Defaulting banks - where will it stop?

[Jan Klimkowski]

Ah, yes, did I mention AE-P and geopolitics...

Will Germany deliver on the Faustian bargain that created monetary union?

If Der Spiegel is correct, the German finance ministry is drafting rescue plans to prevent default on the edges of the eurozone leading to a full-blown collapse of Europe's monetary system.

By Ambrose Evans-Pritchard
Last Updated: 6:57AM GMT 23 Feb 2009
Comments 40 | Comment on this article

This is an entirely appropriate policy in economic terms. One dreads to think what would happen if the world's twin reserve currency were to disintegrate at this stage.

But what about the solemn pledge to voters by Germany's political elites – promiscuously given over the years – that monetary union would never leave them on the hook for the debts of half Europe?

The vast imbalances that have been allowed to build up under the seductive protection of EMU leave German taxpayers facing bail-out liabilities that exceed the cost of reparations after the First World War, in proportional terms. The political ground has not been prepared for this. EMU was foisted on the German people without a referendum, in the face of deep public scepticism and scathing criticisms by the professoriat. This failure to secure a mandate for such a revolutionary undertaking is coming back to haunt them.

Berlin is at last having to deliver on the Faustian bargain made by Germany's political class when it swapped the D-Mark for French acquiescence in reunification. It must either go the whole way towards EMU fiscal union and take responsibility for Italy's public debt (111pc of GDP by next year), Austria's loans to Eastern Europe (70pc of GDP), the adventures of Ireland's 'Canary Dwarf' (€400bn or so in liabilities), and Spain's housing collapse (1m unsold homes), or jeopardize its half-century investment in the political order of post-war Europe. Letting EMU fail at this stage would have far higher costs than never having launched the project in the first place.

The alleged bail-out options include "bilateral bonds" where big brother countries agree to shoulder the credit risk for siblings, (who vouches for Italy and Spain?), or some form of EU bond.

Finance minister Peer Steinbruck – erstwhile Scrooge – has become the unlikely champion of open-ended help for all. "We have a number of countries in the eurozone that are clearly getting into trouble ... Ireland is in a very difficult situation ... The euro-region treaties don't foresee any help for insolvent states, but in reality the others would have to rescue those running into difficulty," he said.

In case there was any misunderstanding, he upped the ante two days later with a pledge to "show ourselves to be capable of acting" if any euro member proves unable to roll over its debts. This is a radical shift in policy.

For now, the bail-out talk has cowed speculators. The euro has rallied after weeks of sharp descent against the dollar. Credit default swaps (CDS) on Irish debt have fallen back below the red alert level of 400 basis points. But it has not been lost on the markets that Germany's own CDS spreads have risen to a record 86. Are traders starting to ask whether Berlin is in a fit state to rescue anybody?

The German economy contracted at an 8.4pc annual rate in the fourth quarter as exports to Eastern Europe, Club Med, and the Anglo-sphere collapsed. The GM subsidiary OPEL is running out of cash and risks going the way of Sweden's SAAB without a €3.3bn rescue.

Mortgage lender Hypo Real Estate is imploding despite €87bn in state guarantees and capital injections. Mr Steinbruck said nationalisation is inevitable. If Hypo collapses with €400bn of liabilities, it would risk a "second Lehman Brothers", he said. Like Northern Rock, it relied on short-term funding to lend long. Game over.

Hypo has been infecting the €850bn Pfandbriefe market (covered bonds), the rock core of Germany's credit system. Spreads on Postbank issues have jumped from 40 to 80 basis points. Pfandbriefe are not covered by Berlin's emergency guarantees (unlike 3-year bank debt). That may need to be changed soon. Mr Steinbruck still insists that German banks are in fine fettle. The rest of us notice their leverage ratio is 52, the highest of any major country in the world. We are assured they have good assets. Let us hope so.

Time will judge whether Mr Steinbruck's bail-out rhetoric is hollow. I wonder whether any German government can in fact deliver on his pledge. He is unlikely to be finance minister after the elections in September. The Social Democrats are heading for the most crushing defeat in a free election since July 1932 – and for the same reasons – because they are associated with a deflationary collapse of Germany's core industry. Their Left flank is peeling away to the neo-Marxist Linke party, just at it peeled away to the Communists in 1932.

