BANKRUPT!

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A US city after fifty years of Democratic leaders and big unions in control

Hat tip to Rosalie Hansen

The news is consumed by Trayvon Martin and the royal baby while the tragedy in Detroit seems to go unnoticed. Detroit declared bankruptcy Thursday.  This is tragic!

It is the largest city to declare bankruptcy in history and it won’t be the last.

Detroit has about $20 billion in debt and takes in about $1 billion a year. They can’t even pay the interest on the debt. They aren’t even sure how much they owe.

Detroit announced in June that it would stop making payments on some of its debt. They failed to make a $34 million dollar payment mid-June, putting it in default.

In March, Kevyn Orr was appointed as emergency financial manager in a last ditch effort to save the city. He summoned public labor unions, bondholders, bond insurers and others to a Detroit airport hotel to present a 200-page restructuring plan. He wasn’t able to pull it off.

Fitch and Standard and Poor’s Ratings Services downgraded them to junk status. S&P warned that delinquency was unavoidable at the time.

Detroit has a dwindling population, very high unemployment, and has suffered under decades of Democratic rule. By all accounts the new Governor is good as is the Mayor but they inherited a city already on an irreversible path to insolvency.

One hundred years ago, Detroit was one of the richest cities in the world. Today it is one of the poorest.

Fifty years ago it was the fifth largest city and now it is eighteenth with one-quarter of the population having left in the last ten years. Once a city of 1.8 million, the population is now hovering around 700,000. Detroit is not bringing in enough revenue to sustain its high debt and overwhelming entitlement payouts. Two-thirds of Detroit’s children are impoverished.

Tens of thousands of homes are vacant. The median house price is $9,000. Property crime is double the average. Violent crime is triple. In the last ten years, half of the police and half of the firefighters were laid off. Much of Detroit is unsafe.

GM is not alive as Joe Biden claimed before the election.

Detroit is the victim of crime, high taxes, excessive spending, a dying car industry, poor governance, and union demands. Many in the middle-class and slews of businesses have fled Detroit, taking their tax dollars with them. The mortgage crisis hit them very hard. They owe Wall Street billions and blame them for having to pay them back the money they borrowed.

It all went down on Obama’s watch, just as the downgrade of the US credit rating occurred under his watch. He is doing nothing about it. Instead, he is giving speeches about less important matters aimed at distracting people from the very real problems we face.

Ironically, in an address on October 2012, he bragged about saving GM and Detroit.

Cities and towns are failing. We are rotting from the inside out. We need to stop spending.

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