Detropia

If I had just come from another planet and someone showed me this documentary and told me it was scenes of a major city in the wealthiest and most powerful nation on this planet, I wouldn’t believe it.

Detropia is a 2012 documentary by Heidi Ewing and Rachel Grady on the decline of the city of Detroit.   Some of the imagery is almost surreal, considering Detroit was at one point a showcase city for America with a vibrant middle class, well-kept neighborhoods and a ton of cultural amenities.   The city shown in this documentary is something completely different.

This documentary has no narration from the directors and the only experts they consult on this documentary are the residents of the city itself – no urban design PhDs or talking heads, just everyday people in Detroit, who come up big with a lot of frank and gut-level commentary.    Another technical plus of this documentary is that there’s very little juxtaposition of stock footage from prosperous and promising times in this one – sometimes it seems like if you’ve seen one documentary like this, you’ve seen them all due to the frequent use of stock footage.

There’s one scene that stood out of a house being torn down with a swingset in the backyard.   The swingset was almost overgrown with golden native prairie grasses, swaying in the wind.  It looked like what you would expect an abandoned homestead somewhere in the prairie states would look like, not something in the midst of one of America’s largest cities.

Another scene that stood out to me was one on the stoop of a house in a run down neighborhood with a group of black 20-somethings.   The municipal government had just brought up the idea of attempting to move residents and consolidate them in order to be able to better provide services as right now the city itself is geographically large and spread out, making efficiency difficult.   The plan was to turn over unused land into urban agriculture.    These guys were talking about the idea and were in complete disbelief over the prospect of turning the city over into gardens.   While urban agriculture makes sense to a lot of people outside of Detroit, it’s probably pretty hard to accept a prospect like that if you’re actually in Detroit and have no connection to food production.   I can see how it can be seen as admitting defeat.  I guess it’s just a matter of perspective.   I do think that urban agriculture along with decentralization is probably Detroit’s best option though (see:  Detroit: Too Big to Not Fail)

An example of the frankness of the residents was a scene involving a bar owner and ex-teacher going to the big auto show in Detroit (I forgot what it’s called, but it’s the major one).   He talks to a Chinese manufacturer of an electronic car that will retail for about $20,000.   Then he talks to some guys manning the booth for a major American manufacturer with an electronic car going for somewhere north of $40,000.   He asks them why the Chinese can do it for $20,000 left and you can see the guys get uncomfortable.   They say it’s an apples to oranges comparison .   The bar owner pushes it further and winds up with the bullshit answer “because we have more features” (which is probably true, but probably not $20,000 worth).   The bar owner then brings up the fact that these guys are saying the same things they said about Japanese automobiles when they first hit the American market and they ended the conversation there.   The discomfort was obvious…

At one point in the documentary they interview a group of guys that were in the business of collecting scrap metal.   They said the police had stopped them earlier and just wanted to make sure that they weren’t stealing anything and told them that if they got any complaints from the neighbors, they’d have to send them off, other than that they had free range at the abandoned houses.   They said they were in this business because they couldn’t find jobs elsewhere and it was the only way they could honestly make money.   They said they got 11 cents a pound for scrap steel and $2.50 for copper.   One guy made a poignant comment about how the scrap metal was often sent back to China so they could “make shit with it and sell it back to us”.     Then there was text stating that most of our scrap metal in the US is sold to China.

This is currently on streaming Netflix, so it’s worth watching if you’re into these subjects.   I don’t think that there’s any new ground covered in the way of documenting Detroit’s decay but it’s full of harrowing footage and homespun wisdom on the topic.

 

Detroit: Too Big To NOT Fail

Detroit: Skid Row

I doubt anyone is surprised to hear that Detroit is in deep shit right now.    That’s been common knowledge for quite some time now, despite the perennial “Detroit is experiencing a renaissance” articles in the media.   To be fair, occasionally I do hear about some good things happening in Detroit at the neighborhood level from time to time, especially in the way of urban farming and restoring abandoned buildings.

