Click on WORD or PDF for full content
Mark Steyn is on the Detroit bankruptcy.
By the time Detroit declared bankruptcy, Americans were so inured to the throbbing dirge of Motown’s Greatest Hits — 40% of its street lamps don’t work; 210 of its 317 public parks have been 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 — 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 Gov. 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 is now a border between First World and Third World — or, if you prefer, developed world and post-developed world.
To any American time-transported from the mid-20th century, the city’s implosion would be 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. …
Zero Hedge linked to a post titled “25 facts about Detroit will leave you shaking your head.” It appeared in The Economic Collapse Blog.
1) At this point, the city of Detroit owes money to more than 100,000 creditors.
2) Detroit is facing $20 billion in debt and unfunded liabilities. That breaks down to more than $25,000 per resident.
3) Back in 1960, the city of Detroit actually had the highest per-capita income in the entire nation.
4) In 1950, there were about 296,000 manufacturing jobs in Detroit. Today, there are less than 27,000.
5) Between December 2000 and December 2010, 48 percent of the manufacturing jobs in the state of Michigan were lost.
6) There are lots of houses available for sale in Detroitright now for $500 or less.
7) At this point, there are approximately 78,000 abandoned homes in the city.
8) About one-third of Detroit’s 140 square miles is either vacant or derelict.
9) An astounding 47 percent of the residents of the city of Detroit are functionally illiterate. …
NY Times has a fascinating story about goods transportation on the other side of the world. For thousands of years camel caravans moved goods between China and Europe. The route was discarded when ships started sailing the route. Changes in China though have driven manufacturers from coastal cities with high wages to interior cities. Shipping to the coast has increased the time to move goods to Europe. Hewlett Packard decided to use train routes through Kazakhstan, Russia, Belarus, Poland, etc. to reach distribution warehouses in Holland. They have succeeded in cutting the shipping time from five weeks to three.
Azamat Kulyenov, a 26-year-old train driver, slid the black-knobbed throttle forward, and the 1,800-ton express freight train, nearly a half-mile long, began rolling west across the vast, deserted grasslands of eastern Kazakhstan, leaving the Chinese border behind.
Dispatchers in the Kazakh border town of Dostyk gave this train priority over all other traffic, including passenger trains. Specially trained guards rode on board. Later in the trip, as the train traveled across desolate Eurasian steppes, guards toting AK-47 military assault rifles boarded the locomotive to keep watch for bandits who might try to drive alongside and rob the train. Sometimes, the guards would even sit on top of the steel shipping containers.
The train roughly follows the fabled Silk Road, the ancient route linking China and Europe that was used to transport spices, gems and, of course, silks before falling into disuse six centuries ago. Now the overland route is being resurrected for a new precious cargo: several million laptop computers and accessories made each year in China and bound for customers in European cities like London, Paris, Berlin and Rome.
Hewlett-Packard, the Silicon Valley electronics company, has pioneered the revival of a route famous in the West since the Roman Empire. For the last two years, the company has shipped laptops and accessories to stores in Europe with increasing frequency aboard express trains that cross Central Asia at a clip of 50 miles an hour. Initially an experiment run in summer months, H.P. is now dispatching trains on the nearly 7,000-mile route at least once a week, and up to three times a week when demand warrants. H.P. plans to ship by rail throughout the coming winter, having taken elaborate measures to protect the cargo from temperatures that can drop to 40 degrees below zero. …
… The Silk Road was never a single route, but a web of paths taken by caravans of camels and horses that began around 120 B.C., when Xi’an in west-central China — best known for its terra cotta warriors — was China’s capital. The caravans started across the deserts of western China, traveled through the mountain ranges along China’s western borders with what are now Kazakhstan and Kyrgyzstan and then journeyed across the sparsely populated steppes of Central Asia to the Caspian Sea and beyond.
These routes flourished through the Dark Ages and the early medieval period in Europe. But as maritime navigation expanded in the 1300s and 1400s, and as China’s political center shifted east to Beijing, China’s economic activity also moved toward the coast.
Today, the economic geography is changing again. …
… Tony Prophet, a senior vice president at H.P., said the company began thinking about a rail route west almost as soon as it started production in Chongqing. The company, Mr. Prophet said, was pursuing a strategy of moving products, not people: instead of encouraging a migration from inland provinces to coastal factories, H.P. would manufacture in the inland provinces and then ship the products from there.
To attract the company, the city built an extra runway at its airport long enough to accommodate Boeing 747 cargo jets. Airfreight to Europe takes only one week, including customs processing.
But persistently high oil prices made the cost of airfreight daunting — as much as seven times the cost of rail freight. H.P. was also concerned about the carbon emissions involved in airfreight, which are 30 times those of the rail or sea routes. …
… The train was punctual in reaching the Dzungarian Gate, a low, wide valley through the snow-capped mountain ranges that separates China and Kazakhstan. Chinese customs officers there opened documents that had been sealed since the shipment left Chongqing. For 49 of the 50 containers, the documents matched the cargo in every detail.
But for one of the laptop computer containers, the numbers didn’t match. The documents showed that the total weight of one container was 10,135 kilograms. But the scale showed that the container weighed 10,153 kilograms — a difference of just two digits, transposed accidentally.
Hours passed on the Kazakh side as H.P. and its shipping agents hustled to amend the paperwork, which was not easy because the error was discovered at the end of a workday. After thundering across China, through Xi’an, across a corner of the Gobi Desert and skirting the vast arid wastes of the Taklamakan Desert, where temperatures can hit 120 degrees, the train simply sat. For 26 hours.
Such extreme delays are unusual — H.P. managers say the longest previous delay was 10 hours, at the Belarus-Poland border. Sea shipments have sometimes been delayed up to three days because of bad weather and other problems.
H.P. has made strenuous efforts to keep the products moving, sending representatives to remote Central Asian border crossings to explain its plans, said Ronald Kleijwegt, the company’s director of logistics for Europe, the Mideast and Africa. …
… Once the problem of the transposed numbers was cleared up, the train crossed into Kazakhstan. An overhead crane and two cranes that looked like cottages on wheels lifted the H.P. containers off the Chinese train, and loaded them onto flat cars with wider wheel gauges in the rail yard in Dostyk on the Kazakh side of the border. Kazakhstan, Russia and Belarus, all traversed on the trip, have wide rails inherited from the Soviet rail system. China and Europe have narrower rails, so cargo transfers take several hours. …
… When the train reached the Belarus-Poland border, the containers had to be moved again to flat cars with a narrower wheel gauge. While 41 flat cars headed on across Europe right away, 9 more had to wait for a separate locomotive because the train would otherwise exceed European regulations for a freight train’s maximum length. The first train reached Duisburg, Germany, on July 3, or 19 days after the containers left Chongqing. Trucks then took the containers overnight to their final destination, H.P.’s European distribution center, in Oostrum, the Netherlands. …
… Mr. Prophet, the H.P. vice president, said that despite the occasional delays — like the 26 hours at the Kazakh border — the company still planned to shift more shipments from sea freight, and especially from airfreight, to rail. The journey to Europe can take as little as 18 or 19 days by rail, but to allow for delays, H.P. doesn’t plan for the train to arrive in fewer than 22 days, he noted.
Zhengzhou’s and DHL’s move to offer regularly scheduled rail service across Kazakhstan, not to mention the lengthening list of industries trying the route, suggests that despite the occasional customs delay, many companies now share H.P.’s view that the Silk Road has re-emerged as a viable transport route.
“They were all highly interested,” Mr. Kleijwegt of H.P. said, “but wanted to see someone else prove it.”