http://endoftheamericandream.com/archives/why-are-the-chinese-gobbling-up-real-estate-and-businesses-in-detroit

Why Are The Chinese Gobbling Up Real Estate And Businesses In Detroit?

By Michael Snyder, on July 30th, 2013

Detroit Michigan at Milwaukee Junction looking southwest at Russell Industrial Complex - Photo by no body atoll

Something very strange is happening to Detroit. Once upon a time, it was the center of American manufacturing and it had the highest per capita income in the United States. But now the city is dying and the Chinese are moving in to pick up the pieces. Lured by news stories that proclaim that you can buy homes in Detroit for as little as one dollar, Chinese investors are eagerly gobbling up properties. In some cases, this is happening dozens of properties at a time. Not only that, according to the New York Times “dozes of companies from China” are investing in businesses and establishing a presence in the Detroit area. If this continues, will Detroit eventually become a city that is heavily dominated by China?

At this point, not too many others appear interested in saving Detroit. Right now, there are approximately 78,000 abandoned buildings in Detroit and about one-third of the entire city is either vacant or derelict. People have been moving out in droves and there are only about 700,000 residents left.

For many Americans, Detroit is about the last place that they would want to live. But to many Chinese, this sounds like a perfect buying opportunity. According to a recent Fox News report, real estate agents in Detroit are being overwhelmed with inquiries from China…

Downtown Detroit is home to one of the worst housing markets in the country, as prices of homes have collapsed and foreclosures have soared in the city’s depressed economy.

But some Chinese investors hungry for real estate are hoping Detroit’s losses will be their gain. After Detroit filed for bankruptcy July 18, Motor City property has been a hot topic on China’s social media platform, Weibo, according to a Quartz.com report.

News of the bankruptcy, coupled with a Chinese TV report in March that claimed you could buy two houses in Detroit for the same price as a pair of leather shoes, has piqued investors’ interest.

And these buyers appear to be quite serious. One buyer reportedly bought 30 properties recently, and other buyers say that they want to purchase even more homes than that…

And it appears to be translating into real interest; Caroline Chen, a real estate broker in Troy, Michigan, says she’s received “tons of calls” from people in mainland China.

“I have people calling and saying, ‘I’m serious—I wanna buy 100, 200 properties,’” she tells Quartz, noting that one of her colleagues recently sold 30 properties to a Chinese buyer. “They say ‘We don’t need to see them. Just pick the good ones.’”

Meanwhile, according to the New York Times, dozens of Chinese companies are moving into the city…

Dozens of companies from China are putting down roots in Detroit, part of the country’s steady push into the American auto industry.

Chinese-owned companies are investing in American businesses and new vehicle technology, selling everything from seat belts to shock absorbers in retail stores, and hiring experienced engineers and designers in an effort to soak up the talent and expertise of domestic automakers and their suppliers.

While starting with batteries and auto parts, the spread of Chinese business is expected to result eventually in the sale of Chinese cars in the United States.

Of course this is not just happening in Detroit. The truth is that the Chinese are buying up real estate, businesses and natural resources all over the country.

But they seem to have a particular interest in Detroit.

Perhaps someone should tell them that Detroit is not actually a very safe place these days. The violent crime rate is five times higher than the national average, and the murder rate in Detroit is 11 times higher than it is in New York City.

If you call the police, it takes them an average of 58 minutes to respond. And sometimes the people that are committing the crimes are actually Detroit police officers. In fact, one Detroit police officer was involved in robbing a gas station just last week…

A Good Samaritan snapped photos of what appeared to be two men impersonating police officers involved in a pistol-whipping and robbery outside a Citgo gas station on Detroit’s east side on July 21.

Once Fox 2 aired those photos, an even more disturbing picture developed.

“Several unidentified police officers were working this particular robbery case, recognized one of the suspects in the photographs as being a member of the Detroit Police Department,” Chief James Craig said Monday.

Now under arrest are two police sergeants, a 47-year-old officer and 20-year veteran of the Detroit Police Department and his 42-year-old buddy from the police academy, who is a former DPD cop and 17-year veteran of the St. Clair Shores Police Department. The later recently received a distinguished service award.

“In fact, they were police officers, just not working on-duty at the time,” Craig said.

Detroit is a dying, bankrupt city. There does not seem to be much hope of a turnaround for Detroit any time soon.

