Is the panic over Detroit real?

Tuesday, November 18, 2008 by Dave Winer.

I'm not an economist, and while I'm not a casual investor (no one can be) -- I'm not a very active investor. I tend to park my assets in one place and just leave them there. The one major exception was January of this year, when I sold almost all my stock. Slowly, I bought back in -- index funds, but a very small amount of my holdings. Mostly I'm in US dollars and like everyone else, taking a bath and getting a haircut. It hasn't been a good year. 

At the same time, I've been watching the AP and AFP photos flow through my screen saver, as always really excellent stuff, and the other day was struck by a photo in a Chinese unemployment office. The people don't look very different from us, and the office looked like it could be in Los Angeles, Phoenix, Denver, St Louis, Atlanta, DC, Philadelphia or Boston or any other American city. There were people gathered in front of a window, waiting in line. And there were computers, they looked exactly like ours (of course, our computers come from China) and they had wires on them, and I imagined those wires went to the Internet, the same Internet the wires on my computer go to. 

The moral of that little story is that today in our crumbling economy, jobs in a random part of China are completely fungible with jobs in a random part of the US. Our workers compete with theirs and vice versa. If they can do a job for less money than our workers, they're going to get the work. Seeing Chinese workers in a scene that looked so familiar brought all this home in a new way.  

At the same time, I'm listening to the talk on cable TV and radio about the looming crisis in Detroit, and recognize that at least half of the talk is nonsense, and the other half is people saying that the first half is nonsense. As usual, they are trying to create a debate, they don't care if the debate is about the substance. On Face The Nation, I heard Bob Schieffer ask the same nonsense questions on Sunday that on Monday Chris Matthews asked on Hardball and Mika Brzezinski asked on Morning Joe.  

The don't report that the problems at GM, Ford and Chrysler are part of the September meltdown, part of the fallout of the bankruptcy of Lehman Brothers. The economy is rapidly slowing down, maybe even grinding to a halt in some areas (esp autos) and companies like the Big 3 automakers can't get loans even if they have decent credit. I understand this because I was listening and reading during the initial reporting of the meltdown, and I heard what they were reporting, almost parenthetically during the rush of news, btw -- GM will run out of cash in a few weeks and might disappear -- but apparently these reporters weren't paying attention to their own reports. (Maybe understandable, because at the time the concern was over Bank of America disappearing.) 

So instead of discussing what form our support will come in, we're discussing the morality of whether they should receive the support. It's the stupidest most dangerous discussion imaginable, because we're going to pay for this one way or the other. We can pay $25 billion now, or $200 billion in January to feed the out-of-work people. And of course, the comments on this post are just going to be rehashes of what Matthews, Schieffer and Brzezinski were saying on their respective TV shows. The Internet mostly parrots, reflects whatever nonsense is on TV.  

The really scary part is that our government, still run by Republicans until January 20, seems to be willfully driving off the cliff. It would be one thing if it was just posturing, one party preparing to blame the other for whatever problems come from what they're calling a bailout, but it's much worse than that. They're going to let the companies fail. I don't think people appreciate just what that means. And the press should be reporting on that, not the morality. They should put their reporters in Detroit, Columbus, Indianapolis, where ever there are elements of the auto industry, and explain what will happen to these Americans when GM, Ford and Chrysler shut down, even if it's just for a few months. Really show us what the decision is. For once, scare us with the truth, instead of telling the usual bedtime story. That would be the honorable journalistic thing to do, but of course they're not doing it. 

We daydreamed through the various crises of the last eight years, really the last forty or fifty. We won't be able to stay asleep through what's coming.  

On an NPR show yesterday they had people calling in from Michigan. They sounded very clear, not angry, not a lot of fear in their voices, but the things they were saying scared me -- towns where everyone is out of work, and no one is able to sell their house, nowhere to go, savings being depleted, wondering what happens when they're gone. 

In online discussions people say we should let the companies fail -- they scare me even more, because they don't understand how much our lives depend on each others. That was clear in New Orleans after Katrina. They couldn't re-open the restaurants not because there was no demand for the services, there was, but because there was no place for the staff to live and no way to get the supplies they needed. And you can't bring in the workers to rebuild the city without places for them to eat.  

Civilizations take a long time to reboot after a crash, so you must do everything you can to avoid crashing, but this one seems to be willful, we have the means to prevent it, but for some reason we're too stupid, collectively, to stop it. 

I feel this also because I live in earthquake country. People here say "New Orleans shouldn't be rebuilt cause there never should have been a city there in the first place." I lower my glasses down my nose and look at them and say (after a long pause) "Are you fucking out of your fucking mind? Don't you see where you live?" I usually don't even have to say a word, just pause and let them think.  

My mother, who lives in NY says the same thing, and I say sheez, it's not as if your city didn't need the rest of us to save you. She literally doesn't understand what I was saying. I ask if she remembers 9/11.  

Fact is, we all live in New Orleans and Detroit, and we're going to learn that in this country, but it's going to be a very very painful lesson, apparently.