In My Native City Of Detroit, Atlas Has At Long Last Shrugged

Forbes ^ | 07/24/2013 | Prof. Mark Hendrickson, Grove City College

[SeekAndFind]

I’m sad. Detroit is my native city. Its decline from being arguably the world’s richest city to being America’s “first Third Word city” is tragic, politically criminal, and a warning to other Americans.

The official declaration of Detroit’s bankruptcy last week could not have come as a surprise to anyone familiar with the Motor City’s atrocious financial condition. The city had no hope of ever recovering from its colossal over-indebtedness, and without a central bank standing by to create fiat credit to augment its insufficient revenue—the scheme that is the only thing keeping the even more colossally over-indebted national government solvent—the only question was when someone would pull the plug.

Fiscally speaking, Detroit had been in the “walking dead” category for years. Last Thursday’s announcement by Detroit’s emergency manager, Kevyn Orr, finally acknowledged the inescapable facts.

Clearly, some Michiganders are still in denial and refuse to face those facts. Last Friday, Ingham County Circuit Judge Rosemarie Aquilina insisted that the Chapter 9 bankruptcy declaration be withdrawn, stating the Michigan constitution forbids any action that would decrease the pension benefits of public employees. In the first place, Judge Aquilina should read my article about will and abandon the delusion that a constitution can alter reality by making nonexistent funds magically appear; in the second, it is an unjust constitution that confers a protection on public employees that private-sector employees don’t have. A sounder constitution would have prohibited the city government from gaining control of employees’ retirement funds contributions and instead have mandated that those contributions all go into a private fund in the workers’ names where the city couldn’t touch them.

[SeekAndFind]

There was a previous thread on this. However, it was hijacked by the apostrophe Nazis who harped on the Forbes editors for missing a typo ( the author the word "It's" instead of "Its", which sent several people into a grammatical frenzy).

That thread soon turned a discussion about the proper use of apostrophes in the English language instead of a discussion about Detroit.

I am hoping that the mods will allow this thread to go through ( I actually corrected the author's little mistake in the article).

Hopefully, people will focus on the TOPIC at hand and not be side tracked.

[uncitizen]

Bump

[abb]

At our coffee group this morning, the Detroit issue came up. The analogy I used was that the parasite outgrew the host and killed it.

[tgusa]

Coming soon to our country, I fear. Stock up and arm up while your fiat dollars still have some worth - when Obama’s plan to destroy the country is fulfilled, it will be too late.

[who_would_fardels_bear]

The only government entity in the US that is allowed to run deficits forever is the federal government. Over time as all governments overspend they will cede more and more power over to the feds in order to keep their local coffers filled.

Those few states and cities that can keep their houses in financial order will most likely be plundered by the feds to keep the freeloaders fed.

We need to have a real enforceable balanced budget amendment so that no government entity, not even the feds, can run deficits indefinitely. That will force of day of reckoning for all politicians. The sooner the better.

[Publius]

Atlas Ping. This article has been reposted so that there can be a vigorous discussion of its points and not its punctuation.

[bboop]

It is exactly that - the parasite outgrew its host. Parasite is, unfortunately, looking at a larger host to suck the lifeblood from — the US Government. “They’ can pay our pensions.

Detroit, Michigan, California, New York City and all the other blood-sucking union pension dumps need the Scott Walker treatment.

[shove_it]

Yeah, that was a bummer yesterday. Detroit is my hometown too. When I first read Atlas Shrugged in college in the late 1950s (it was required reading in my Lit 101 class) I did not believe it could possibly happen anywhere in America, especially in thriving Detroit. Then came the 60s, the race riots, the auto union strikes, the rise of the Japanese auto industry and the flood of Detroiters to the burbs. I then realized Rand was right and left the Detroit area for good in the early 70s and now return only for funerals of relatives and friends.

This article is dead on. Stossel will do a special on Detroit tonite at 9pm on FoxBiz fyi.

