Posted on 07/19/2013 9:19:20 AM PDT by SatinDoll
Listen up folks, after you read the bankruptcy filing for Detroit.
1. Right now, the City cannot meet its basic obligations to its citizens.
2. Right now, the City cannot meet its basic obligations to its creditors.
3. The failure of the City to meet its obligations to its citizens is the primary cause of its inability to meet its obligations to its creditors.
4. The only feasible path to ensuring the City will be able to meet obligations in the future is to have a successful restructuring via the bankruptcy process that recognizes the fundamental importance of ensuring the City meets its basic obligations to its citizens.
I have repeatedly pointed the impossible position that many governmental units, whether they be state, local or Federal, have placed themselves in by creating special classes of "untouchable" promises that were negotiated in bad faith by one or both sides and which are then ensconced with special protections under the law.
The fundamental reality of taxation is that if the economy is growing in your city (town, state, etc) then tax rates can remain the same or decrease and tax revenue goes up. That's because economic activity increases and taxes, as a matter of rate upon an activity, being a constant, results in more revenue.
Now four important axioms:
Economic progress only comes through capital formation.
Capital formation only comes from economic surplus.
Economic surplus is earnings less expenses including taxes.
All other forms of "development" are nothing more than leverage-driven bubbles.
If you increase tax rates then you decrease economic surplus. This inevitably slows economic expansion; it mathematically must.
If you make political promises that can only be met through increased tax rates, now or in the future, you begin the process of slitting your own throat. That outcome is inevitable when you agree to political promises that have escalating expenses over time as pensions, medical benefits, salary "step" increases, bond issues that have a payment schedule longer than the useful life of the asset bought and similar.
There is no way out of this box other than to repudiate those promises. Those who were made them inevitably try (and sometimes succeed) in getting supra-legal protection for their "benefits" but no amount of legal arm-twisting can change arithmetic.
You can raise tax rates on the people to try to cover the promises made but every time you do some percentage of the population that has positive economic surplus -- that is, those who are actual productive members of society -- choose to either quit working in whole or part or they MOVE.
You get less from those who choose to work less.
You get nothing from those who choose not to work at all or to move.
You cannot force someone to produce. You can only entice them to do so.
This problem is not local to Detroit. It is in fact in evidence everywhere from Detroit to Chicago to California to Okaloosa County Florida.
The only solution is to find a way to do more with less. To bring into alignment that which is promised with that which can be delivered. To reduce tax rates while boosting economic activity not through transfers, not through false "enterprise zones" or other various short-term schemes and scams that advantage one business over another but rather through having a general economic environment in which capital formation is rewarded rather than punished. One must foster an environment where spending less than one makes is seen as a virtue instead of a curse and where government departments are encouraged to return unspent funds instead of finding ways to make sure every last allocated nickel is blown on something.
Those things that the people want must be placed in front of them honestly with both cost and benefit clearly delineated. No more "smart boards" for classrooms unless you can show exactly how they reduce the total cost of education and improve outcomes -- both, not "either/or." No more spending the lunchroom chiller money or the re-roofing fund on something other than the sinking fund for that inevitable replacement. No more promising pension payments that anyone with a 3rd grade education knows will balloon to grossly large amounts of money in the "out years" -- when those who passed it will be retired and thus they don't care. No more "enterprise zones" that simply rob one business or the citizens as a whole through higher tax rates so some preferred entity can obtain a lower rate. And no more buying the "best and finest" simply because "our city employees deserve it"; the question is one of whether there is actual need, not a desire to look like Rambo on patrol or have shiny new police cars, but rather if there is need what is the most cost-effective means to meet that need.
Those who made these promises and did these things in the past must be held to account. The policies and promises that were made and cannot reasonably be fulfilled must be rolled back and repudiated.
I know nobody wants to talk about this say much less do it, but it must be done and done now.
Unless, of course, you want to follow the path of Detroit.
These kinds of situations require cold-blooded assessments. It will take courage to see what is really there and get the Hell out!
Perhaps we should bring back the Clinton “Bake sales.”
Move. We’re going to move far out in the county, whereas right now we live in a highly-unionized city with low employment.
This past six months I cut my water usage by 75%. My utility bill is still $200. This sucks! Got to pay all those expensive pension pay-outs. The city’s retired employees are living better than the majority of its citizens.
Obama already fixed this..http://www.youtube.com/watch?feature=player_embedded&v=V6Su5mjQSaE...see?
I read another article yesterday that the regime is being encouraged by a Dem Congressman from PA to ‘bailout’ Detroit.
It is all about race. Not only do Democrats control the Motor City government, they’re all black.
Yes....yes......yes. We all see the symptoms......high unemployment.....declining public services......urban decay.
We know the symptoms, but we refuse to acknowledge the diagnosis. Here is the diagnosis for Detroit. It has a terminal case of Democrat party.
You cannot force someone to produce. You can only entice them to do so.
Slaves and serfs virtually never work harder than necessary to avoid beatings.
How hard was that to figure out? I've got to believe it must be awfully difficult, because the history of Marxism is an unbroken list of failures on the part of statists to understand any part of economics or human nature. Ultimately, Marxism is nothing grander than the straightest, smoothest path to power for the psychopaths who help themselves to control of Marxist organizations and states. The utopian jibber-jabber is window dressing. It's always about power, and the first and last measure of Marxist dictatorship is mass murder.
How hard was that to figure out? Again, it must be extremely difficult, because even lifelong anti-communists sincerely believe Marxism is a utopian philosophical system rather than a hodgepodge of lies top-ranking communists have never taken even 1% seriously. Maybe it's all just too simple for lots of us to accept at face value.