So why are the Chinese gobbling up so much real estate and so many businesses in Detroit?

That is a very good question.

Abandoned Home In Detroit - Photo by Jmk7

The Financial System Doesn't Just Enable Theft, It Is Theft

July 30, 2013

Print Version

Charles Hugh-Smith of OfTwoMinds blog,

It's not just inflation that is theft.

It is painfully self-evident that our financial system doesn't just enable theft, it is theft by nature and design. If you doubt this, please follow along.

Inflation is theft, but we accept inflation because we've been persuaded it benefits us. Here's the basic story: our financial system creates new credit money (i.e. debt) in quantities that are only limited by the appetites of borrowers and the value of assets they buy with freshly borrowed money.

If this expansion of credit money exceeds the actual growth rate of the real economy, inflation results.

Since our economy is ultimately based on expanding debt in every sector (government, corporations, households), inflation is a good thing because it enables borrowers to pay back old debt with cheaper money.

For example, if J.Q. Citizen makes $50,000 a year and owes $50,000 on his fixed-rate mortgage, what happens if inflation jumps 100%? Assuming J.Q.'s wages rise along with prices, his earnings jump to $100,000 while mortgage remains at $50,000. Though prices of everything else have also doubled, the debt remains fixed, making it much easier for J.Q. to service the mortgage. Before inflation, it might have taken ten days of earnings to make enough money to pay the mortgage payment; after inflation, it only takes five days' wages to make the payment.

This apparent benefit evaporates if wages do not rise along with the price of goods and services. If earned income stagnates during inflation, the purchasing power of wages declines. If it took two days' earning to pay for groceries and gasoline before inflation, now it takes three days' wages. The wage earner is measurably poorer thanks to inflation. How much poorer? Take a look: (chart by Doug Short)

Using the governments' flawed consumer price index (CPI), household income has declined over 7%. But this understates inflation in a number of ways; as several readers pointed out after reading What's Up with Inflation? (July 25, 2013), such calculations of inflation do not track the reduction in package contents that mask the fact that our dollars are purchasing less goods even though the package remains unchanged: the cereal box is the same size as last year but the quantity of corn flakes has declined.

There are other reasons to be skeptical of official measures of inflation. As I note in the above link, how can healthcare be 18% of the GDP but only 7% in the CPI's weighting scheme?

The obvious fact is that inflation is stealing purchasing power from every household with earned income, for the simple reason that wages are not rising in tandem with prices.

In 19th century Britain, the price of bread remained stable for most of the century: the price of a loaf of bread in 1890 was the same as it was in 1850. Any increase in wages in a no-inflation environment means the wage earner's purchasing power has increased. In an inflationary financial system, as earned income stagnates, everyone without access to credit and leverage loses purchasing power, i.e. becomes poorer.

The advent of unlimited credit and leverage enabled new and less overt forms of expropriation, otherwise known as theft.

Let's say that two traders enter a great trading fair seeking to buy goods to sell elsewhere for a fat profit. That is, after all, the purpose of the capitalist fair: to enable buyers and sellers to mutually profit.

One trader uses the time-honored method of letters of credit: he buys and sells during the fair by exchanging letters of credit which are settled at the end of the fair via payment of balances due with gold or silver.

Ultimately, the trader's purchases are limited by the amount of silver/gold (i.e. real money) he possesses.

Trader #2 has access to leveraged credit, meaning that he has borrowed 100 units of gold with a mere 10 units of gold and the promise of paying interest on the borrowed 90 units.

This trader can buy 10 times more goods than Trader #1, and thus reap 10 times more profit. After paying 10% in interest, Trader #2 reaps 9 times more profit based on the credit-funded expansion of his claim on resources.

The issuance of paper money is an even more astonishing shortcut claim on real-world resources. Trader #3 brings a printing press to the fair and prints off "money" which is a claim on resources. The paper is intrinsically worthless, but if sellers at the fair accept its claimed value, then they exchange real resources for this claim of value.

Needless to say, those with access to leveraged credit and the issuance of fiat money have the power to make claims on resources without actually having produced anything of value or earned tangible forms of wealth.

Those with political power and wealth naturally have monopolies on the issuance of credit and paper money, as these enable the acquisition of real wealth without actually having to produce or earn the wealth.