There is much talk in the German and global media perpetuating the myth that it was German hyperinflation in 1923 that destroyed Weimar and led to Nazism. This is a fatal misreading of events. What led to Hitler was the Bruning deflation of the early 1930s.

What is true is that the 1923 trauma caused the Reichsbank to wait too long to ease monetary policy from 1930 to 1933, though Gold Standard ideology played its part. The European Central Bank has done better. At least it has followed Bagehot's advice to "lend generously" even if rates have been too high, but it has been paralysed by its own institutional hang-ups and its need to prove itself a hard-money successor to the Bundesbank.

Last week chief economist Jurgen Stark attempted to head off the bail-out plans, reminding Berlin last week that rescues are prohibited by EU law. This is not strictly true – Article 100.2 allows aid in "exceptional circumstances" – but it gives powerful cover to anybody wishing to oppose the Steinbruck policy.

But whatever the legal theory, the political reality is that 700,000 Germans are going to lose their jobs this year as unemployment rises to 4.3m (IFO Institute). Voters are not going to look kindly on any party seen to divert German savings to Ireland or Club Med.

Architects of EMU were well aware that a one-size-fits-all monetary policy for vastly disparate nations would create serious tensions over time. They gambled that this would work to their advantage. The EU would be forced to create new machinery to safeguard its investment in the euro. It would be a "beneficial crisis", bringing about the great leap forward to full union.

We are about to find out if they were right.

http://www.telegraph.co.uk/finance/comme...union.html

[David Guyatt]

Out of interest Jan, has AE-P ever written a hard-hitting piece on the even more dire state of the US and UK economy, or is his brief, er, I mean "focus" only on trashing Euroland?

[Jan Klimkowski]

Out of interest Jan, has AE-P ever written a hard-hitting piece on the even more dire state of the US and UK economy, or is his brief, er, I mean "focus" only on trashing Euroland?

He has written apocalyptic pieces on the state of the UK economy, but mainly to INSIST ABSOLUTELY WITHOUT EQUIVOCATION that the govt & Bank of England must follow Paulson & Bernanke's American model.

In other words, massive state funding & exchange of T-Bills for toxic waste - eg TARP etc. And zero or even negative interest rates.

AE-P spent a long time bashing the BoE for not cutting interest rates "aggressively" enough.

In reality, the BoE cutting to near zero only helped to devalue the pound, and hasn't done anything to inject liquidity into the loan market. Economically, AEP's line is crass & stupid monetarism and a desperate lust for another bubble - pleeze pleeze - to be created.

Of course, AEP's economics is just a figleaf for his - Their - geopolitics.

In March 2008, he wrote (my emphasis):

At the end of the day, this country retains the Bank of England, the pound, and the tools of economic self-government (unlike some). We can slash rates to stop a slump.

http://www.telegraph.co.uk/finance/comme...ieces.html

That turned out well, didn't it.... :bird:

[Peter Lemkin]

Slump? What Slump?! :embarassed: In Fino-parlance it is called a 'correction'. Only. :thefinger:

[Jan Klimkowski]

Allegedly the biggest queues in the US of A are currently for guns. Here's some anecdotal stuff from Ticker Forum - purely anecdotal, ya understand:

1) Got my concealed weapons permit renewed yesterday. There was a 4+ hour wait to get fingerprinted. The two women at the Probate Court said they went from doing 20 a month to over 1000 a month (Fulton County) in the past year.

2) My mom wanted to buy a small revolver this weekend. We couldn't find one even close to what she wanted (steel frame snubnose). We decided she would buy me a gun of equal value and she could take my 7-shot .357 snubnose and my whole stash of ammo and speedloaders.

3) The range is always packed. Average wait on the weekend for a lane is 1-2 hours. Most ranges are booked up as soon as they open since people are waiting at the door. My local range went from doing less than $700 in receipts some weeknights (including all sales and range fees) to averaging about ten times that on weeknights, and doing north of $25k each weekend. They've got 6-7 people working a store the size of my apartment and they are all busy, busy, busy.

