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Saturday, July 20, 2013

Detroit has filed for bankruptcy Part 2



[VIDEO] Reason talks about Detroit in this recent video. Of course Reason is a libertarian magazine that often attacks anything resembling the big government model. Detroit is often the posterchild for that model and it's often noted that Motor City has been controlled by Democrats for many years. With that in mind Reason noted:
In fat times and lean, the city’s pols and power-brokers chose to focus their energy, and the residents’ tax dollars on gigantic, big-ticket development scams while ignoring the basics that let cities thrive – or at least survive.
On the other hand there's Megan McCardle at Bloombery who also discusses Detroit's current predicament it noted that the recent bankruptcy filing has come under judicial scrutiny. It was ruled by a Michigan court that the filing must be withdrawn until the court is able to rule on a bid by bondholders and pension funds. She further noted:
But notwithstanding the judicial ruling and attempted procedural trickery, Detroit faces an ugly and unyielding truth: It can’t pay its debts and obligations. The city’s financial condition has been weak for decades, and over the last 15 years, it has collapsed. Since peaking in 1950, the population of the city has fallen by more than half; what’s left is poor, with a median household income of only $27,862. Unfortunately, Detroit still has the size and government benefits structure of a much larger, more prosperous city. Something has to shrink.
So Detroit once had over 1 million people over 60 years ago and now is reduced to at least 700k people. Can you afford to maintain a city that has a population that has been drastically reduced. I've seen photos of the city that is largely vacant as many homes have been either torn down and therefore neighborhoods have as McCardle has put it, "Large swaths of the city are slowly reverting to the farmland they were built on".

Here's hoping Detroit can get back to better fiscal health. Let's hope that in 2013 the people who are running in their municipal election have their eye on getting Detroit back on its feet. Let's also hope they avoid nonsense like this:
All along, the state’s involvement — including Mr. Snyder’s decision to send in an emergency manager — has carried racial implications, setting off a wave of concerns for some in Detroit that the mostly-white, Republican-led state government was trying to seize control of Detroit, a Democratic-held city where more than 80 percent of residents are black.  
Yeah throwing the race and political card won't help Detroit out. It's likely make things worse!

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