This system is intrinsically unstable, as the financial claims of credit and fiat money on limited real-world resources and wealth eventually exceed real-world resources, and the system of claims collapses in a heap. Though this end-state can easily be predicted, the actual moment of collapse is not predictable, as those holding power have a vast menu of ways to mask their expropriation and keep the game going.

For example, quantitative easing (QE), which is ultimately the issuance of unlimited credit and leverage to the chosen few at the top of the heap of financial thievery: Are We Investing or Are We Just Dodging Thieves? (July 29, 2013).

"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."

Ernest Hemingway, The Next War

U.S. welfare food shipped offshore in huge barrels to be sold on black market in developing nations

July 31, 2013

Print Version

Source: Natural News

Waste, fraud, and abuse are the three things taxpayers hate more than the taxes themselves, because they stand for a blatant misuse of resources provided by coercion: Pay your taxes or else go to jail.

So it is beyond maddening when taxpayers learn that government-enforced charity, which is the base concept behind all welfare programs, is being exploited by the very people such programs were designed to “help.”
A recent case in point involves rampant welfare fraud in New York City. What’s more, as reported by the New York Post, “food stamp fraud [in the city] has turned into foreign aid – to black-market profiteers in the Dominican Republic.”

Prior, the paper reported that welfare recipients in New York were buying food with their benefits cards, then shipping it in blue barrels to relatives in the Caribbean. But not all of them are distributing the food to the needy; some are selling the taxpayer-funded fare for a profit on the city streets in the DR.

‘We do it all the time’

“It’s a really easy way to make money, and it doesn’t cost me anything,” a seller named Maria-Teresa told a Post reporter. Of course, the costs are all being borne by U.S. New York taxpayers. More from the Post:

The 47-year-old Bronx native told The Post she scalps barrels of Frosted Flakes and baby formula bought with welfare money in the United States.

Maria-Teresa said she gets new barrels every few weeks from her sister, who buys everything at a Western Beef on Prospect Avenue near East 165th Street in Foxhurst.

Baby formula is also popular, according to the report. A 23-ounce can of powdered Enfamil is $25 in the U.S., but $19 in Santiago; Maria-Teresa sells it for $15.

“People want the best quality for the price, so they buy the formula made in the U.S.,” she told the paper.
Of course. Nothing but the best, compliments of the American taxpayer.

There is more to the food-stamp fraud business, however. As the Post reports, Maria-Teresa says her Bronx-based sis has local grocers ring up phoney $250 transactions with her EBT card. In exchange, the stores give her $200 in cash and pocket the remaining fifty bucks. No goods are actually bought or exchanged; rather, her sister sends the money to Santiago – that is, whatever’s left over from spending it on liquor and other non-food items.

“We do it all the time, and a lot of people do this,” Maria-Teresa said. “It’s a way of laundering money, but it’s easier because it’s free.”

What else can our government do to abuse its taxpayers?

Well, of course, it’s not free to you and I, but that doesn’t seem to matter to the enterprising immigrant welfare cheats who are defrauding our system, which is obviously broken. Yet another massive government program gone awry.

There’s more:

Jean, another public-assistance cheat in Santiago, told The Post he has peddled welfare food in Santiago since getting deported from New York in 2010.

A thirtysomething Haitian national, he said his sister in Queens uses her EBT card to purchase food before shipping it to him from Long Island City.

“Every other month, I receive the barrels from my sister in New York City,” he told The Post. “Whatever I don’t need, I sell.”

They say that charity begins at home and while that may be true, it can obviously end up somewhere it was never intended to be.

http://www.zerohedge.com/news/2013-07-31/count-yourself-among-poor

Count Yourself Among The Poor!

Submitted by Tyler Durden on 07/31/2013 17:47 -0400

Authored by Ben Tanosborn via Tanosborn.com,

Go ahead, be a fool, tell yourself that you are still part of that once proud American “middle-class,” then dare look in the mirror and see yourself as nothing but a zombie. Or, rather, the new identifiable species in the US: theAmerizombie, a reanimated economic corpse, undead but politically clueless to the new global realities.

Still managing to put food on the table, living on borrowed money and tiredly keeping both your mind and your mouth shut as you face America’s sad sack economic reality? Well, if so… you are doing it at your peril; living your economic agony in denial, begging for that last pain-killing shot of economic morphine before you expire.