So basically what’s happening now is that they’re finally acknowledging that the situation in Detroit is out of hand.   The city has about $14 billion in unfunded liabilities (pensions, health care benefits, etc) and about $2.3 – $2.6 billion in annual revenues, which doesn’t cover their current expenses, let alone the debts and liabilities.    It looks like the state is going to step in and suspend the powers of the Detroit City Council and the Mayor in order to try to get things straightened out.    Detroit as we know it today is a failed city.   It’s a tough pill to swallow that these kinds of places exist in the omnipotent United States of America, but that’s reality.

State of Michigan Debt Clock

The rest of Michigan isn’t doing so hot, but I assume that a lot of the state is doing better than Detroit and Flint.   The state is about 125 million in debt, representing a little over $12,000 per resident.    This article from The Economist points out that this move is going to make a lot of people angry – there’s a big cultural and political divide between Detroit and the rest of Michigan and I’m sure the anger is going to go in all different directions over this.    People from Detroit (who tend to be black and democrat) aren’t going to like the state government (currently republican) calling the shots ethe rest of the state (which is mostly white and a little more conservative-leaning) isn’t going to be thrilled with bailing Detroit out while things are tight for them as well.

In The 2012 Election and the Elephant Outside The Room I mentioned that in a short period of time I think there will be some real talk of states wanting to split up one way or another.    Detroit and Michigan might be the most likely candidate at this point, although Northern California has been whispering about parting ways with Southern California for years.

It will be interesting to see what happens with Detroit in the next few years as there probably won’t be able to pull off any magic tricks and fix Detroit’s problems.   There are some different dynamics at play, but when the subject of municipal and state debts come up, it’s often pointed out that many of the states that are in trouble right now have economies the size of European countries.    Michigan’s economy is bigger than that of Greece.   If a major city goes down and brings the state down with them, what happens then?   We don’t know, but I’m sure we’ll see in the next few years.

I’ve never even been to Detroit, so I feel kind of silly saying what’s best for Detroit, but it really sounds like Detroit’s future isn’t in “Detroit”, but rather in a series of smaller communities.   By all reports a good portion of the city is already vacant.   If you go to yahoo or google maps and look at Detroit, there’s a lot of open spaces in the residential areas of Detroit’s inner city.       When/if the city government fails, it makes sense for communities within Detroit to pick up the pieces and go at it without them.   Honestly, it would be difficult to run a municipality any worse than Detroit’s leadership already has.   That’s probably the best way to get out from underneath the unsustainable debt of that city.

Whenever I come across articles about Detroit, I always read them.   It kind of fascinates me.   It sounds like everything is already in place to start devolving into a series of smaller communities already.   Occasionally you read about “urban pioneers” from the suburbs revitalizing one little pocket of the city, an ethnic group establishing a viable section of the city or a small inner-city area getting together and cleaning house.   Everyone might be better off starting from scratch instead of trying to keep the whole shit-show going.   Nothing lasts forever, especially municipalities.

It is cool to see examples of dilapidated buildings getting restored or communities within Detroit find some reason to wake up in the morning.   As I understand it, in the 50’s Detroit was basically America’s model city with a very prosperous middle class, a ton of cultural amenities, great architecture and so forth.   Returning to those days probably isn’t in the cards, but it is possible to create vibrant communities within that patch of land.

People that like history usually have a few events or periods that they’re really into.   One of mine is the fall of Constantinople.   Reading about Constantinople before the Turkish siege sounds a lot like Detroit – most of the prosperity was gone one way or another, they were deeply in debt, crime and depravity ran wild and large tracts of the once-great city reverted into farm plots, vineyards, orchards and open space.   The city had the feeling of a series of small villages instead of one grand city.   When the Ottoman Sultan Mehmet II finally made it past Constantinople’s gates he was a little let down with what he actually saw in the city as it was a far cry from it’s glorious legacy.

At any rate, I’ll continue to watch the news from Detroit.   The city’s plight is nothing new, but at some point they’re going to hit a breaking point (or magically solve their problems) and there could be greater implications for the rest of the country when/if that happens.

