Detroit becomes largest US city to file for bankruptcy

[W8taminute]

Well when you are a one party city/state these things happen.  The question is how much longer until Chi town will fall? 

[TheCommandTent]

New Jersey vs. Detroit...now there's a race to the bottom.

Victor Melling: Why is New Jersey called "The Garden State"?

Gracie Hart: Because it's too hard to fit"Oil and Petrochemical Refinery State" on a license plate?

All of the above QFT.

[Boggit]

Presumably, if they go bankrupt, they're no longer in any position to pay public service salaries, pensions etc. That will be a financial disaster for those individuals, but is also a disaster for the other residents re schools, police, public health etc. Very sad.

[Mr. Bigglesworth]

If the Federal Government bails out Detroit, this removes all incentive for other cities or states to maintain fiscal responsibility.  If they know the Feds will step in clean up their mess, might as well spend it all.  Uncle Sugar can just print up another trillion dollars to cover the cost.

This bodes ill for the municipal bond market.  Traditionally this has been a haven for conservative investors.  When cities get the idea they no longer have to pay their bills, funding future capital improvement projects will entail higher costs and greater risk for everyone.

Agree.

That is the game of winning politics today by creating bills for someone else in the future.

[Gusington]

There's a lot of talk right now on what happens to city workers' pensions. They aren't going away but they are being cut drastically.

[Arctic Blast]

But the state is going to help the Red Wings get their shiny new arena...cause that will magically turn the entire economy around.

I love the part where they explain that much of the public investment will be paid back through increased tax revenue from the area around the arena.

What tax revenue? You have no economy!

[Gusington]

Detroit makes me feel better about myself. "Well at least I aint that guy."

[Mr. Bigglesworth]

http://www.economist.com/news/leaders/21582258-it-not-just-detroit-american-cities-and-states-must-promise-less-or-face-disaster

[LongBlade]

http://www.economist.com/news/leaders/21582258-it-not-just-detroit-american-cities-and-states-must-promise-less-or-face-disaster

In the US - if you've been paying attention - we've been told Detroit is the first of several big cities in trouble.

Here's the key - the city employees got greedy and tried to live too high off the hog. They're about to learn what happens when they ask for too much and fail to make hard choices, like hiking taxes, to pay for what they want.

From the article:

Nearly half of Detroit's liabilities stem from promises of pensions and health care to its workers when they retire. American states and cities typically offer their employees defined-benefit pensions based on years of service and final salary. These are supposed to be covered by funds set aside for the purpose. By the states' own estimates, their pension pots are only 73% funded. That is bad enough, but nearly all states apply an optimistic discount rate to their obligations, making the liabilities seem smaller than they are. If a more sober one is applied, the true ratio is a terrifying 48% (see article). And many states are much worse. The hole in Illinois's pension pot is equivalent to 241% of its annual tax revenues: for Connecticut, the figure is 190%; for Kentucky, 141%; for New Jersey, 137%.

[LongBlade]

"Can't solve the problems because the problems are cultural," Will said. "You have a city, 139 square miles. You can graze cattle in vast portions of it. Dangerous herds of feral dogs roam in there. You have 3 percent of fourth graders reading at the national math standards. Forty-seven percent of Detroit residents are functionally illiterate. Seventy-nine percent of Detroit children are born to unmarried mothers. They don't have a fiscal problem, Steve. They have a cultural collapse."

Read more: http://dailycaller.com/2013/07/28/george-will-detroit-doesnt-have-a-fiscal-problem-but-a-cultural-collapse/#ixzz2aRYBakrN

[Martok]

Thanks for the link, LB.  I don't really agree -- there are simply too many factors involved in Detroit's decline/collapse for any one of them dominate -- but I'm willing to concede he may have a point. 

[Centurion40]

Michigan should decriminalize weed, tax its sale and permit the legal establishment of weed bars/casinos.  That'd turn the economy of Detroit around, and boost the enrollment of Michigan State U.

[LongBlade]

Michigan should decriminalize weed, tax its sale and permit the legal establishment of weed bars/casinos.  That'd turn the economy of Detroit around, and boost the enrollment of Michigan State U.

They don't need more weed.

They need a population that understands how to build a family, stay married, and learn to read and write.

Detroit seems to be the poster child for corruption and dependence on government programs.

[Windigo]

Americans in virtuous states and cities will be just as furious about their tax dollars flowing to Detroit and other distressed places as Germans are about euros going to southern Europe. But the truth is that America's whole public sector still operates in a financial never-never land. Uncle Sam offers an array of "entitlements" that there is no real plan to pay for. Barack Obama is on his way to joining George W. Bush as a president who did nothing about that, while Republicans in Congress imagine they can balance the books without raising taxes. The government spends more on health care than many rich countries and still does not cover everyone. America's dynamic private sector is carrying on its back an unreformed Leviathan. Detroit is merely a symptom of that.

Not a lot of factual information here... raises more questions than anything.....

whats a virtuous state? Whats a NOT virtuous state?

talk about a false dichotomy

Do you REALLY get influenced by this shit?

[GDS_Starfury]

here I would take virtuous states and cities as those that have balanced budgets.