Unfortunately, we, the poor in America – including those soon-to-be poor – will depart this world leaving behind those we have procreated; a generation, perhaps two, of future slaves we have incestuously sold to the ruling class. Yet, stupidly, call ourselves part of that subjugated and submissive 99 percent “majority,” making claims, directing blame solely against “that evil” 1 percent in our population!

But such portrayal of socio-economic America is way off the mark. We might prefer the safety and camaraderie of a common enemy very small in number, that ubiquitous 1 percent, instead of confronting the sad reality of an existing economic “class struggle.” For the time being, however, we can only label ourselves the poor 80 percent, the other 19 percent remaining in the population being the true middle class, US’ bourgeoisie of early 21st century: civil servants at all three levels (municipal, state and federal), the military, teachers, lower-income professionals, and a few other groups which remain economically unscathed after a three-decade sacking by the ruling class. Sacking which took place at the same time as America’s working class was thrown to the croc-infested waters to be devoured by the aquatic tetrapod of unplanned globalization.

Yep, the ugly reality we prefer to disregard, not face at all: the Squires (19 percent) serving the Knights (1 percent) by either choice or default... dressed in the same duds as the poor to remain inconspicuous in the safety of a mythical 99-percent economically homogenous crowd. A class struggle most often hidden because of family ties, where economic help is often provided by those with means to those in need; but a struggle which is increasingly being identified as a generational class struggle… the under-35 population receiving the greatest share of casualties drowning in poverty, unemployed or underemployed, in both cases decapitating man’s only inherent value: its dignity.

For over three decades we have seen America’s predatory capitalism sanguinely taking much of the middle class to the economic guillotine, clearing any labor costs obstruction to maximize profit via globalization; after all, isn’t that what our beloved capitalism is all about: maximization of profits? Our elected politicians, regardless of which of the twin parties they belonged to, became our Executioner-Congress… the president of this US becoming the Executioner-in-Chief. Our list of EIC’s since Carter left the White House is all-inclusive: Reagan, the two-Bushes, now Obama… not to forget Bill Clinton, America’s answer in economic crimes to the greatest serial killer of all time, Vasili Blokhin, Soviet Supreme Executioner of the Stalinist NKVD – Blokhin using a 7.65 mm Walther PPK pistol while his American homologue, William Jefferson Clinton, preferred to stay blood-spray free by using a simple stroke of a pen.

Globalization, however, is not the sole reason for the chaotic economy, or the latent class struggle likely to erupt at any time without warning from economic seismicity or social deformation. The culprit in front of us, one we refuse to acknowledge and deal with, is the existing inequality in both income and wealth in America... far greater than that of any other advanced economy. While we have acknowledged and measured the inequity in pay between genders (women, in general, being paid approximately 70 percent of that paid to men for the same/comparable job), we have failed to do similar comparisons in overall compensation (to include benefits) for jobs in the public sector versus those in the private sector… comparisons which yield differences not of 30 percent, but of 100 to 200 percent, at times more. Not just an invitation, but a sure way to bring in class struggle.

Meantime we’ll just continue our rants... against the Fed, Obama, anyone or anything we happen to dislike, even if relatively inconsequential to the true socio-economic health of our society. Walt Kelly (via his Pogo character) had figured our base societal instincts half a century ago:“We have met the enemy and he is us.”

On that concluding sentence I gave this column’s text to my dear friend to edit-suggest, as I usually do... and within five minutes, and an inquisitive smile on her face, she threw this comment back at me: “And you probably feel that we, Amerizombies, are truly getting our just deserts!” To which I say… Amen.

http://www.zerohedge.com/news/2013-07-31/chart-day-foreigners-are-quietly-getting-out-dodge

Chart Of The Day: Foreigners Are Quietly Getting Out Of Dodge

Submitted by Tyler Durden on 07/31/2013 15:26 -0400

Across the Curve

While the Fed is posturing daily whether it will or it won't monetize an ever greater portion of gross US issuance (and considering the drop in US funding needs, unless the Fed tapers it will soon very soon buy more than 100% of all 10 Year equivalent issuance going forward), foreigners have made their position vis-a-vis US paper loud and clear.

What is their position? The following chart from today's TBAC presentation to the Treasury makes it very clear. With an ever declining, and recently the smallest on file, notional amount of Treasurys at auction going to foreigners since 2009 (and certainly much further back), they are not sticking around to see what happens.

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