Saturday, July 20, 2013

Detroit's demise

Mark Steyn says it all about Detroit's decline from a major U.S. city to a third world slum city.


Mark Steyn: Motown no more

By the time Detroit declared bankruptcy, Americans were so inured to the throbbing dirge of Motown's Greatest Hits – 40 percent of its streetlamps don't work; 210 of its 317 public parks have been permanently closed; it takes an hour for police to respond to a 911 call; only a third of its ambulances are drivable; one-third of the city has been abandoned; the local Realtor offers houses on sale for a buck and still finds no takers; etc., etc. – Americans were so inured that the formal confirmation of a great city's downfall was greeted with little more than a fatalistic shrug.
But it shouldn't be. To achieve this level of devastation, you usually have to be invaded by a foreign power. In the War of 1812, when Detroit was taken by a remarkably small number of British troops without a shot being fired, Michigan's Governor Hull was said to have been panicked into surrender after drinking heavily. Two centuries later, after an almighty 50-year bender, the city surrendered to itself. The tunnel from Windsor, Ontario, to Detroit, Mich., is now a border between the First World and the Third World – or, if you prefer, the developed world and the post-developed world. To any American time-transported from the mid-20th century, the city's implosion would be literally incredible: Were he to compare photographs of today's Hiroshima with today's Detroit, he would assume Japan won the Second World War after nuking Michigan. Detroit was the industrial powerhouse of America, the "arsenal of democracy," and, in 1960, the city with the highest per capita income in the land. Half a century on, Detroit's population has fallen by two-thirds, and in terms of "per capita income," many of the shrunken pool of capita have no income at all beyond EBT cards. The recent HBO series "Hung" recorded the adventures of a financially struggling Detroit school basketball coach forced to moonlight as a gigolo. It would be heartening to think the rest of the bloated public-sector workforce, whose unsustainable pensions and benefits have brought Detroit to its present sorry state (and account for $9 billion of its $11 billion in unsecured loans), could be persuaded to follow its protagonist and branch out into the private sector, but this would probably be more gigolos than the market could bear, even allowing for an uptick in tourism from Windsor.
Article Tab: image1-Mark Steyn: Motown no more
Sean Delonas / Cagle Cartoons
So, late Friday, some genius jurist struck down the bankruptcy filing. Judge Rosemarie Aquilina declared Detroit's bankruptcy "unconstitutional" because, according to the Detroit Free Press, "the Michigan Constitution prohibits actions that will lessen the pension benefits of public employees." Which means that, in Michigan, reality is unconstitutional.
So a bankrupt ruin unable to declare bankruptcy is now back to selling off its few remaining valuables, as I learned from a Detroit News story headlined "Howdy Doody May Test Limits Of Protecting Detroit Assets." For those of you under 40 – okay, under 80 – Howdy Doody is the beloved American children's puppet, in Western garb with a beaming smile and 48 freckles, one for every state, which gives you some idea of when his heyday was. The "Howdy Doody Show" ended its run Sept. 24, 1960, which would have made sense for Detroit, too. The city's Institute of Arts paid $300,000 for the original Howdy Doody puppet – or about the cost of 300,000 three-bedroom homes. Don't get too excited – you can't go to Detroit and see him on display; he's in storage. He's in some warehouse, lying down doing nothing all day long, like so many other $300,000 city employees. Instead of selling him off, maybe they should get him moonlighting as a gigolo and sell it to HBO as "Hungy Doody" ("When you're looking for the real wood"). What else is left to sell? The city of Windsor has already offered to buy the Detroit half of the Detroit-Windsor tunnel, perhaps to wall it up.
With bankruptcy temporarily struck down, we're told that "innovation hubs" and "enterprise zones" are the answer. Seriously? In my book "After America," I observe that the physical decay of Detroit – the vacant and derelict lots for block after block after block – is as nothing compared with the decay of the city's human capital. Forty-seven percent of adults are functionally illiterate, which is about the same rate as in the Central African Republic, which at least has the excuse that it was ruled throughout the Seventies by a cannibal emperor. Why would any genuine innovator open a business in a Detroit "innovation hub"? Whom would you employ? The illiterates include a recent president of the School Board, Otis Mathis, which doesn't bode well for the potential workforce a decade hence.
Given their respective starting points, one has to conclude that Detroit's Democratic Party makes a far more comprehensive wrecking crew than Emperor Bokassa ever did. No bombs, no invasions, no civil war, just "liberal" "progressive" politics day in, day out. Americans sigh and say, "Oh, well, Detroit's an 'outlier.'" It's an outlier only in the sense that it happened here first. The same malign alliance between a corrupt political class, rapacious public sector unions and an ever more swollen army of welfare dependents has been adopted in the formally Golden State of California, and in large part by the Obama administration, whose priorities – "health" "care" "reform," "immigration" "reform" – are determined by the same elite/union/dependency axis. As one droll Tweeter put it, "If Obama had a city, it would look like Detroit."
After the Battle of Saratoga, Adam Smith famously told a friend despondent that the revolting colonials were going to be the ruin of Britain, "There is a great deal of ruin in a nation" – and in a great city, too. If your inheritance includes the fruits of visionaries like Henry Ford, Walter Chrysler and the Dodge brothers, you can coast for a long time, and then decline incrementally, and then less incrementally, and then catastrophically, until what's left is, as the city's bankruptcy petition puts it, "structurally unsound and in danger of collapse." There is a great deal of ruin in advanced societies, but, even in Detroit, it took only six decades.
"Structurally unsound and in danger of collapse": Hold that thought. Like Detroit, America has unfunded liabilities, to the tune of $220 trillion, according to the economist Laurence Kotlikoff. Like Detroit, it's cosseting the government class and expanding the dependency class, to the point where its bipartisan "immigration reform" actively recruits 50 million to 60 million low-skilled chain-migrants. Like Detroit, America's governing institutions are increasingly the corrupt enforcers of a one-party state – the IRS and Eric Holder's amusingly misnamed Department of Justice being only the most obvious examples. Like Detroit, America is bifurcating into the class of "community organizers" and the unfortunate denizens of the communities so organized.
The one good thing that could come out of bankruptcy is, if those public-sector pensions are, cut and government workers are forced to learn what happens when, as National Review's Kevin Williamson puts it, a parasite outgrows its host. But, pending an appeal, that's "unconstitutional," no matter how dead the host is. Beyond that, Detroit needs urgently both to make it noninsane for talented people to live in the city, and to cease subjecting its present population to a public "education" system that's little more than unionized child abuse. Otherwise, Windsor, Ontario, might as well annex it for a War of 1812 theme park – except if Gen. Brock and the Royal Newfoundland Fencibles had done to Detroit what the Democratic Party did they'd be on trial at the Hague for war crimes.

