Detroit: The Blueprint for Bankruptcy!

[Alvin Neal]

We Are All Detroit

Do you think the damage from the pending bankruptcy of the city of Detroit will be limited to Detroit? Think again. Detroit is partly the victim of economic trends far beyond its control, the downsizing and outsourcing of the auto industry and the collapse of the sub-prime bubble, to name just two. And yes, the city has suffered from corrupt and inept local government. But leaving Detroit to a bankruptcy process that favors investment bankers over local pensioners will neither provide a fair outcome nor contain the damage. It is a travesty that the federal government and the Michigan state government are not sending Detroit a lifeline. Other cities and states stand to lose both public services and pension benefits as this trend spreads. Chicago, which just suffered three levels of bond-downgrading, looks to be next.

Robert Kuttner

Co-founder and co-editor, 'The American Prospec

[Richard D.]

@Al Neal all politics aside, ultimately the issue is the residents and their lack of holding themselves accountable. They chose to depend on others to protect their best interests, but failed to boot the same people out when they failed. If they did boot them, they chose an option that was worse than what they had originally. 

So by continuing to rely on unions to protect them, the people ran business out of Detroit.  Just by shear cost in the pensions, the people so desired to retain without genuinely earning. They then traded the unions for politicians. Who in turned ran off more businesses through taxation. Then followed people who would generate new businesses by increased taxation on incomes. So this leaves Detroit with only those who are too poor to correct the situation.

Too prove my point, Detroit is so desperate for funds they are turning off water to those unable to pay, until they actually pay. And I agree with your assessment as Chicago being next. Just pay attention to what the teachers Union just did a couple of years. They protested to get a large raise on substandard work performances, along with secured pensions!