That is not opportunity knocking on your door, Detroit, Michigan. Reality has arrived.
We refer you to this article “Detroit on brink of financial ruin.” You can link to it at:
We also refer you to our previous postings (see TheFundamentals: Michigan Rx, June 24, 2009 and State of Michigan R.I.P., April 28, 2009) about Detroit and the State of Michigan. For those who are stumbling over our simple message, here it is again: Cut spending; repay debt; avoid bankruptcy. Encourage wealth creation; encourage jobs.
A casual observer will find some of the same characters who drove Detroit over the cliff following their spending and debt addictions in congress, at the Federal Reserve, at the USTreasury and at countless bureaucracies in DC and state capitols across the nation. They cannot help themselves. They are addicted to spending more than they take in and accumulating massive debt. In DC they are printing money in a fashion reminiscent of banana republics.
A few days ago a prize winning economist writing in the NYTimes again sounded the call that the massive national debt was OK. Keep it up. It is needed. Not to worry. This prize winner is paid for this nonsense. First prize should have been a week in Detroit. Second prize, two weeks.
TheFundamentals has been desperately seeking evidence that massive debt does not lead to bankruptcy. We’d like to win a prize. We will continue to search for at least one example of where massive debt has led to the promised land. Milk and honey. Health care for all. Best years are ahead of us. Blah-blah-blah.
Is there a silver lining? Well, the same website cited above offered these remedies (someone is going to make a lot of money developing a 12 step program for politicians and bureaucrats) for the Detroit situation:
Detroit's financial options remain limited, experts say. Two options are bankruptcy with a receiver being in charge, and having the state appoint an emergency financial manager.
Emergency financial manager
• Appointed by the governor.
• Acts under state law.
• Tasked with resolving financial emergency.
• Can renegotiate labor contracts, but not abrogate them.
• Can, with state approval, file bankruptcy for the city.
A judge typically appoints a receiver who:
• Acts under federal bankruptcy law.
• Is tasked with preserving property in a bankruptcy.
• Can, with court approval, abrogate contracts.”
Who knows, bankruptcy may not be so bad after all. Detroit’s unemployment rate is 28.9%. Somebody is going to have to nail up the plywood and drive the busloads of marchers to DC clamoring for more handouts.