4) Can't find ammo. Last year it was expensive to replace. In some calibers and loadings you can't replace it at any price.

5) The biggest online distributors of guns are sold out of nearly every model. The only models in stock are hunting weapons or target weapons. Most guns that can be concealed and formerly abundant pump-action shotguns and semi-automatic rifles are missing from the supply chain. You can find a few in stores but at insane prices . . . but I guess those are the prices now.

No wonder California wants to legalize pot and get everyone chilled...

[Peter Lemkin]

Whatever is behind the thinking of those buying up all the guns [I believe the statistic before was about 200.000.000 legally registered guns - no one knows how many unregistered and illegal in the USA. Many have millitary grade heavy machineguns and assault weapons and even small mortors, missiles, grenades, bombs, etc.] that is a very chilling report. People are afraid for a variety of reasons. America, sadly, I think is about to explode in a variety of ways....like the late 60s - only more so. Obama has his plate full - fuller than he knows, I think. For those of us not so cofortable with buying weapons, I wonder if maybe I should go into the body-armor and home bunker business. I think, sadly, America has perhaps seen its best days and what lies ahead will be a rather precipitous and ugly/ignoble decline. I truely HOPE I'm WRONG!

[Jan Klimkowski]

Good stuff from one time Republican insider, Paul Craig Roberts, the Assistant Secretary of the Treasury in the Reagan administration. His analysis of the flaws of globalization has always been excellent.

How the Economy was Lost
By PAUL CRAIG ROBERTS

The American economy has gone away. It is not coming back until free trade myths are buried six feet under.

America’s 20th century economic success was based on two things. Free trade was not one of them. America’s economic success was based on protectionism, which was ensured by the union victory in the Civil War, and on British indebtedness, which destroyed the British pound as world reserve currency. Following World War II, the US dollar took the role as reserve currency, a privilege that allows the US to pay its international bills in its own currency.

World War II and socialism together ensured that the US economy dominated the world at the mid 20th century. The economies of the rest of the world had been destroyed by war or were stifled by socialism [in terms of the priorities of the capitalist growth model. Editors.]

The ascendant position of the US economy caused the US government to be relaxed about giving away American industries, such as textiles, as bribes to other countries for cooperating with America’s cold war and foreign policies. For example, Turkey’s US textile quotas were increased in exchange for over-flight rights in the Gulf War, making lost US textile jobs an off-budget war expense.

In contrast, countries such as Japan and Germany used industrial policy to plot their comebacks. By the late 1970s, Japanese auto makers had the once dominant American auto industry on the ropes. The first economic act of the “free market” Reagan administration in 1981 was to put quotas on the import of Japanese cars in order to protect Detroit and the United Auto Workers.

Eamonn Fingleton, Pat Choate, and others have described how negligence in Washington DC aided and abetted the erosion of America’s economic position. What we didn’t give away, the United States let be taken away while preaching a “free trade” doctrine at which the rest of the world scoffed.

Fortunately, the U.S.’s adversaries at the time, the Soviet Union and China, had unworkable economic systems that posed no threat to America’s diminishing economic prowess.

This furlough from reality ended when Soviet, Chinese, and Indian socialism surrendered around 1990, to be followed shortly thereafter by the rise of the high speed Internet. Suddenly, American and other first world corporations discovered that a massive supply of foreign labor was available at practically free wages.

To get Wall Street analysts and shareholder advocacy groups off their backs, and to boost shareholder returns and management bonuses, American corporations began moving their production for American markets offshore. Products that were made in Peoria are now made in China.

As offshoring spread, American cities and states lost tax base, and families and communities lost jobs. The replacement jobs, such as selling the offshored products at Wal-Mart, brought home less pay.

“Free market economists” covered up the damage done to the US economy by preaching a New Economy based on services and innovation. But it wasn’t long before corporations discovered that the high speed Internet let them offshore a wide range of professional service jobs. In America, the hardest hit have been software engineers and information technology (IT) workers.