 

Debt and Economic Woes in Argentina: Is Collapse Looming?

Argentina Grounds President’s Plane

Argentina Orders Crew to Quit Libertad Ship Held in Ghana

 

 

Argentina is a country that should be a lot better off than it is.   They’ve got great farmland, tons of mineral resources, access to big enough markets and a fairly well-educated and savvy populace.   At the beginning of the 20th Century Argentina was one of the richest nations in the world and Buenos Aires was considered one of the most elegant cities in the world, “the Paris of the Southern Hemisphere”.    You can still see the evidence of the city’s past grandeur in its stunning architecture, although time and neglect has certainly taken it down a few notches.

Argentina experienced major economic upheaval in 2001, following the crash of the American stock market and they’ve never completely recovered to the same level as they were before the crash.  There was a pretty big socioeconomic divide between rural and urban Argentina, but overall there was a large middle class that more or less had a first world standard of living.   For more on the 2001 crash, Fernando “Ferfal” Aguirre wrote a preparedness-minded book on his experiences during that period (The Modern Survival Manual: Surviving the Economic Collapse) and there’s a good documentary on Youtube:

Anyways, things have been heating up down there again.   Before 2001, the Argentine Peso was pegged 1:1 to the US Dollar.   It went to 4:1 after the collapse and I think it stayed somewhere in the area of 3:1 in the following decade.    Today it’s five pesos per dollar.   They’ve also put currency controls in place that make it so that pesos can’t leave the country in order to avoid massive capital flight.   A guy I know that was down there in the past couple of months said that there’s definitely something in the air down there these days.

I’ve noticed two stories in the news over the past couple months about Argentina.   In October their naval training vessel ARA Libertad was seized in as it docked in Ghana as collateral for the nation’s creditors.   The other involves Argentine President Cristina Kirchner grounding the state airplane Tango 1 (think Air Force One) and taking a charter plane to make a few trips around the world in order to keep it out of the hands of Argentina’s creditors.      The ARA Libertad isn’t just any old ship; it’s largely ceremonial and used to train naval cadets from Argentina and other nations.   Technically it’s a warship, but it’s mission is more diplomatic than anything and it’s supposed to be a symbol of pride for Argentina.     It’s kind of a cool looking ship:

Libertad 1
As far as Tango 1 goes, I’m sure it’s a very nice plane but it would be a real kick to the balls for any state for their leader to have to hitch a ride home after getting their plane snatched away from them.   Both of these events have to be very demoralizing to a country that can never seem to stay ahead of the curve.   I wish them the best of luck down there, but it doesn’t look good.

I think these stories from down south are notable to us because it goes to show that past performance doesn’t always guarantee future results.   Who would have believed back in Argentina’s glory days as one of the world’s wealthiest nations that someday one of their ships would be seized in an African port as collateral on debt?    It also shows that actions have consequences and sometimes the piper has to be paid.   If you owe people money, it will come back to bite you in the ass one way or another.   Another theme in these stories is that although the head of state might more or less rule the roost in their own country, there’s only so much they can do outside of their borders.  There’s no “they can’t do that to ….!” here  because yes “they” can.

Although there are some fundamental differences between the US and Argentina, I think it is an interesting case to follow because it is an example of what an advanced, modern economy looks like when things really go sour.   We’re well over our heads in debt but hopefully we can pull our heads out of our asses before we end up in a situation where we have to worry about having assets seized abroad like Argentina.

 

 

Scranton Mayor Slashes Pay For All City Employees to Minimum Wage – Austerity Comes to America

Scranton mayor slashes pay for all city workers—including police and firefighters—to minimum wage

 

This is a story that came out today on Yahoo about the city of Scranton, PA taking drastic measures to deal with their budget crisis.   The article describes how the mayor slashed everyone’s pay down to minimum wage, perhaps illegally, in order to keep the town something resembling solvent.   According to the article, Scranton has a $16.8 million budget deficit with only  $133,000 in cash on hand and $3.4 million in vendor bills (i.e. health insurance and such).

