Then and Now: Its enough to make you cry

I guess I am no different from a lot of people. I have a set of favorite sites saved on my browser and visit them each morning to see how the world is progressing.
This morning I went to one such site and was struck by two particular pictures to which they had linked several more pics.

One was showing how the beaches of Normany have changed from D-day til today.

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D-day. then and now.
Reuters photographer Chris Helgren found archival photos taken during the invasion and returned in the same places to photograph them again.

The other shows how the city of Detroit is falling apart.

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How dies Detroit
Detroit hotels, formerly the capital of the automobile and the prestigious city, now slowly but surely turning into a ghost town. Attempts to invest in infrastructure and settle in what have not resulted. The town is dying, and it shows even locally. Between these pictures made by Google, just a few years.

I could only feel a sense of disappointment at how we, as a country, have fallen from such high ideals and expectations in the past to a level of dispair and complacentcy.
We had put men onto the world stage to set right the things we believed in; yet today we stand by and watch as our own cities die from, what is clearly, apathy.
This is not to lay blame on those individuals whose homes have fallen into such states of disrepair as shown. It is far more the fault of those who were in postions of authority and, for their own reasons, allowed things to come to this stage of "undevelopement".
There is now very little which can be done for Detroit, and other cities in such conditions, except some massive change in the policies which fostered the current state of being.
I don't know what policy changes these would be, so I leave it to any of those who read this to chime in with some serious suggestions.

a reply to: teamcommander

Old cities are dying. Others are thriving. It's not the end. Just a paradigm shift.

I saw some of the Detroit pics last night. It really saddened me to see the sequence containing the 4 houses.

In 2009, there were 4 cute, well tended houses on a street. Fast forward to 2011 and 3 of the houses are demolished. Two years later (2013), and all that's left of the 4th house is the front steps.

I found it to be a very poignant reminder of how quickly the economy has affected our labor class.

a reply to: teamcommander

The greatest cure for apathy is the free-market.

In terms of government "letting" places like Detroit go, it is their dumb laws that make the place the last spot on earth I'd move a business to. Okay, maybe not the last...but one of the last in the U.S.

Either way, the pictures are very interesting. Previous generations were very violent and it's crazy to think that estimates for total death in WW2 is from 50-70 million people. That's a lot of death and destruction.

Thanks for posting.

We dont have jobs for Americans but hey lets open the border and amnesty
for every one!! It started way before Obama but he is throwing gas on the fire.

Kick out the illegals close the borders and do not reopen until the real unemployment
rate is around 3%.

originally posted by: nfflhome
We dont have jobs for Americans but hey lets open the border and amnesty

for every one!! It started way before Obama but he is throwing gas on the fire.



Kick out the illegals close the borders and do not reopen until the real unemployment

rate is around 3%.

I couldnt agree more, but will also add bring back those jobs that have left the country in the name of NAFTA and greed
Thanks Ed

originally posted by: OrphanApology
a reply to: teamcommander



The greatest cure for apathy is the free-market.



In terms of government "letting" places like Detroit go, it is their dumb laws that make the place the last spot on earth I'd move a business to. Okay, maybe not the last...but one of the last in the U.S.



Either way, the pictures are very interesting. Previous generations were very violent and it's crazy to think that estimates for total death in WW2 is from 50-70 million people. That's a lot of death and destruction.



Thanks for posting.

Yep...
You can't beat those "free market policies" like NAFTA and helping corps move off shore with some good old tax breaks.
I agree that illegal immigration, which big coprs like, has had its detrimental effects on our economy but I am afraid it was the "willful" out sourcing of jobs that has driven the nail into the coffen. But don't lay it off on the unions, the corporations negotiated every contract and knew how they would impact their bottom line far in advance of their decisions to outsource jobs. Look at the differences in the pay scales for your answer to this question.
Over the past couple of decades, our employment market could have likely absorbed much of the immigration problem but when you move entire factories out you create much more stress than the market can bare.
With the two combined it has just been too much.
Of course, the greed of the financial institutions has not helped either.

a reply to: OrphanApology

From what I understand about what occurred with Detroit's declining was in part due to the deregulation of the financial markets and the sale of toxic swap agreements by the banks in the years preceding the 2007/8 financial crisis. Interest swaps fall under the definition of derivatives which, in fact, had been deregulated in those prior years. Deregulation is allowing the market to regulate itself and that was backed by Greenspan.



uk.finance.yahoo.com...

Detroit isn't the only place in the US that engaged in such deals with the banks that went significantly toxic. Jefferson County in Alabama also entered into a similar deal on these types of derivatives with as profound of an effect as what Detroit has been facing.

The SEC and Justice Department are probing whether the banks that financed Jefferson County conspired nationwide to fix prices for derivatives, violating the Sherman Antitrust Act, according to target letters sent to bank employees.

www.bloomberg.com...

