Alexonomic's Outlook for 2013: South America

Yes, the Brazilians are still the centerpiece of South American economic growth, yet there are competitors arising. While Venezuala faces a period of uncertainty with the potential replacement of Hugo Chavez, Argentina offers a renewed challenge to the Falklands under Cristina Fernández de Kirchner.

Alexonomic's Outlook for 2013: Europe

Europe reminds many historians of conditions during the 1930s. Economically depressed countries are embracing extremist political parties with racial divide, riots, and anger as the symptoms. Currently, most of the population is aware of the European debt crisis. Although a serious as the economic crisis is, the side effects of lower economic output can be more serious.

Americans and their Guns

To stray from the Predictions of 2013 series, I did an infographic of the gun control debate raging in the US, along with some statistics. The objectives of Obama gun control rules come plainly from the White House publication on the topic. As one can see, the proposed regulations are quite practical.

Alexonomics' Outlook for 2013: Africa

Egypt has often been the focus of news in Africa as of late. The removal of Mubarak and election of Mohammed Morsi has proven to be an interesting turn of events, but the excitement is far from over. Morsi symbolically removed ties from the Muslim Brotherhood, but that move hardly removes the influence the party has on the President.

A guide to Environmental Economics

Often, articles will be conclusions with a few supporting facts that will often sway the reader. I find this problematic for two reasons. First, the reader does not have the chance to fully understand the topic because no background is given. Secondly, the reader doesn't really have an opportunity to disagree with the writer's conclusion if the reader has little to no knowledge of the topic.

Wednesday, 29 February 2012

This is the Motor City

Motown, Hockeytown, Rock City and now Broke Town.

Yeah, we're talking about Detroit.

The city has seen far better times. The once great auto manufacturer has seemingly fallen into a economic disparity according to the eyes of the world. However, despite an unsolved murder rate of 70%, a thriving illegal drug industry, and having the most expensive auto insurance in America for having a high crime rate, Detroit is showing signs of recovery.

Detroit is one of the few cities in the US to have all the big four accounting firms present, as well as corporate offices for Ally Financial, Bank of America , JP Morgan, Robert Half and Raymond James. In 2011, Quicken Loans moved their headquarters to downtown Detroit after a very profitable 2009. This moved 4000 employees downtown. Blue Cross consolidated 6000 employees to downtown Detroit in 2011 as well. Besides finance, Detroit became the fastest region in the US for high tech jobs (2010). Incubators for high tech such as the Michigan Security Network nurture research in cybersecurity, biodefense, and border security.

Manufacturing is still a large part of Detroit, with GM, Ford and Chrysler all retaining corporate offices along with any major automaker. General Electric has built a 100m center employing 1200 people averaging 100k a year. Adding to this is a large refinery operated by Marathon, which refines oil sands from Canada. Speaking of Canada, the Windsor-Detroit border crossing provides $13 billion in economic activity (roughly).

The list goes on, I am just summarizing Wikipedia. I knew most of this, but some of it surprised me as it should others. However, everyone heard of the large bailouts for automakers in 2010 . The population of Detroit fell 25% from 2000 - 2010. The 2009 Detroit unemployment rate was 30% compared t America's 9.1% unemployment. (some said the real unemployment rate was 50%). Adding to this is the gangs and ghettos that cause the police to even fret. Myself being a Caucasian individual could possibly wind up on that list of unsolved murders if I dared to venture out past the cultural divide on the 8 mile. It could be said that 2008/2009 were two of the worst years Detroit has seen as the financial world crumbled around them weakening automakers even further.

However, there are signs of hope. The tech industry in Detroit is slowly showing life. Expertise in Cloud Computing, Mobile Software apps, and Energy Management  are in demand as automakers switch to higher tech cars. Technology is especially needed with the US Government granting a billion dollars for further research and development into lithium powered motors. In 2010, tech employment has risen 10%. The main draw is not the salary, which is still below the US National Average, but the low cost of living which could be an estimated 90% below that of living in the Silicon Valley.  The unemployment rate is still higher than the national average, but sits at around 13%, far better than that of 2 years ago. Many of these new jobs are in the Tech industry as hydrogen fuel cells and green automobile energies are being researched.

In terms of political economic assistance and development, Detroit is showing some progress. Some parts of Detroit are designated as Michigan Renaissance Zones - which are almost tax free areas for any business or resident in the area. Tax abatements, public loans and grants, and community development block grants are all programs Detroit has offered. Job training continues under a famous program entitled HOPE, while the Michigan Economic Development Corp. has created a job training program meant to meet market needs.

Lastly, Detroit has seen employers people to live there including Detroit Medical Center, Henry Ford Hospital, Quicken, Compuware, Wayne State and others.  The Blue Cross is offering a 5 year Live Downtown program, which home buyers can receive a $20 000 forgivable loan and renters a $2500 allowance. Current residents could be given up to $5000 for exterior improvements.

I'm not saying Detroit is a paradise, far from that. Stories such as this still exist and are a reality for many. All I am saying is Detroit does finally seem to be sowing seeds of opportunity, something that hasn't been seen for a while. It has bottomed out, and with proper economic and political policy, will continue a slow ascension back to paradise. Ok, not paradise, but maybe meeting the national unemployment rate is a good goal.  

In terms of investment, I can suggest the following. First, if you want to begin a startup tech business and cannot afford the high costs of the Silicon Valley, try Detroit. If you wish to live for free in a more dangerous area as a young college graduate, try Detroit.  If you wish to work for some of the cutting edge auto technology that is playing a part in green technology, try Detroit. Lastly, if you want to see the Toronto Maple Leafs utterly destroy the Detroit Red Wings in 2012, try Detroit.