http://www.guardian.co.uk/business/2008 ... r-industry wrote:For sale: four-bedroom detached bungalow, some work needed, cost: $800. The catch? It's in Detroit, home to the once mighty Ford, General Motors and Chrysler, and not many people want to live in the Motor City now that the American car giants are laying off tens of thousands of workers.
The bungalow is not the only bargain basement property up for grabs: thousands of others are on the market for $10,000 or less. One estate agent who has sold 50 properties - mostly foreclosures - in Detroit is trying to remain upbeat but admits: 'It is a blue-collar town like a lot of other American towns, but it has been hit harder than most.' He says there are houses are going for $5,000 while homeowners next door are struggling to pay a $60,000 to $70,000 mortgage on an identical property. 'It's obviously devastating for them.'
The Detroit property market and the US car industry are mirror images: both are in freefall. Speculation is mounting that the government is planning a bail-out of the giant 'Detroit Three'. On Thursday, Presidential candidate Barack Obama added to the clamour, calling for a doubling of the $25bn in government loans recently approved by Congress to help the industry make more fuel-efficient cars.
It's hard to exaggerate the scale of the crisis facing the Detroit Three; in many ways, they are in a more parlous state than the banks. In 2000, the high-water mark for the industry, the combined stock market value of Ford and GM was more than $130bn. Today, you could pick up both for $10bn and still have change. Citigroup analysts estimate that the pair are carrying $69bn of debt between them. Since 2005, the companies have been haemorrhaging money: in the first half of this year they lost almost $30bn. Paul Newton, analyst from consultancy Global Insight, says: 'The big three are in severe trouble. The past couple of years have been a bloodbath.'
$130 billion to $10 billion in 8 years - and with a debt the size of New Zealand's GDP...