Whatever happened to that probe?

a reply to: ItCameFromOuterSpace

Not old cities... Cities that are extremely Democrat. Too many Democrats results in cities like Detroit, Memphis, etc etc.

LoL

a reply to: WhiteAlice

No.

What I posted is that the free-market is the cure for apathy. In no way is any of the nonsense the government has been doing for the last 100 or more years anything close to the free market. Detroit has been one of the biggest victims of statist game playing in recent years.

The derivatives market only exists because of government law.

Swaps are agreements among corporations(again existing only because of government law) that started as a risk mitigation tool. Unfortunately now every bank is connected to every other bank which means that if one fails(which is naturally supposed to happen in a healthy economy) every bank has the potential to fail. Basically it's about as far away from a free market as you can get without getting your nose wet(old Gregg reference).

It's a big ol' mess but in no way has anything to do with a free market. Republicans, Democrats, Libertarians, and whoever else can try and say things are "free market" this or "free market" that. But they wouldn't know a free market if it came up and bit them on their ass.

"Deregulation" is just a fancy political word for "Deregulation for some, everyone else is still regulated".

The free market is an all or none sort of deal. You cannot "deregulate" only one portion of things and then call it the free market. That's not how it works.

a reply to: teamcommander

??? How is it, that I'm the 10th poster,
but nobody else noticed that both the links go to Normandy???
Doesn't anyone click & read before they comment??

Interesting pics! The before & some of the after are sad!
But for different reasons.
It's sad how far removed everyone is already,
from what happened!

Too bad they don't put the before pictures up,
at the places where they were taken, to be a reminder!
WOQ

a reply to: OrphanApology

No. I'm an accountant. Knowing what derivatives are and what went wrong is my JOB. The derivatives market was deregulated, which is, in fact taking away oversight and rule making from a specific portion of a market. That is making it "free". The Commodity Futures Modernization Act of 200 is precisely one of those acts which specifically took away governmental oversight on futures trading between private entities, including credit default swaps.

Now credit default swaps haven't been around for "100 years" and are the precise derivative that was motivating the fraudulent activities behind the Financial Crisis of 2007/8 and where many of our municipalities got owned by major banks such as Bank of America and JP Morgan. In fact, they were invented by JP Morgan in 1994, as you said "to mitigate risk". In the case of a credit default swap, the risk being mitigated was that the debtor would default on a loan. Now, what was happening in the years preceding the collapse? Robosigning and other fraudulent mortgage practices at perpetuated by multiple financial industries including, most notably, Countrywide. The industry was able to snap up all those mortgages, repackage them to make them prettier than the dogs they were thanks to the help of Standard & Poors and Moodys, and then resold them to a number of entities from private companies to municipalities and sometimes even entire countries. They were huge to "mitigate risk" and well, when you have a high demand for something, you better step up that production, right? Fraud.

In the case of Jefferson County in Alabama, the SEC pressed charges against JP Morgan for what is basically bribery (SEC calls it an "unlawful payment scheme"). They were engaging in unlawful business practices to sell those toxic credit swaps to the county. JP Morgan, the inventor of these things, was forced to pay $25 million in fines, $50 million to Jefferson County and then, made to release $647 million in termination fees that they were trying to get the county to pay in order to exit out of those toxic swap contracts. JP Morgan opted to settle

www.sec.gov...

Robosigning, outright fraud, bribery and well, just flat out lying. What happened in the 2007/8 financial crisis is not an argument for a free market. What happened is an argument about why we have regulations imposed on the financial market in the first place because they can be some of the greediest and sketchiest mofos on the planet and they don't give a damn about who they hurt--whether it's an entire country or the people living in a county.

a reply to: WhiteAlice

I hadn't realized you worked with or around derivatives and understand how they work on a professional level. I have a question...

Derivatives: The Unregulated Global Casino for Banks

How accurate is the bottom of that page or was it at the time it was created?

originally posted by: nfflhome
We dont have jobs for Americans but hey lets open the border and amnesty
for every one!! It started way before Obama but he is throwing gas on the fire.

Kick out the illegals close the borders and do not reopen until the real unemployment
rate is around 3%.

Yes, let's kick out "all the illegals" while corporates X, Y and Z can happily continue outsourcing and manufacturing in Pakistan. That sure will save our economy : )

originally posted by: Wrabbit2000
a reply to: WhiteAlice

I hadn't realized you worked with or around derivatives and understand how they work on a professional level. I have a question...

Derivatives: The Unregulated Global Casino for Banks

How accurate is the bottom of that page or was it at the time it was created?