I feel for the city employees – building your life around getting a decent paycheck every week and then suddenly being expected to do the same amount of work for a poverty level paycheck has to be a real kick to the teeth.   I’m sure everyone thinks the mayor is an asshole too, but I know that was not an easy call to make.  The bottom line is that there’s essentially no money, not enough revenue coming in and someone is going to have to swallow it.

Scranton isn’t the only city in the US facing these problems by any means, but as far as I know it’s the only one of any notable size that has taken these kinds of drastic measures in the midst of a budget crisis to date.   There have been many municipal layoffs, cutbacks, reduced hours and overtime and wage freezes, but I can’t recall hearing of an across-the-board wage cutting like this.

The thing that really scares me about this news story is that Scranton’s situation isn’t unique and many other city, county and state governments around the country are in equally dire straits.     So who is going to come to the rescue?   The county that Scranton is in is probably broke too.    Scranton isn’t the only city in Pennsylvania facing hard times and if the state comes to the rescue, they’ll probably have to step in for the other cities facing a budget crisis.   If other cities in Pennsylvania are facing budget crises, the state as a whole is probably behind the 8 ball as well and would have to look to the federal government for assistance.   If the federal government helps out Pennsylvania, they’re going to have to help out Michigan, New York, Illinois, California and every other state facing a local crisis.   In case you haven’t heard, the federal government isn’t looking so hot either right now in this department.  I fear that right now we could be at the verge of a major economic disaster that will start from the lowest levels of government and work all the way up to the top.

The difference between the federal government and state and local governments is that the federal government can print money to meet its obligations.  Local governments have to raise taxes, attract new sources of tax revenue or issue bonds if revenue falls short.   Since the economy tanking and the housing crash, there’s been less money for local governments to take.   An increase in foreclosures and lower property values mean lower property tax revenues.   They can raise taxes, but many people and businesses (especially the successful ones with more to lose) may move to greener pastures, having an overall negative effect on revenue.   You can issue bonds, but people have to want to take the risk and buy them.  If they don’t, you have to raise the interest in order to attract the investors.   At some point, the city is responsible for paying back the bondholders more than they borrowed and there’s no guarantee that things will be rosy and the money will be flowing in the future.    In other words, the federal government has more tricks up their sleeve to deal with budget shortfalls than local governments.

This will undoubtedly mean a sharp decline in services for the people of Scranton and the people of any other municipality facing a similar dilemma.  Many cities are laying off police officers and at least in theory Scranton is keeping the same amount of officers on hand, but it’s likely that police officers will seek new lines of work, jobs with different departments and become more cynical about their work.   I think most police officers have a genuine desire to keep the citizens of their city safe and fight crime, but I can see a police officer who just had his wage cut by more than half becoming apathetic to petty crime.   So someone broke into your garage and stole some tools?  Yeah, sure, they’ll get right on it.   When criminals know they have a better chance of getting away with crime, they’ll do it.  When committing petty crimes becomes less risky, more marginal people will get knocked off the fence and crime will become more alluring.

We can debate whether or not this is the smartest solution, but ultimately it looks like we can expect to see more of this throughout the country and there’s probably not anyone coming on a white horse to save some of these cities.

Ok, now let’s talk about how to deal with this situation:

–  Since the quality of policing will likely go down, it’s a good idea to take home security precautions like good lighting, good locks, cutting back shrubbery that could give criminals a place to hide, securing easily accessible windows and making it look like you’re home when you’re not just to name a few general ones.

– Being armed and knowing what you’re doing to include lethal and non-lethal weapons.  If someone’s coming in and the cops can’t be there in the next 10 seconds to save your ass, it’s in your best interest to do it yourself.   Know and abide by your local laws on this subject as well.

–  It pays to be in as good of health as possible if facilities and ambulance services have declined.   Actually, it pays to be in good health even if they could beam you up into the finest hospital in the world at the drop of a dime.  Learn basic first aid (or even more advanced!), it might come in handy someday while you’re waiting for an ambulance.

