Detroit. The Motor City. Motown.
What’s in a Name? Hockey Town. City of Champions. Rock City. The culture that inhabited this space in Michigan has left its imprint on generations. When we drive, when we sing, when we dance, there will always be a little Detroit in all of us. Yesterday we sang the ballad of The Big D, and how it became one of the most profitable cities in the world. Not back in the 20s, or 50s, but now, right now.
From the days of prosperity and growth, we’ve seen a slow motion slip into poverty. Generationally, parts of the city were just abandoned. We hear horror stories, we see photos, and it all sounds just awful. Property values crashed. Businesses tanked. Blocks and blocks of empty houses. Who would want to live there now?
Most of the talk show chatter focuses on the bankruptcy details. NBC asks, “If Detroit is allowed to stop or shorten payments to their retirees, will states like California or Illinois follow suit?” CNN warned, “Large, unfunded pensions for city and state workers across the US are looming liabilities”, and Chris Mathews added, “Detroit is the canary in the coalmine. If they get away with going bankrupt, not delivering on pension promises, we could be looking at a domino effect in the future.”
Living in a World of Their Creation
There’s alot of talk around Detroit and its problems. But no talk about a little district in Detroit known as Hamtramck. Try to say that out loud, and you’ll get some idea of why no one talks about Hamtramck.
Hamtramk is home to the now famous Goldman Sachs’ warehouses, that make billions a year, while producing nothing at all. It sits in the center of the bankrupt community of Detroit, the city that went broke. Flat broke. Emergency managers were put in charge of towns all over Michigan. With a swipe of the Governor’s hand, venture capitalist Gov. Snyder (R) completely replaced elected officials to help “manage” “low income” areas, and quickly, things went from worse to over.
To make sure you are up to speed at this point, The Daily Show, as usual, offers a somewhat concise update, so grab a cold one, enjoy the laugh, we’ll see you back here in five.
The Daily Show July 25, 2013 ~~ We suggest starting at :35
Who’s In Charge Here?
In the video from our last blog post, we left off with an NBC interview of beloved Sen. Sherrod Brown of Ohio (D), who currently sits on the Senate Banking Committee. Brown said he had no idea where the metals market oversight was based. Who made the rules, anyway? How can we end this national scam in practice? Who’s going to take responsibility here?!?
|Inside the Goldman Sachs Aluminum Warehouses of Hamtramck
(Detroit, Metro International.com, 2013)
A World of Pure Imagination
Say you are what the banks call a ‘consumer’. You use commercial grade aluminum in bulk to produce cars or planes, crutches or the great American gift of soda cans, or whatever, somewhere in the world. Well, ya can’t just go down to ye olde local aluminum store. No. If you want that kind of aluminum (or zinc, or copper), you’re gonna need a warrant. There is only one place in the world to get that canceled warrant of purchase, wait for it, from a coven of members known as The Ring who run the London Metal Exchange. Seriously.
Regardless of where metal is stored after being mined, consumers around the world fill their metal needs at global prices set by business conducted in The Ring.
What’s in a Name?
A holdover from the days of yore, when Britain ruled the world, if you want to buy aluminum, you need to do it in London. To start with, this isn’t really new news. International metal trading began in Britain when the Romans invaded in AD43, but by the early 19th century, there were so many commodity traders at court, it became impossible to do business. As a result, individual groups of traders set up shop in the coffee houses of London. A merchant with metal to sell would draw a circle in the sawdust on the floor and call out ‘Change’, at which point all those wishing to trade would gather around in a circle, or ring, and make their bids and offers. The name stuck.
Change You Can Believe In
None of this was a fast process. Shipments took months and months to come in from all over the world. The need for a central unit to watch over the purchases, and deliveries of these metals, made it necessary to create a watchdog organization.
In 1877, LME was founded to oversee the locations, travel times and price changes of the world’s trades in metal. Over time, they incorporated oversight of other commodities, as well. Since the process was slow as molasses, this was rather easy to do.
LME traded copper and tin since its inception. Lead and zinc since 1920. Special high grade zinc since 1986. Primary aluminium was introduced in December 1978. Nickel trading started in April 1979, and the featured commodity of this news cycle, aluminium alloy, was added in October 1992. Later, cobalt and molybdenum, were included. Fun Fact; molybdenum is a superalloy, stronger than all the rest, made up of oxidized minerals.
|Copper Ingots Stacked
Today, 80% of the world’s aluminum is, at one point or another, held in a warehouse that is part the LME system. The remaining 20% comes from scrap metal, or from secondary metal processors, who originally picked up their raw aluminum from an LME warehouse.
If you are still awake and reading, god bless you. Seriously. This is thick stuff, and nothing about it is fun. It’s about dusty warehouses, and historical trading details. Metal is cold, and statistics about storage do not a fantasy team make. But a Policy Geek is always curious, and these issues directly affect the economies of the whole planet. Mostly importantly, it has a tight connection to this We Are The 99% thing.
The 3rd, and hopefully final installment, pulls back the curtain, so we can pay attention to the Gold Men Standing behind it. For the third installment: see Heavy Meddle Coming Soon