Tuesday, July 16, 2013

A reminder of the causes of the '07/'08 financial collapse

Stanley Kurtz wrote this very clear explication of the cause of the financial meltdown of '07-'08.  The article appeared in the NYPost October 13, 2008.  Lest we all forget, Obama was closely allied and supportive of ACORN, the criminal organization that was instrumental in several ways in electing him in '07.  We are paying the price in our economy today, and will continue to in the future, for the outrageous co-opting of our banking system by ACORN, the CBC (Congressional Black Caucus), Ted Kennedy and all the other corrupt largely democrat congressmen who created and supported the CRA dating back to Jimmy Carter's administration in the '70's.  Anyone without work and/or otherwise suffering in the U.S. economy today, has these groups and politicians involved in this fiasco to thank.


SPREADING THE VIRUS

TO discover the roots of to day's economic crisis, consider a tale from 1995.
That March, House Speaker Newt Gingrich was scheduled to address a meeting of county commissioners at the Washington Hilton. But, first, some 500 protesters from the Association of Community Organizations for Reform Now (ACORN) poured into the ballroom from both the kitchen and the main entrance.
Hotel staffers who tried to block them were quickly overwhelmed by demonstrators chanting, "Nuke Newt!" and "We want Newt!" Jamming the aisles, carrying bullhorns and taunting the assembled county commissioners, demonstrators swiftly took over the head table and commandeered the microphone, sending two members of Congress scurrying.
The demonstrators' target, Gingrich, hadn't yet arrived - and his speech was cancelled. When the cancellation was announced, ACORN's foot soldiers cheered.
Editorial writers from Little Rock to Buffalo condemned ACORN's action as an affront to both civility and freedom of speech. Editorialists also pointed out that the "spending cuts" the protesters railed against were imaginary - Gingrich proposed merely to slow the growth in some welfare programs and turn control back to the states.
Yet ACORN had only just begun. Two days later, 50 to 100 of the same protesters hit their main target - a House Banking subcommittee considering changes to the Community Reinvestment Act, a law that allows groups like ACORN to force banks into making high-risk loans to low-credit customers.
The CRA's ostensible purpose is to prevent banks from discriminating against minorities. But Rep. Marge Roukema (R-NJ), who chaired the subcommittee, was worried that charges of discrimination had become an excuse for lowering credit standards. She warned that new, Democrat-proposed CRA regulations could amount to an illegal quota system.
FOR years, ACORN had combined manipulation of the CRA with intimidation-protest tactics to force banks to lower credit standards. Its crusade, with help from Democrats in Congress, to push these high-risk "subprime" loans on banks is at the root of today's economic meltdown.
When the role of ACORN and congressional Democrats in the mortgage crisis is pointed out, Democrats reply that banks subject to the CRA represent only about a quarter of the loans that led to our current troubles. In fact, the problem goes way beyond the CRA.
As ACORN ran its campaigns against local banks, it quickly hit a roadblock. Banks would tell ACORN they could afford to reduce their credit standards by only a little - since Fannie Mae and Freddie Mac, the federal mortgage giants, refused to buy up those risky loans for sale on the "secondary market."

