What Killed Detroit? Was it the Automobile?

Photo: The grand entrance of Michigan Central Station stands empty and crumbling as the building awaits a decision on its ultimate fate. (Megan O'Toole/National Post)

Detroit was the Silicon Valley of the 1920s — the booming home of a glamorous new industry, a place where huge fortunes were conjured in years, sometimes months. But while the creators of the computer industry have as yet bequeathed very little to the built environment, the automobile industry piled up around it an astounding American city, in astoundingly little time.

The Detroit of 1910 was a thriving Midwestern milling and shipping entrepot, a bigger Minneapolis. The Detroit of 1930 had rebuilt itself as a grand metropolis of skyscrapers, mansions, movie palaces and frame cottages spreading northward beyond the line of sight, exceeding Philadelphia and St. Louis, rivaling Chicago and New York. I had a chance to tour central Detroit recently, my first visit to the downtown core in many, many years.

Some of the old visual magnificence remains, has even been improved. The Guardian tower displays again the blazing colors of its vaulted atrium, long covered up by dry wall. The marble adorning the Fisher building still glows. The Renaissance Center, once as walled and moated against the city as a medieval castle, has lowered its defenses, especially on the side facing the Detroit River. But for the most part, all is decay. Whole towers stand empty, waiting to join the long line of grand structures that have either been abandoned to pillage and ruin, like Detroit’s once magnificent neoclassical skyscraper of a train station, or else pulled down entirely, like the downtown Dayton Hudson department store, once the largest enclosed shopping space in the United States.

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Canadian Rules will Prevent U.S.-Style Crisis

We’ll (Canada) feel some ripple effects, but growth here should remain positive…

Canada’s banking system is not only number one in the world right now, but rather we do things a bit different than the US as well… Our banking system is made up of what is called Deposit Banks, where the banks that do investments also are the same ones that you and I, as Canadians hold our chequing and savings accounts in.  The banks are much, much more regulated and supervised here in Canada vs. the US.

In Canada and most other industrial nations, investment banking — which can include stock trading, packaging and selling securities, corporate advice on mergers, and making investments for profit — is mostly done by the same commercial banks that offer savings and chequing accounts through branches on every street corner.

Commercial banks are closely supervised by government regulators and their leverage — the amount of borrowed money they use to do business — is limited to a fraction of that formerly found in the lightly regulated U.S. investment banks.

That means they can never earn the fabulous profits reaped by the U.S. investment banks in good years. But it also means that they have much less risk in bad years. Better still, they are cushioned by profits from their more stable consumer and business lending, and their large pool of depositors’ money means they’re less dependent on borrowing in bond markets to do business.

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The good news for Canada is that this country doesn’t have serious problems with its financial system or a collapse of home prices. We’ll be hurt by the U.S. slowdown, but our internal strength means that growth here should remain positive.

Wall Street’s Melt Down Explained

I have to say that this is a good behind the look at what has happened in the US and the financial markets.  The one thing they are missing is a ‘big thing’.

CONSUMERS…

The main reason this whole collapse has happened, as consumers / investors are always chasing the dollar and chasing the ROI (Return on Investment)  that companies create risky products to keep shareholders happy, keep investors investing and their companies strong.  This is a very simplified version of the reality, but it’s true.
What are your thoughts?  How did this collapse happen?