The American corporations quickly learned that by declaring “shortages” of skilled Americans, they could get from Congress H-1b work visas for lower paid foreigners with whom to replace their American work force. Many US corporations are known for forcing their US employees to train their foreign replacements in exchange for severance pay.

Chasing after shareholder return and “performance bonuses,” US corporations deserted their American workforce. The consequences can be seen everywhere. The loss of tax base has threatened the municipal bonds of cities and states and reduced the wealth of individuals who purchased the bonds. The lost jobs with good pay resulted in the expansion of consumer debt in order to maintain consumption. As the offshored goods and services are brought back to America to sell, the US trade deficit has exploded to unimaginable heights, calling into question the US dollar as reserve currency and America’s ability to finance its trade deficit.

As the American economy eroded away bit by bit, “free market” ideologues produced endless reassurances that America had pulled a fast one on China, sending China dirty and grimy manufacturing jobs. Free of these “old economy” jobs, Americans were lulled with promises of riches. In place of dirty fingernails, American efforts would flow into innovation and entrepreneurship. In the meantime, the “service economy” of software and communications would provide a leg up for the work force.

Education was the answer to all challenges. This appeased the academics, and they produced no studies that would contradict the propaganda and, thus, curtail the flow of federal government and corporate grants.

The “free market” economists, who provided the propaganda and disinformation to hide the act of destroying the US economy, were well paid. And as Business Week noted, “outsourcing’s inner circle has deep roots in GE (General Electric) and McKinsey,” a consulting firm. Indeed, one of McKinsey’s main apologists for offshoring of US jobs, Diana Farrell, is now a member of Obama’s White House National Economic Council.

The pressure of jobs offshoring, together with vast imports, has destroyed the economic prospects for all Americans, except the CEOs who receive “performance” bonuses for moving American jobs offshore or giving them to H-1b work visa holders. Lowly paid offshored employees, together with H-1b visas, have curtailed employment for older and more experienced American workers. Older workers traditionally receive higher pay. However, when the determining factor is minimizing labor costs for the sake of shareholder returns and management bonuses, older workers are unaffordable. Doing a good job, providing a good service, is no longer the corporation’s function. Instead, the goal is to minimize labor costs at all cost.

Thus, “free trade” has also destroyed the employment prospects of older workers. Forced out of their careers, they seek employment as shelf stockers for Wal-Mart.

I have read endless tributes to Wal-Mart from “libertarian economists,” who sing Wal-Mart’s praises for bringing low price goods, 70 per cent of which are made in China, to the American consumer. What these “economists” do not factor into their analysis is the diminution of American family incomes and government tax base from the loss of the goods producing jobs to China. Ladders of upward mobility are being dismantled by offshoring, while California issues IOUs to pay its bills. The shift of production offshore reduces US GDP. When the goods and services are brought back to America to be sold, they increase the trade deficit. As the trade deficit is financed by foreigners acquiring ownership of US assets, this means that profits, dividends, capital gains, interest, rents, and tolls leave American pockets for foreign ones.

The demise of America’s productive economy left the US economy dependent on finance, in which the US remained dominant because the dollar is the reserve currency. With the departure of factories, finance went in new directions. Mortgages, which were once held in the portfolios of the issuer, were securitized. Individual mortgage debts were combined into a “security.” The next step was to strip out the interest payments to the mortgages and sell them as derivatives, thus creating a third debt instrument based on the original mortgages.

In pursuit of ever more profits, financial institutions began betting on the success and failure of various debt instruments and by implication on firms. They bought and sold collateral debt swaps. A buyer pays a premium to a seller for a swap to guarantee an asset’s value. If an asset “insured” by a swap falls in value, the seller of the swap is supposed to make the owner of the swap whole. The purchaser of a swap is not required to own the asset in order to contract for a guarantee of its value. Therefore, as many people could purchase as many swaps as they wished on the same asset. Thus, the total value of the swaps greatly exceeds the value of the assets.

