Skip to comments.Detroitís bankruptcy: A warning to NYC
Posted on 07/23/2013 7:47:14 AM PDT by SeekAndFindEdited on 07/23/2013 7:47:53 AM PDT by Admin Moderator. [history]
What a difference four decades makes. In the mid-í70s, New York Cityís threat of bankruptcy was a horror that the state, feds and city ultimately avoided. Last week, Detroit declared bankruptcy because Michigan thought it was the best choice ó and Washington stayed silent.
(Excerpt) Read more at nypost.com ...
And Chicago, LA, St Louis, Philly, Baltimore...........
In the early 80's in the middle of Upstate New York cars still bore bumper stickers reading "Let the Apple Rot". Today I suppose somebody in Michigan might make a few bucks with the motto "Let Motown Go Down (and good riddance)".
Bailing out Detroit will be about as effective long term as if the the crew of the Titanic bailed out every bathtub on the ship. The ship and the crew would still be lost. Obama is probably telling the Chinese not to worry. He is not using the money he is borrowing tom”save”Detroit, Bernacke is simply going to print it. Absurdities lead to collapse.
Detroit should not be bailed out but its the least of our problems. Cities with much much larger debts are going to come looking for money at some point.
I have little hope for Detroit. They have crashed and will be rebuilt with the same cast of characters in charge. Unlike NYC, and other cities, Detroit’s current population are not tasxpayers. So, after the crash, I see no real possibility of revenue creation. Even if outside business interests move in, they still have a crime-ridden uneducated populace.
Skipping the usual fixation on Detroit.
Is a magical unicorn going to crap gold coins in America’s cities? Their debt is growing perpetually and there aren’t enough taxpayers in the world to save them from the inevitable. Believing otherwise is just standard Keynesian thinking.
Some parallels between Detroit and NYC ( from the article):
* Detroit owes $5.7 billion for retiree health care. New York owes $88.2 billion and has no money squirreled away. Thats $20 billion more than Detroit when adjusted for NYC’s larger population (NYC is 12 times bigger).
* Pensions? New York owed pensioners $69.9 billion more than it set aside as of last years annual report. Adjusted for population, thats $28 billion more than Detroit owes.
* Bondholder debt? New York owes $77.3 billion. Detroit beats NYC there by about $34 billion but even that should be a warning, not a comfort. People kept loaning until it was too late to maintain the illusion that Detroit could afford its retirement benefits and now both groups will suffer.
What about budget deficits?
* Detroit cant balance its annual budget because it must spend one-third of its revenues on health retirement benefits and debt. Well, New Yorks budget has run an operating deficit six of the past seven years (with the shortfalls covered by pre-2008 surpluses).
And NYC spends one third of the budget on health and retirement benefits and debt.
* Detroit lost the auto industry. And New York, half a decade after Lehman Bros. collapsed, is still missing more than 30,000 jobs from its premier industry, finance. The sectors ranks remain down 7.5 percent.
Thats important, because finance still provides 28.9 percent of New Yorks income from wages and we need the taxes on those wages to keep city services up so the worlds global elite dont decamp with their cash.
* One difference -— NYC’s median household income, about $51,270 (thanks to Manhattan), is nearly twice Detroits.
The difference between NYC and Detroit, is that there is tremendous wealth in NYC that can (and will) be taxed to increase revenues - at least in the short run. There is no way for Detroit to increase revenues - there is almost nobody left with any money to tax.
While it’s true that there aren’t enough taxpayers in the world to solve the cesspool that is Detroit (and Chicago, LA, Philly, NYC etc.), as a member of the taxpaying chumps of the country, there are also too many tax evaders in the country, be they corporations big or small, your friendly neighborhood secretary, or black conservative underground restaurant owning tax evaders.
And while Detroit is a cesspool (and I hope when it finally gets to the sucking sound around the drain, it takes a bunch of unions, union-types, criminal elements, and commies with it), it will be deemed too big to fail and the temporary fix will AGAIN come out of our pockets.
Of course Detroit should not be bailed out . . . but . . . what problems?
Theres no problem. People (politicians, welfare recipients, rich people, students on scholarship) spend money they dont have, they make promises thay know cant be kept, they put off consequences until the consequences can no longer be put off, then reality comes knocking.
Sure . . . its brutal. Its tragic. A lot of people get hurt. Public health declines, suicides increase, crime becomes worse . . . but . . . no problem.
Folly finds its own solution.
What did everyone think would happen?
I’m an NYPD cop. I sure hope my pension is there when I am eligible for retirement. Luckily I’ll be young enough to begin a whole new career if need be.
The difference between Detroit and NYC?
NYC has the financial industry to paper over with illusion and BS the insanity of the city failure.
Detroit only has vacant manufacturing buildings in rubble and social leaches who will beg the Feds to feed them.
Show me a city run by ComDems that is not a total failure. There is not one.
As I said . . . No problem. Folly finds its own solution.
Unfortunately people running away just go somewhere else and start the process all over. After all, the democrats of Detroit came to what was once a republican city.
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