–  Know your neighbors and look out for each other.   Although the neighborhood watch concept may have taken a bit of a hit with the recent Zimmerman/Martin incident, it’s a good idea to be vigilant and look out for your neighbors and have them do the same for you.

– If you’re someplace really precarious, you can always jump ship and go somewhere else.   It would probably be easier to sell your home sooner rather than later if the municipal debt crisis kicks off.  Some parts of the country (and probably even within your state or county) are better off than others.

–  If you think your job, wage and benefits are secure, so did the employees of the city of Scranton.   A legal agreement can bind one party to pay another, but a legal agreement can’t magically fill the payer’s pocket full of money for the payee.   The employees can take the city to court, but if there’s no money there still going to end up with bloodless turnip for dinner that night.

I’d like to believe that this is just a fluke and a temporary glitch, but I think we’re all going to have to start making due with less.   Hopefully the employees of the city of Scranton were able to prepare themselves financially for this kind of situation and hopefully some sort of normalcy is reached soon.

The Case For Keeping A Little Extra Cash Around

Greek Cash Withdrawals Raise Fear of Run on Banks

Is This What a Run on Greek Banks Looks Like?

 

As the once-unmentionable prospect of Greece leaving the Euro becomes more frequently acknowledged as a possibility by mainstream media, Greeks have been falling all over themselves to withdrawal their euro-denominated savings out of Greek banks in order to have their savings in on-hand euros, as opposed to a new currency which would presumably be the drachma and of possibly substantially less value than the euro.   The likelihood of a bank holiday where the banks convert all of their euro holdings to a new currency is high and the Greek citizens sleep a little more comfortably on euro-stuffed mattresses than knowing that their savings could lose a lot of value (I’ve heard estimates of 30%-70% if Greece leaves the Euro) left in the banks.   No one knows for sure what will happen in Greece and right now average citizens are trying to play it safe and preserve what they have.    This is a good case for investing some of your money into precious metals, by the way.

Watching this unfold in Greece made me think about the idea of keeping some cash on hand as part of preparedness.      We have had bank runs in our past as well as recent brushings with bank failures – there’s nothing that says that this can’t happen here.   The FDIC insures deposits up to $200,000 but they’re not in the business of making sure it gets to you in a timely fashion.    The possibility of some sort of glitch in the banking system is definitely within the realm of possibility.    Should something like that happen, one of the last places I would want to be is standing in lines while ATM’s and banks get depleted and/or having to scour town for an untapped ATM machine.     Hell, even if everything goes fine but the power goes out and you can’t pay for things with credit cards or use ATMs, you’ll be well served to have some cash squirreled away at home.

At a more mundane level, it’s good to have some small bills around to be able to take advantage of certain deals where cash is still involved in our increasingly-cashless society.   For instance, there’s some kids down the block that come around looking to mow or shovel snow for a few dollars.   They do not accept Visa, Mastercard or Paypal.   It’s nice to know that I can go grab a $10 from the stash and pay them.   There’s been times I’ve needed to get a haircut and didn’t have cash around so I either had to drive out of my way to get to one of my bank’s ATMs or pay a fee at a more convenient one if I was pressed for time (which I often am).   With some bills stashed away, I know I can just grab one of those if I don’t have enough day-to-day cash on me.      I also like to keep at least one $10 bill in my truck, which has come in handy a few times.

The issue of whether or not it’s safe to keep cash in your home is a valid one but then again, as we’re beginning to see in Greece and we’ve seen in Argentina, sometimes money in banks is just as vulnerable.   By keeping some cash around you’re covering all of your bases.    You have to use some discretion when keeping cash around the house.   I wouldn’t keep that much around and what I do I would not but in the same spot or the most obvious spot.   There’s probably all kinds of places around your house you can stash a few things and reduce the likelihood of an intruder finding them.    One thing I’ve seen that looks kind of cool are these safes:

Completely inconspicuous if placed among other similar items – most criminals aren’t going to go through your cleaning supplies.   Use your imagination.

