|Let’s take a closer look
(Fast Company, 2013)
Auto Icon, Henry Ford (despite his antisemitic writings distributed during the later part of this life), was widely considered the father of the age of industrialization. Thanks to Ford, in 1901, Detroit became the Silicon Valley of its day. He invented “the living wage”, the assembly line, and once he opened his factory in Dearborn, a suburb of Detroit, the city became an instant mecca for innovation. Today is Henry Ford’s birthday.
(Not So) Fun Facts
According to the Michigan Historical Review: Over time,“Detroit was betrayed by a lack of political vision, torn asunder by racial conflict, and devastated by deindustrialization.” By the 1960s, Detroit had become the center of President Lyndon Johnson’s War on Poverty, and a mecca for the civil rights movement.
|No man’s land.
When the riot on Detroit’s 12th Street broke out in the summer of 1967, Gov. George Romney ordered the Michigan National Guard into the city, and President Johnson sent in Army troops. About 7,200 rioters were arrested and more than 2,000 buildings destroyed. Yes, you heard right. The Romney’s are in this story too.
(Kennedy Picker, 1967)
By 1974, the well-intentioned War On Poverty programs were terminated nationwide after race riots and a series of confrontations between police and inner city black youth.
By 2012, Detroit was generating $33 of long-term debt for every $1 of net assets recorded.
As you must have heard by now, on July 18th, Detroit, The Motor City, The Birthplace of Motown Music, filed for bankruptcy. That happened. Detroit flatlined. Of course, there is plenty of blame to go around. Depending on who you read, it was a result of high crime rates, race issues, greedy unions, ill equipped emergency managers, bad accounting, fraudulent land grabs, and/or the slow decline of the auto industry.
The great bustling city of the modern automobile has become a no man’s land. No schools, no water service, no streetlights.
A new young generation will eventually take on the task of rebuilding. They’ll set a standard for reinvention. They’ll revision what it means to be a state-of-the-art city.
We’ll Begin With A Spin
But wait. What’s that rumbling sound coming out of the ashes? Ask any local, and they’ll tell you it’s the sound of the “merry go round” of trucks over at the Goldman Sachs warehouses, commonly referred to as Metro International Trade Services. As it turns out, despite its decline, Detroit is actually the most profitable city in the world.
Last week, MSNBC reported on some of that unusual activity going on in a city with almost nothing going on. Here’s the best wrap up of how the story began (you’re going to have to be patient, there’s a commercial first):
This isn’t easy. Slowing delivery times sounds benign. They know. How do you make “physical commodities” sexy? Ya can’t. And that’s exactly how the banks like it. The details of this saga, the ones that take Detroit from then until now, are hard to follow and boring to listen to, but if you are willing to take on a little extra credit, you’ll be glad you did. And mad as hell. We did our best to make this meals-on-wheels taste like a gourmet feast paired with a fine french wine. So, bon appetit.
Humanity, meet the Bankers. Bankers, meet the rest of the civilized world.
The Main Players
Merrill Lynch, Pierce,and Fenner and Smith
Credit Suisse Securities (USA)
The Minor Players
Citigroup Global Markets
Moelis and Company
RBC Capital Markets Corporation
The Williams Capital Group
Davenport and Company
(Let’s see who gets angry for not being thought of as a major player, shall we?)
Who’s In Charge
For the rest of this piece, please see Sachs Of Gold II
The Policy Geek