David Frum of the conservative American Enterprise Institute has written an interesting (albeit pessimistic) account of what went wrong in Detroit (everyone’s favorite topic).

In his National Post article “What Killed Detroit,” Frum argues that poisonous race relations and an insufficient commitment to arts and culture sealed the city’s fate long before the auto giants crumbled.

“The collapse of the automobile industry seems the obvious answer. But is it a sufficient answer?,” he wonders. “The departure of meatpacking did not kill Chicago. Pittsburgh has staggered forward from the demise of steelmaking. New York has lost one industry after another: shipping, garment-manufacture, printing, and how many more?”

Some potential good news for the struggling auto industry: The New York Times reports the so-called “Cash for Clunkers” program has really taken off – so much so that it is completely out of money.
“About a quarter-million vehicles were sold under the program,” the Times reports, “which offered payments of $3,500 to $4,500 for people who traded in old cars for new ones that had higher fuel economy. The average payment worked out to about $4,000, and the total payout, about $1 billion, the amount allocated by Congress under the …

As most everyone knows, Detroit is a city with a lot of problems.
Metro Times writes,
“The auto industry that formed its economic bedrock for most of the past century teeters precariously as two of what used to be known as the Big Three emerge from bankruptcy reorganization. The consensus opinion from President Barack Obama on down is that even though every effort is being made to save the industry, many of the jobs lost are never coming back, and the city known as Motown is in for a long and perilous …

This Wall Street Journal story highlights the struggle many people in Michigan face as auto jobs disappear.
The share of Michigan residents under 65 using public insurance such as Medicaid rose to 22% last year, from 11% a decade earlier, WSJ reports.
“These cutbacks, in turn, are devastating the health-care sector. Now the state’s largest employer, health-care providers have swung from profit to loss. Hopes are fading that Michigan’s hospitals and clinics can offset the car industry’s decline: Even as waves of former auto workers are retraining as nurses, dental hygienists and …

Remember Steve Rattner? The guy who was going to save us all?
Well he has quit his job as Car Czar, helping oversee the bailout/bankruptcy of The Big Three, after only five months.
“With GM’s restructuring complete, Steven Rattner, whose leadership and vision were invaluable to the auto task force’s efforts, has decided to transition back to private life and his family in New York City,” Treasury Secretary Timothy Geithner said (via Detroit News).
The former Wall Street financier worth $188 million will be succeeded by Ron Bloom, a former adviser for the …

GM is emerging from bankruptcy today, free of debt, under modified contracts and with the president’s approval.
It was in Chapter 11 for 40 days.
The federal government controls a 61% share of the new, leaner company.

Meanwhile, some jerks are organizing a boycott of the company, as if it didn’t have enough problems.
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This Associated Press story highlights the problem of fire – by arson or by accident – in vacant homes, increasing as does the foreclosure crisis.
It focuses on the sad story of one homeless man squatting in one vacant home in Flint.
-KG
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This Slate piece was written by a Flint native returning to his hometown in search of affordable housing, driven out of San Fransisco by obscenly high housing costs.
It’s an interesting and well-written story.
Thanks to Rust Wire reader Claudia Raleigh for bringing it to my attention.
-KG
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Two recent articles in the Detroit Free Press and Pittsburgh Post-Gazette point out, the steel industry has truly taken a beating in this recession.
According to the Free Press, “The steel industry has been hit hard by the recession and the automotive industry’s turmoil, prompting the United Steelworkers to become leading national advocates for federal support of the automotive industry.”
It continues, “U.S. steel plants are operating at 38% of capacity, and tire plants are operating at about 50% of capacity, said Leo Gerard, president of United Steelworkers.”
The union president told the …

  We all knew it was coming and now it has: GM is bankrupt.
  The quintessential American automaker entered Chapter 11 this morning. It is $172 billion in debt, according to The New York Times.

  GM has announced plans to close 12 factories in Michigan, Indiana, Ohio, Delaware and Tennessee.
  The government’s going to give GM another $30 billion to get it through what President Obama hopes will be a quick restructuring.
  Mercifully, at least GM has promised to keep its headquarters in Detroit, The Times reports.
  Chrysler, meanwhile, is expected to emerge from …