As far as how much you should keep around, that’s up to you and varies from person to person, but I would keep in mind that you might someday have to sustain yourself for several days or even a week or more on your own cash, should there be some sort of interruption in power, economic collapse or whatever.

As far as denominations go, I like smaller bills.  They give you a little more flexibility.  In the event of the electronic banking system going down there might be some issues making change and being able to pay an exact amount gives you a little more leverage in bargaining, i.e. if someone wants $75 for something and you’re rebutting with $60, your offer is a little less firm when you offer a $100 expecting $40 in change.    Plus many of our day-to-day expenses are small and you don’t want to end up like this guy:

If I had no cash on hand and was going to start with $100, I think I would choose three $20s, three $10s, a $5 and five $1s.     With my next $100, I’d take a $50, a $20, a $10, three $5’s and five $1’s.    After that it’s up to you.   I feel this combination would offer me the most denominational flexibility for most common transactions that would tide us over for a week or so should we need it.

As Dave Ramsey says, “cash is king”.    Don’t overlook this aspect of your preparedness.

 

“Banking Backlash Fashion” in Iceland

Today on my way home from the gym I heard a clip on NPR’s rebroadcasting of the day’s BBC Newshour (3/29/12) concerning Iceland that I found interesting.   The segment on Iceland begins at about 15:00:

BBC Newshour

 

They interviewed a few Icelanders about their thoughts on the trial of former Prime Minister Geir H. Haarde and a few anecdotes on the aftermath of Iceland’s 2008 economic crisis.    What I found particularly interesting was that they mentioned that it is now common to see young Icelanders donning fisherman’s clothing, traditional Icelandic wool sweaters and beards.   The fashion statement is in part due to practicality – many people are turning to the traditional fishing industry and thus the apparel associated with it instead of jobs in the finance industry.   According the one gentleman interviewed in the segment, the style is also a rejection of the styles common to the foreign bankers and a show of local solidarity.

This is something that gives me some hope for the future.   When modern hyper-consumerism fails to deliver, people are looking backwards and internally for inspiration.   The increase in interest in the founding fathers in the United States as we lose personal liberties and decline economically is an example of this same phenomena happening here.   I’m optimistic that as we continue to decline, many people in the US will begin to look to some of the things that were important to our forebearers and things like gardening, urban farming, food preservation, family, heritage, thinking locally, craftsmanship and basic skills while rejecting some of the things that caused our woes in the first place.    I’m not suggesting that we’ll return to some magical and quaint Little House on the Prairie days (nor would I want that!), but I think that many people (unfortunately not all) will look to these things and that gives me some hope for our future.     I think this case in Iceland is a good example of people realizing what kinds of things are real in their lives and what kinds of things aren’t.

I visited Iceland in 2007.  Beautiful country.   One thing that did strike me was how “cosmopolitan” most of the inhabitants looked, often adopting emo/indie fashions and slick haircuts.   I’m not sure what I actually expected to see from the descendents of the mighty Vikings (and kidnapped Irish women), but they had a very effeminate style to them, at least by my North American outlook.    I guess I expected them to resemble pillaging and plundering warriors instead of rail-thin dudes with swoop haircuts and iPods.   I’d say that Iceland has the most beautiful women on the planet, at least from the small segment I’ve seen of it.   It’s a very health-conscious country and everyone appears healthy and pleasant (but reserved).

There are some things to be gained from globalism.  There’s a lot we can gain, learn and experience from all the peoples of the world but that doesn’t mean that we should all morph into a single transnational culture and lose our identities in the pursuit of wealth.   Good for the Icelanders for rejecting the idea that they should to abandon their culture and get with the globalists’ program.

 

Here is a photo of two young girls wearing the type of sweaters mentioned.   I can’t say that they’re exactly my style, but they make a lot of sense in Iceland with all the abundant wool and consistently cool temperatures.   It beats importing textiles from China.   I suppose if you’re into them and/or want to show solidarity with Iceland, you can purchase them here.

File:Lopapeysa.jpg

Here’s me in 2007 at Gullfoss waterfall in Iceland.