The next step is for holders of the swaps to short the asset in order to drive down its value and collect the guarantee. As the issuers of swaps were not required to reserve against them, and as there is no limit to the number of swaps, the payouts could easily exceed the net worth of the issuer.

This was the most shameful and most mindless form of speculation. Gamblers were betting hands that they could not cover. The US regulators fled their posts. The American financial institutions abandoned all integrity. As a consequence, American financial institutions and rating agencies are trusted nowhere on earth...

http://jessescrossroadscafe.blogspot.com/

[Jan Klimkowski]

Ticker Forum have coined the highly descriptive phrase "bear porn" to describe this type of information coming from pillars of the financial establishment... :bandit:

A bigger proportion of non-investment grade companies will go bust in the US and overseas in the coming years than during the Great Depression, according to Moody's, one of the world's foremost experts on credit.


By Edmund Conway, Economic Editor
Last Updated: 7:42PM GMT 26 Feb 2009

In what will be seen by many as die-cast confirmation that the world economy is plummeting towards an economic and corporate implosion of unprecedented proportions, Moody's said it anticipated a tidal wave of defaults was approaching.

It said that in the coming months more than 15pc of speculative-grade bonds and loans - all but the most highly-rated - would default on their debts.

This peak is even higher than the peak reached in 1933, when bank after bank throughout America was collapsing, taking hoards of other companies with them. Back then, the default rate peaked at 15.4pc; moreover these companies were former investment grade issuers regarded as more reliable credit prospects than their contemporary counterparts.

Kenneth Emery, senior vice president at Moody's said: "The three main drivers of the forecasting model are forecasts for the high-yield bond spread and the unemployment rate, along with the current level of issuer ratings. In the fourth quarter, the high yield bond spread reached unprecedented levels; and we've got an unemployment forecast approaching 9pc this year and issuer ratings at record low levels.

"We certainly think that this credit cycle will be worse than the last two in the early 1990s and 2000s. In fact, in 2009 we expect to see the largest number of defaults since the advent of high yield bond market in the early 1980s. And the default rate for non-investment grade bonds may reach levels even higher than those registered during the Great Depression.

"There are risks here because we are in unchartered territory, but the model forecast is that roughly 15pc of our speculative-grade issuers globally will default in 2009. In Europe the forecast default rate is even higher at close to 19pc."

The report traced the health of the bond market all the way back to the 1920s, and finds that the threat of companies defaulting is more stark now than at any point in that stretch of time. It predicted that company defaults will triple this year to about 300, after 101 defaulted last year on more than $280bn of debt.

If the economy deteriorates by even more than expected, the default rate could conceivably mount to around 20pc, Moody's added - meaning around one in five of all non-investment grade issuers default, something which has never happened before. The companies most at risk of default are consumer transport groups, which largely constitute airlines, media companies and car manufacturers.

In Europe, the sectors most at risk of defaulting include those providing durable and non-durable consumer goods and business services.

http://www.telegraph.co.uk/finance/econo...ssion.html

Personally, I get a belly laugh from the financial pages of major MSM newspapers describing Moody's as "one of the world's foremost experts on credit" with an entirely straight face...

[Jan Klimkowski]

HALSELL, Ala. – Alone in his mobile home off a winding dirt road, Jimmy Tanks heard a commotion at 2:30 a.m. just outside his bedroom window: Somebody was messing with his car.

The 67-year-old railroad retiree grabbed a gun, walked out the back door and confronted not a thief but a repo man and two helpers trying to tow off the Chrysler Sebring. Shots were fired, and Tanks wound up dead, a bullet in his chest.

The man who came to repossess the car, Kenneth Alvin Smith, is awaiting trial on a murder charge in a state considered a Wild West territory even by the standards of an industry that's largely unregulated nationally. Since Tanks' death last June, two other repo men from the same company Smith worked for were shot, one fatally.

"It's gotten to where it's a crazy world out there," said Smith, 50, an ex-Marine who preaches part-time and sings gospel music. Smith said Thursday that he fired in self-defense after Tanks fired a shot.