I knew a partner for a mid-sized accounting firm that called the OTC (over-the-counter) derivatives market the "stuff of her nightmares" when I commented on the size of the financial derivatives market back and asked her opinion of it in 2011. She couldn't even think about it. It scared her that silly. The growth of the market, after the financial crisis, was alarming and at times, about 150% of what it was the prior year. I stopped being able to look at it a year or so ago as it really actually made me a little terror struck, too. Honestly, I have to actively reassure myself that much of the derivative market is actually spread wide across the total market and that it would all collapse is unlikely.

These days it appears to be increasing about $100 trillion a year. The notional value of all outstanding derivatives contract at the end of 2013 was $710 trillion. I know you like your data so here's a link for you that breaks down that $710 trillion at year end 2013.

www.bis.org...

One thing to keep in mind, which is what I always do when looking at these numbers, is to remember that not all derivatives are the same. The primary derivative most strongly associated with the Financial Crisis was credit default swaps (CDS). Page 7 of the above pdf discusses the market for CDS. Compared to the larger total amount of the derivatives market in its entirety, it comprises a small portion of it. That's a big of a relief as long as you don't recall that it is still in the trillions.

The largest portion of financial institution derivatives would be interest rate derivatives (page 5). A really basic explanation of those is that they are bets on future interest rate fluctuations. One party bets that it's going to go up and the other bets that it's going to go down. What the interest rate derivative is based on varies but one of the most common is US Treasury bonds. FRA, which you'll see be mentioned, is a forward rate agreement. That's basically that up and down bet where the payment is made at the maturity of the contract. They can be very short term (1 month) so the FRA market is very active and they typically use LIBOR as their reference rate. The calculation for who pays what is basically the difference between the reference rate and the fixed rate over the days of the term of the contract, divided by 1+ the reference rate over that same period. Confusing, no? And that's the kind of dumbed down version.

More lovely data for you: www.bis.org...

My three concerns with this portion of the OTC derivatives market is 1. the sheer enormity, 2. the fact that, despite the LIBOR scandal, many utilize LIBOR, which in my mind just risks a repeat/temptation to fiddle, and 3. as BIS states, they are "opaque". It's hard to know what is going on with them, especially when they can be so short term, coupled with the sheer number of them. Unlike CDS, a significant portion of interest rate derivatives do not go through central clearing as mandated for some OTC derivatives by Dodd-Frank here in the US and other international laws developed since the Financial Crisis.

There is a significant problem with the whole central clearing response and that is that the largest banks are the central counter party (CCP) clearing houses that are being used. They're acting as the go between of the two parties involved in the derivative contract and to whom the parties must provide collateral to. While it's not a bad idea and does mitigate that risk between the two parties. Basically, if they were to go into a contract and one party loses and is found to be insolvent, the other party is SOL. By having a centralized entity as go-between, assessor and collateral holder, it lessens that risk of somebody being hung out to dry on a derivative contract. It is still kind of problematic as, if these banks were "too big to fail" before, then surely they really are now as CCPs and that's just my most immediate thought on that one, lol.

dealbook.nytimes.com...

And that is probably more than you ever wanted to know about the derivatives market. Hopefully that didn't confuse the crap out of you or make your head hurt. There's a whole lot of OTC derivatives and they can be on everything from currencies, bonds, other obligations, the price of a commodity and much, much more. That's why, when I look at that monster number, I remind myself of that fact. You could have a company with $50 trillion in derivatives but that $50 trillion could be spread far and wide on the market. Having it get hit for that entire $50 trillion is unlikely.

Part of mitigating risk is avoiding having all your eggs in one basket so to speak. If all your eggs are in one basket, then your risk isn't being mitigated at all. It's better to have your eggs in multiple baskets in case one falls. It still is kind of scary though.

originally posted by: OrphanApology
In terms of government "letting" places like Detroit go, it is their dumb laws that make the place the last spot on earth I'd move a business to. Okay, maybe not the last...but one of the last in the U.S.

You're right, and its also one of the last places in the US that anyone wants to live. Detroit's population has been in collapse since its high point in the 1950s, with barely a third as many people now as it had then, and its a trend that continues to this day. With no prospect for good jobs, most of the productive citizens have either moved to the suburbs or moved out entirely, leaving the crime ridden mess we see now. Basically, the result is an oversupply of homes, and, combined with rampant crime, you see, predictably, exaggerated rates of urban decay.

The blame largely lies with the political leadership of cities like Detroit and their failed policies, not to mention the people who keep electing them year after year, decade after decade.

a reply to: vor78
Well said.

Failed policies and approaches to problems that are compounded year after year and decade after decade. And yet the people voting do not seem to be able to learn from their mistakes (or do not want to) and the people in leadership positions not learning from past mistakes (or choosing not to).

Detroit highlights much of what is wrong in our country, and specifically with certain urban areas across the country.

It seems that we cannot have an honest discussion in this country about some of the major problems we are experiencing. Not being able to have such discussions do nothing but perpetuate the status quo which eventually evolves into status FUBAR.