes have pros and cons, and should be used to their best effect.

    Terrorism – Iraq was not involved in 9/11 and was not the major source of terrorist activity in the world by a long shot.

    Yes, Iraq was involved. The connections were many. The list is quite extensive, and I have it posted at work as part of my ongoing ignorance-reduction project.

    I would scale back missile defense spending, as the Russians can easily evade it.

    If the Russians can “easily evade it,” then would you mind telling the rest of the class why Putin is upset that we’re continuing to develop it? I mean, hey, if it’s really all that useless, then why wouldn’t his attitude be “ha, go ahead, develop it, we don’t care!”

    No, he’s angry and blustery about it. I believe he’s nervous because with each missle defense test, whether it’s 100% successful or not, we LEARN. We make IMPROVEMENTS. We PERFECT it. This makes Putin nervous. SDI is not an “attack” system, it’s a defense system, not completely unlike a suit of armor. So why would Putin be nervous? Unless we’re on the right track, that is. Full speed ahead, I say.

  • avatar
    Qwerty

    Yes, Iraq was involved. The connections were many. The list is quite extensive, and I have it posted at work as part of my ongoing ignorance-reduction project.

    Maybe in the looney tunes world of Dick Cheney’s dreams. Here in the real world, Iraq had nothing to do with 9/11.

  • avatar
    Steve_K

    For anyone who might care, there are happy places in Michigan. I like southwest Michigan (everything west of Battle Creek, south of Sparta). Just don’t plan on getting a job here unless you wish to work as a retail clerk, food service person or freelance musician. There are very, very few real jobs and they’re all taken. Grand Rapids has jobs for you, but GR is just…meh.

  • avatar
    happy-cynic

    Great article. Captured the feeling very well. My step-dad is from Detroit. I went with him once to visit his relatives back in 1980.
    Saw a lot of boarded up malls and homes along Telegraph Ave.

    As for the war, I believe WW2 was mostly funded via War Bonds.
    There is a really good movie about Ira Hayes made. (I do not remember the name, but it was made in the 40’s or 50’s)
    Not sure when the war costs where mushed into the general budget, but as one can see, it was cynical political move to reduce the costs impact.

    I have been laid-off myself for a year, but it was in the high tech industry in MA. It was a matter of time time before things rebounded, however I really feel for you and thousands of other workers. Hopefully all that skill and equipment can be re-tooled to make something that can wean US off oil

    (As you mentioned) you can find a party to blame. A good indicator of ones political bents is whom they blame for failure.

    I think big 2.8 (getting smaller) and unions took the consumer for granted for all those years. Nothing like farting on their loyal customers. However the damage has been done. Will it be restored? I don’t know. Around here,(Metro Boston) a “domestic” car is rare. A typical Malibu owner is white haired and sports a baseball cap blazened with his ship he served or other service branch emblem.

    Personally I had no trouble with my domestic cars, but seen my friends pay a lot of money for a car and watch it fall apart before their eyes and and find them driving a Asian make.

    Too bad you can not set the clock back, If some union clown, laughed about doing a shoddy job, or some bean counter got cheap with parts so he/she got raise and bonus could see all those customers paying out a lot of money for a car, and realize that each customer adds up. And don’t think a son or daughter is taking note of parents experiance, when it times come for them to buy a car, which brand do you think?

  • avatar
    RogerB34

    Fine article. In 1934 unemployment was 23.2 percent and in Jan 1940 was 14.6 percent. Those were tough times. The current economic meltdown was made in the USA by the People and debt. The Iraq/Afganistan war has nothing to do with the economic meltdown. None of you can say that your pay was cut or taxes increased due to Iraq/Afganistan. If war was the economy killer, how did we survive the Revolutionary War, Civil War, WWI, WWII, Korea and the rest? If the proposition is that we are finished, I would agree based on what happened to Detroit, subprimes, Mortgage Based Securities, and foolish debt by the People. Made Proudly in America. Lets see if there is anything left when we hit bottom. No assurance that since the Greatest Generation made it, that USA Century 21 will.

  • avatar
    GS650G

    http://www.detroityes.com/0tourdetroit.htm#The_Fabulous_Ruins

    Take the tour of the ruins of Detroit. It’s pretty sad. Other large American cities could face this fate if they don’t get their shit together. But in our society it is everyone for themselves, and someone else gets the bill.

    I think Detroit is a lost cause and the entire state of Michigan better start thinking about agriculture as a business or recreation (along the lines of Florida without the warm sun) or else we might as well give it to Canada.

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