With the U.S. dealing with an economic slide that has cost millions of jobs, the number of vehicle repossessions is expected to rise 5 percent this year. That's after it jumped 12 percent to 1.67 million nationally in 2008, said Tom Webb, chief economist with Manheim Consulting, an automotive marketing firm. That followed a 9 percent increase in 2007, creating more opportunities for bad outcomes in an industry where armed confrontations and threats happen every day.

Joe Taylor, whose Florida-based company insures repossession companies, said licensing and training is the answer to avoiding such violence.

"If a guy is just put right on the street without training, the potential for violence is very, very high," said Taylor, who runs Insurance Services USA.

Federal law says workers can't "breach the peace" while repossessing items, but it doesn't go further to state just what that means, leaving definitions up to courts.

All three Alabama shootings were in the middle of the night, which an industry leader said was a sign of a problem.

"The smart operators aren't out there at 2 or 3 o'clock at night with people who can put you in a bad situation," said Les McCook, executive director of the American Recovery Association, a trade group for repossession companies.

It was June 26 that the repo man came for Tanks' car in Halsell, a tiny, rural Choctaw County town near the Mississippi line. Tanks already had filed for bankruptcy and was behind on his payments, court documents show.

Tanks heard a noise and went outside with a gun, something anybody would do, said Choctaw County Sheriff James Lovette, who knew Tanks for years. Smith was indicted Tuesday, but no charges were filed against a man and his teenage son who accompanied Smith, said Lovette.

Smith's defense lawyer, Rusty Wright, said Tanks came out of the trailer and fired, and that Smith "just wanted to stop him."

"This is not the gunslinging cowboy that people think about with repo guys," Wright said. "(Smith) wasn't out to kill the guy."

The sheriff declined comment on whether Tanks shot at Smith.

Lovette said Smith worked out of Birmingham with Ascension Recovery, a subsidiary of the Chicago-based Renovo Services. The same recovery firm employed a repo man who was shot and killed on Jan. 8 in Birmingham, as well as a third worker who was wounded while towing a vehicle in the city on Feb. 10.

The CEO of Renovo Services, David Cowlbeck, didn't respond to questions sent by e-mail about the fatal shootings. He called the unsolved February wounding of 30-year-old Jason Williamson "a random act of violence."

"We trust that the perpetrators are quickly apprehended and charged accordingly," Cowlbeck said in a statement.

Lovette is asking the Alabama Sheriff's Association to push a bill limiting the hours when repossession companies can operate and requiring them to contact local law enforcement before working in an area.

"There's a time and place for everything, and 3 a.m. is not it," said Lovette.

The three states that actively license and monitor recovery agents — California, Florida and Louisiana — report less violence than other states, Taylor said. But most state legislatures aren't interested in repossession law until people start dying, he said.

"You don't find many state legislators who have had a car repossessed. They are just unfamiliar with that world," said Taylor.

Tanks was killed just two weeks after he married Georgia Tanks, who keeps a floral spray at the spot where he died beside the car, which is long gone. She wasn't at home the night he was killed because she was away teaching Vacation Bible School in nearby Meridian, Miss. She has filed a wrongful death suit in the slaying.

"It's senseless," she said, wiping away tears as she looked at their wedding photograph. "The legal stuff I don't know anything about. I just know God is going to let justice be done."

Smith, too, is haunted by what happened that night.

"I've played it through in my mind a million times to see if I could have done something different," he said. "I couldn't have."

http://news.yahoo.com/s/ap/20090227/ap_o...o_violence

[Jan Klimkowski]

Thursday, February 26, 2009
Charlie LeDuff on Detroit
Putting faith in a Bible -- and a gun
Charlie LeDuff / The Detroit News

DETROIT -- Paulette Bouyer is a member of a peculiar little sorority in this city; a church lady who keeps a loaded pistol.

Once a rabid booster of living in Detroit, Bouyer's home was broken into in broad daylight two weeks ago. The interlopers even made it through the iron gate that covers the door. Now, Bouyer says, she is so afraid, she is prepared to break the Sixth Commandment -- thou shall not kill -- by virtue of her Second Amendment right to bear arms.