Page 2 of 3
That is, the CRA wasn't enough. Unless Fannie and Freddie were willing to relax their credit standards as well, local banks would never make home loans to customers with bad credit histories or with too little money for a downpayment.
So ACORN's Democratic friends in Congress moved to force Fannie Mae and Freddie Mac to dispense with normal credit standards. Throughout the early '90s, they imposed ever-increasing subprime-lending quotas on Fannie and Freddie.
But then the Republicans won control of Congress - and Rep. Roukema scheduled her hearing. ACORN went into action to protect its golden goose.
IT struck as Roukema aired her concerns at that hearing. Pro testers, led by ACORN President Maud Hurd, stood up and began chanting, "CRA has got to stay!" and "Banks for greed, not for need!" The protesters then demanded the microphone.
With the hearing interrupted and the demonstrators refusing to leave, Roukema called the Capital Police, who arrested Hurd and four others for "disorderly conduct in a Capital building" - a charge carrying a penalty of a $500 fine, six months in prison or both. As the police arrived, two of the protesters menacingly approached Roukema's desk, still demanding the hearing microphone.
Requests to the Capital Police to release the activists from Sen. Ted Kennedy (D-Mass.) and Rep. Joe Kennedy (D-Mass,) failed. Then Rep. Maxine Waters (D-Calif.) showed up at the jail and refused to leave until the protesters were released; the Capital Police relented.
Meanwhile, instead of repudiating ACORN's intimidation tactics, Rep. Kennedy berated Roukema for arresting one of his constituents and accused the Republicans of preparing for "an all-out attack on CRA." He also promised to introduce legislation to expand the CRA's coverage to mortgage bankers and large credit unions.
THIS little slice of political life from 1995 had a variety of ripple effects. Above all, ACORN's intimidation tactics, and its alliance with Democrats in Congress, triumphed. Despite their 1994 takeover of Congress, Republicans' attempts to pare back the CRA were stymied.
Instead, Democrats like Rep. Barney Frank (D-Mass.) and Reps. Kennedy and Waters allied with the Clinton administration to broaden the acceptability of risky subprime loans throughout the financial system, thus precipitating our current crisis.
ACORN had come to Congress not only to protect the CRA from GOP reforms but also to expand the reach of quota-based lending to Fannie, Freddie and beyond. By steamrolling the GOP that March, it had crushed the last potential barrier to "change."

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Three months later, the Clinton administration announced a comprehensive strategy to push homeownership in America to new heights - regardless of the compromise in credit standards that the task would require. Fannie and Freddie were assigned massive subprime lending quotas, which would rise to about half of their total business by the end of the decade.
WHEN the ACORN-Democrat alliance finally succeeded in blocking Republicans from restoring fiscal sanity in 1995, the way was open to virtually unlimited lending quotas - and to a whole new way of thinking about credit standards.
Urged on by ACORN, congressional Democrats and the Clinton administration helped push tolerance for high-risk loans through every sector of the banking system - far beyond the sort of banks originally subject to the CRA.
So it was the efforts of ACORN and its Democratic allies that first spread the subprime virus from the CRA to Fannie and Freddie and thence to the entire financial system.
Soon, Democratic politicians and regulators actually began to take pride in lowered credit standards as a sign of "fairness" - and the contagion spread.
And when financial institutions across the board saw that they could make money by trading what would once have been considered junk loans, the profit motive kicked in. But the bad seed that started it all was ACORN.
HOW does Barack Obama fit into all of this? Obama has been a key ally of Chicago ACORN going back to his days as a community organizer.
Later, as a young lawyer, he offered leadership training to the activists who were forcing Chicago banks into high-risk subprime loans. And when he made it on to the boards of Chicago's Woods Fund and the Chicago Annenberg Challenge, he channeled money ACORN's way.
Obama was perfectly aware of ACORN's intimidation tactics - indeed, he oversaw a Woods Fund report that boasted of managing to fund the radical group despite its shocking behavior.
And as a lawmaker, in Illinois and in Washington, he has continued to back ACORN's leglislative agenda.
ACORN's high-pressure tactics live on. And congressional Democrats are still covering for ACORN, funneling it money and doing its legislative bidding. ACORN also continues its shady ways, using a vast network of technically separate but in fact quite interconnected organizations to evade federal laws on the politicized use of government money.
Perhaps most disturbing of all, the Obama campaign appears to have little more regard for freedom of speech than Reps. Kennedy or Waters did when they backed up ACORN's thugs in 1995. The campaign actually practices ACORN-style tactics, sending out "action wires" that call on supporters to block Obama critics from radio appearances (a tactic once applied to me) and demanding legal actions against unfriendly political advertisers.
As a presidential candidate, Obama promises a massive national-service program closely allied with the nonprofit sector. He wants to remove "barriers for smaller nonprofits to participate in government programs."
In other words, he plans a massive effort to funnel America's youth into volunteer work alongside the likes of ACORN. So Obama's favorite community organizers may soon be training your child.
ACORN's alliance with the Democratic Party is at the root of the current financial meltdown. And Barack Obama has stayed true to ACORN's ways.
Pretty soon, the folks who poured into the Washington Hilton to shut down Speaker Gingrich in 1995 may no longer need to take over the microphone. They'll be in charge of it.
Stanley Kurtz is a senior fellow with the Ethics and Public Policy Center in Washington.