Detroit's financial woes have placed the issue of bankruptcy in the national spotlight. Yet, for many Americans, who are still struggling to get back on their feet amid high unemployment and expensive medical bills, bankruptcy is all too familiar.
As the dust settles after the initial Detroit bankruptcy filing, all sorts of unanswered questions and economic choices are getting clearer.
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.
What do you think of when someone mentions "unions"? Me? I think of striking workers marching down streets. I think of Tony Soprano. I think of ceme...
While corporate profits soar and our biggest corporations increase in value by billions, the people of the city of Detroit, some of whom are also the customers and employees who keep those corporations in business, are insolvent.
The message we're sending other cities as well as our own citizens is it's OK to mismanage all of your money because the government will come riding in on the white horse to save you.
Today, Chicago residents can count on their streetlamps working tonight and the police responding to emergencies in well under an hour. Unless they demand immediate action to address public employee retirement costs, that may not be true tomorrow.
It's easy to blame Detroit's problems on corruption, unions and overly generous pension benefits, but none of which were the primary cause of bankruptcy. Detroit may have mismanaged finances, but the state's cuts to revenue sharing doomed the city.
Poor Detroit. The City's been getting a ton of abuse over the past week or so ever since it was announced that they were filing for bankruptcy. It's just not fair. Detroit's a cool town. I can think of at least 10 good reasons why moving to Detroit isn't such a bad idea at all.
I feel bad for the folks in Detroit right now because it already sucks to live there, plus the Lions are usually bad, and with this new bankruptcy filing, it's just another blow to the hometown spirit.
The refrain on repeat across news outlets includes some combination of the following: decades of mismanagement, a shrinking tax base, the decline of industry, and corruption. All of these factors doubtlessly contributed to Detroit's financial distress, but as an explanation for it they are woefully incomplete.
The world will shrug when Detroit's art collection is put on the block, when cops are fired, when schools close and when real people suffer. But don't pay back bondholders and attention must be paid.
The Windy City is likely the next shoe to fall. Above all, elected officials around the country must take this lesson from Detroit: Do not spend money you do not have because one day, the bills will come due.
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