Financial Crisis in Detroit Michigan

The global financial crisis (GFC) hit many people & corporations hard - that's no secret, it was very well reported. Yet perhaps not so well reported is the effect this has had on entire cities. It was a domino effect of the GFC, leading to an industry collapse in Automobiles, leading to a major company collapse in General Motors, leading to a lot of individuals without jobs, leading eventually to an economic collapse in the City of Detroit.  This article discusses what happened and the lessons that can be taken from it for us as individuals..

Previously the fourth largest city in the USA, Detroit is now a shadow of its former self. I personally had heard of the troubles in Detroit but only in brief. I had heard the stories of houses for sale for just $1. I checked this out and indeed there are many homes in Detroit for sale for a buck. I did not however understand the full effects of the automobiles collapse in Detroit until I watch a documentary during a plane journey recently. I found this documentary in full length available on youtube (see bottom of page) and as as a trader and businessman I found it stunning viewing. Watch the first 5 minutes and you will be hooked!

• The largest building in the world by land mass -  abandoned! 
• Luxury homes of ex CEOs - Empty!
• Entire suburbs - preparing to be bulldozed!
• The population of Detroit - Halved!

One of the most interesting points is that the people of Detroit thought that 'it could never happen'. It was their home, their city.  When in recent history had such a large city collapsed to such an extent? It could not happen!  We are all guilty of this kind of thinking to some extent.  During the GFC major banks, mortgage lenders and automobile companies were bailed out by governments around the world. Why did the governments bail them out?  What would have happened were they allowed to go bankrupt?  Watch this documentary and you will get a glimpse of what could have happened on a larger scale.

So why am I bringing this up and why is it of interest?   I despise doomsayers and have often blamed the press for their negativity which leads to deeper and darker economic times. For me this is not doomsaying, the day has already come for Detroit, the worst case has already happened. Its more a case of understanding that anything can happen and being prepared for that. As a trader I think my trading is safe, as a businessman I think my business is safe, as a property investor I think the value of my real estate will go up.  This documentary opened my eyes to MUCH bigger businesses, much bigger property investors and from other news we all know of very large traders - all of whom the GFC was too much for.

I see positive solutions to this and lessons from age old advice I have learned from studying many successful people. People who also managed to survive economic times such as these often many times over:

• Don't have all your eggs in one basket - no one business, no one property, no one sector or even country. Cliche but true!
• Have multiple income streams - trading can be an outstanding income stream and the best thing as a home trader... when companies start firing staff you cant be on the list if you work for yourself!
• Prepare for the worst and insure against it - understand what can happen if things go wrong and take steps to counter that
• Keep focused on the positives - this is the biggest piece of advice I personally can give. Prepare for the worst but plan for the best!  Understand what the worst case is and be prepared for it but do everything humanly possible within your power to achieve every goal you want from life, trading & business.

The documentary was called Requiem for Detroit and is available here:

Plan for the best!

Nick McDonald
 
Managing Director & Head Trader
www.tradewithprecision.com

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