[nathanbedford]

It’s hard to feel sympathy for any of the vultures who are squabbling over Detroit’s carcass. Municipal bondholders certainly don’t merit sympathy for the huge losses they will incur. Anyone who invested in the debt promises of such a corrupt and poorly managed city deserves to lose money. They would have had to be blind not to see how broke the city was, so it seems that they made a cold, cynical, calculated bet on Detroit’s predatory government continuing to be able to find victims from whom to extract more money. While acknowledging that there are dedicated policemen and teachers in Detroit who labor under difficult conditions, it is still hard to justify economically the generous pension promises they have received when the average response time to a 9-1-1 call is 58 minutes and educational results have been so abysmal.

Since when does one's rights to contractual commitments of municipal bonds or as a pensioner depend on whether you deserve sympathy? The bondholders are entitled to rely on the dedicated sources of repayment, such as the utilities, without reference to whether or not they were "cynical" in doing so. If they were wrong in their calculation they will lose that source of repayment but not because there motives were suspect.

Similarly, if the pensioners lose their pensions it should be because they fall behind other creditors, such as bondholders, preferred because of contractual commitment in the bonds to sources of income, or otherwise by law.

It is as Mae West replied when someone observed, "Goodness, what a beautiful ring." Ms. West replied, "goodness had nothing to do with it."

[luvbach1]

I visited Detroit on Thanksgiving in 1950. It was a big, beautiful, metropolis. If anyone could have been transported from 1950 Detroit to its 2013 remnant, they would have been shocked and flabbergasted.

[fuente]

Anyone that thinks Detroit is is the USA’s first third world city has never been to Memphis or New Orleans.

[Starboard]

a warning to other Americans
***********
It should be, but probably won’t. Too many other trivial distractions out there to bother being enlightened about the consequences of a failed city. The media will also ignore the Detroit story because it runs counter to their utopian/progressive agenda.

[abb]

It has been opined that if Detroit’s bondholders are stiffed, then money in the municipal bond market will “dry up.”

I have a different take here. If cities become a riskier investment because Detroit is allowed to welch on its debts, there will still be money available.

The question is whether the cities can afford the new vigorish rate in the future.

[Starboard]

This article is dead on. Stossel will do a special on Detroit tonite at 9pm on FoxBiz fyi.
**********
Hey, thanks for mentioning this. I enjoy his shows. And this one should be really good.

[longtermmemmory]

any news on the state judge who tried to trump federal law by ordering the bankruptcy stopped?

It seems if this is the case the easy solution is to simply de-charter Detroit.

[Starboard]

Although a string of other cities have failed in recent years, Detroit is the real canary in the coal mine. And the mine is getting ready to collapse.

[abb]

http://news.yahoo.com/fight-over-detroit-bankruptcy-begins-federal-court-040959917.html

Detroit manager scores first win over unions in bankruptcy bid

Reuters
By Bernie Woodall and Joseph Lichterman

DETROIT (Reuters) - A U.S. bankruptcy court judge on Wednesday dealt a blow to Detroit’s public employee unions and pension funds opposed to the city’s historic bankruptcy filing by suspending legal challenges in Michigan state courts while he reviews the city’s petition for protection from creditors.

Judge Steven Rhodes ordered three lawsuits filed by city workers, retirees and pension funds be halted and extended that stay to suits against Michigan’s governor, treasurer and Detroit’s emergency manager. Rhodes’ action ensures that the only path to fight the city’s Chapter 9 bankruptcy petition runs through his courtroom in downtown Detroit.

snip

[Don Corleone]

The official declaration of Detroit’s bankruptcy last week could not have come as a surprise to anyone familiar with the Motor City’s atrocious financial condition.

Proof that "Cloward-Piven" will and does work. It is not lost on Obama and his Marxists.

[T-Bird45]

Careful, those are the renowned “Chocolate Cities” that you dare question.

[American in Israel]

The Judge ruling that the Pension fund had to be paid was ludicrous. What part of no money in the Pension fund did she not understand? Where were all her rulings when the mismanagement was going on. Why not rule for an Audit for criminal proceedings?

Nope, the liberal is going to redefine reality. Isn’t that at its root what liberalism is?