In any event, Detroit's bankruptcy is much in the news these days. I have a hunch if we were to quit looking at the particulars and take a long look at the whole trend or devolution, which dates back decades, we'd see yet another all but blindingly obvious fact: Detroit is a Democratic [sic] party sterling success story. Comprehensive collapse is what's supposed to happen.
That's been the goal all along. The Chicagoization and Detroitification of America continue full speed "Forward!" as people say in Democratic [sic] party circles. The next step in the Detroit saga? Forcing the nation to pour still more good money after bad, of course.
Here's the BEST line from it:
"Detroit's ruling class is a parasite that has outgrown its host."
Ding, ding, ding! The money statement of the day! It seems every government employee was "promised" this or that...and no one wants to give anything up. Never do you see unions saying, "yes, we understand state revenues are lower since the recession started, so we're willing to give up some benefits."
It's more like, "you have less revenues? Not our problem, suckas!"
Anyone who stays in the cities is going to regret it bitterly, especially if they own their home there. If you don’t get out in time, you may never get out since property values head down to zero as crime rates, taxes, rise and services decline.
Well, guess what. These people that served their community for years are going to lose their pensions completely or maybe get 8 or 9 cents on the dollar.
They will be in the same boat as the takers that took welfare, watched TV, smoked dope and drank their lives away while sucking on the FedGov teat.
The vast majority of these people are black. I feel for them because Obama, Holder, Sharpton, Jackson, and all the race pimps want us to focus on one black criminal thug that was shot when he was trying to kill a hispanic. That thug did not contribute a single thing to his community. In fact he was stealing from his community to fund his drug habit. Yet that is the ideal Obama, Holder, Sharpton, and Jackson are holding up as the standard under which the black community should march under. How do you think those people about to lose their pensions in Detroit feel about the the shameful behavior of their “black leaders”?
Well, guess what. These people that served their community for years are going to lose their pensions completely or maybe get 8 or 9 cents on the dollar.
I worked for Burroughs Corporation in the 60's and was in Detroit during the MLK riots with the burning, looting and killing.
My family was back in Pittsburgh {my home} and when I returned my wife informed me that we were moving out of the city and we moved into Westmoreland County and it has turned out to be the best move that we could have made.
The place that we used to live is now crawling with hoes, pimps, druggies and more low life scum than you could shoot with a Gatling gun.
If you still own a home there, burn it down and collect the fire insurance or walk just walk away. It is a disaster.
What Detroit is doing today is a preview for what is going to happen in many, many major USA cities.
Police and Firemen in cities such as Chicago, Philly, and other cities victim to Democratic leadership will be in the same boat in a few years (or months).
As one poster put it, math simply does not lie.
Chicago just had its credit rating reduced, which will speed its demise considerably.
A lot of good people will suffer (right along with the takers) as the crime spirals and the cities burn.
The reason why New York City hasn't fallen into the same abyss is that the city has a very diverse economic base, and most of the rich are still living in Manhattan. Meanwhile, if you look at Detroit, the city is completely destitute, while the surrounding suburbs are some of the most prosperous in the country.
I personally think the next city that could face a major economic collapse is Philadelphia. The city has never recovered from the closing of the Philadelphia Naval Yard, and it doesn’t have the diverse economic base of New York City or the status of vital transportation hub like Chicago to keep the city going.
The progressive can not, will not...dares not accept or understand this concept. His entire world view crumbles into dust if he admits this is reality.
He thus changes the subject by claiming that the whole concept of economic expansion is a fraud, the economy is a zero-sum game, private businesses are little better than highwaymen, and government must level incomes to ensure equality of outcomes.
I too think Philly will fall to bankruptcy, but not as fast as Chicago.
Reason? S&P recently upgraded Philly's credit rating...
http://blogs.phillymag.com/the_philly_post/2013/06/17/good-news-phillys-bond-rating-highest-1979/
...while Moody's just downgraded Chicago's credit rating.
People that buy munis will move money away from Chicago and to Philly at least in the short term.
For this reason, I think Philly will have an incremental amount of time before it goes belly up like Detroit.
Whites moved out of Detroit decades ago.
DETROIT POPULATIONS BY DECADE CENSUS
1940
White 1,474,000... 90% of Detroit is white
Black 149,000... Detroit has been the fourth most populous city in America since 1920.
1950
White 1,545,000... Detroit is a shining city, reveling in the post-war boom (but LA passes them for #4 in the US).
Black 301,000... black population doubles, white population grows at 6%
1960
White 1,182,000... a quarter million whites depart for the successful suburbs with their new wealth
Black 482,000... black population increases by 180,000 once again... Detroit is suddenly 29% black
The last Republican mayor leaves office in 1962
Then the Race Riots of 1967 take place... and watch what happens:
1970
White 815,000... 25% of the whites disappeared
Black 659,000... blacks increase again by about 180,000
1980
White 402,000... half of the remaining whites depart...
Black 754,000... blacks grow more slowly, but are now 66% of the population.
1990
White 212,000... half of the remaining whites depart AGAIN...
Black 755,000... black population is stagnant
2000
White 100,000... half of the remaining whites depart yet AGAIN
Black 770,000... black population growth over 20 years is still under 1%, but they are now 89% of the population. In 50 years, the racial composition of 90-10 has been reversed.
2010
White 55,000... half of the remaining whites depart ONCE MORE
Black 586,000... almost a quarter of all blacks have left the failure of Detroit.
Yes, get out!
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