"If I could get a covered wagon and a mule and a piggybank, I'd get up and ride out of here tonight," she said. "Because if somebody walks through my door uninvited, somebody else is going to have to carry him out. Is that any way to live?"

She spends her days locked in her house of bars on Greenview Street on the city's west side. She watches the street suspiciously through a peephole covered by the metal security gate. In her window facing the street is a Bible opened to the book of Job.

Bouyer said she wishes to leave today. But she cannot leave today or tomorrow or next week. Who would buy her small three-bedroom bungalow?

"It's worthless," she said. "I can't get out."

It is a sentiment that stretches far across the metro region, from Sterling Heights to Warren to Redford. People trapped on an economic roller coaster, unsure where the bottom is, stuck in a declining neighborhood, chained to an aging house worth less than they owe.

Bouyer's neighborhood was one of those coherent places that city boosters liked to point to as a wholesome, functioning district where good people lived and children thrived. But the decline has come sharply and swiftly, people like Bouyer say.

The home next door to Bouyer's is boarded up. The house next to that is a charred ruin. The home across the street a victim of foreclosure. There are six houses on the block in similar disrepair. At the bottom of neighborhood on Seven Mile squats the abandoned Arnold Nursing Home, a hulking eyesore in the Greek revival style that has no windows and a sagging pediment. It has proven to be the millstone that has pulled the once thriving neighborhood down. At the top of Greenview Street on Eight Mile the story is the same: strip clubs and empty storefronts where small businesses once prospered. A student was recently shot and killed in a drive-by at nearby Henry Ford High School.

"I loved this city and I committed my life and my money to it," Bouyer said, on her way to cast her vote for mayor Tuesday. She is a brassy and well-put together woman, a 61-year-old grandmother with swollen joints and sensible shoes. She is prone to charming little turns of phrase such as "fantabulous." She keeps a neat home with cream carpets, a Bible on the table and the six-shooter next to that. Bouyer is president of her block association, a single mother who put two boys through college while working on the factory floor at Fisher Body.

When she bought her home 23 years ago, hers was a thriving, integrated community, she said. People kept their lawns cut. Children were in by dark. The future seemed bright. Then the future arrived.

"This neighborhood has become a desert of nomads," said Bouyer, a native Detroiter. "Older people take their garbage out once a week and lock themselves back in. People are moving out and it seems like nobody cares."

Bouyer committed her life to Detroit, preferring to see the glass half-full. She endured the bad times: the riot of 1967, the murder of her husband in 1977, the crack epidemic of the '80s and '90s, the blight of the abandoned nursing home in 2002, the drug addicts who moved into the foreclosed house next to hers in the middle of the night along with their children. The wild nights ensued. The loud music. The liquor in paper bags. The strange men.

But two weeks ago, while she was away at the store in the middle of the day, somebody pried through the bars and kicked the front door in. For whatever reason, they made off with nothing. But they had unlocked the windows, perhaps to return at another hour.

"I told her to get out, just walk away," said her son Chris, who lives in another state. "It's not normal that a church lady needs to be packing to go to church."

Bouyer cast a cynical vote for mayor at the Calvary Presbyterian Church at 10:30 a.m. on Tuesday. By that time, just 16 others had voted.

"People have given up," said Johnnie Wilford, a friend of Bouyer's and a member of her church sorority. "We've been forgotten out here."

Felix Seay said as much: "I'd sell my house and leave to another state if I could."

Even Pastor Kevin Johnson said he sometimes fantasized about acquiring his own handgun to stop the thieves from robbing his church. But the problem is much bigger than that, he said.

"With the decline of the middle class, the lack of jobs and the schools deteriorating, it is a perfect storm and we are in the eye of the hurricane," he said. "One day I'm getting out of here too, Lord willing."

Bouyer's choice for mayor did not place in the top two of Tuesday's primary. Even so, she said she would be willing to stay in Detroit with a few provisos.

"I want to see the police," she said. "I want to see the abandoned buildings torn down. I want to see something for these kids. That's not too much to ask, is it? To do right? Is that too much to ask?"

http://www.detnews.com/apps/pbcs.dll/art...-1/ARCHIVE