Free Markets, Free People

Detroit: The dead canary in the debt mine

Zero Hedge has a very pointed article about Detroit’s decline.  In it are listed 25 reasons it’s bankrupt (that, as ZH claims, will leave you shaking your head when you finish).  Here are the first 12:

1) At this point, the city of Detroit owes money to more than 100,000 creditors.

2) Detroit is facing $20 billion in debt and unfunded liabilities.  That breaks down to more than $25,000 per resident.

3) Back in 1960, the city of Detroit actually had the highest per-capita income in the entire nation.

4) In 1950, there were about 296,000 manufacturing jobs in Detroit.  Today, there are less than 27,000.

5) Between December 2000 and December 2010, 48 percent of the manufacturing jobs in the state of Michigan were lost.

6) There are lots of houses available for sale in Detroit right now for $500 or less.

7) At this point, there are approximately 78,000 abandoned homes in the city.

8 ) About one-third of Detroit’s 140 square miles is either vacant or derelict.

I know, you look at that and say, "these have me shaking my head already … there’s more"? Oh, yeah. Read ’em all. But here’s the important part. It’s not just Detroit:

9) An astounding 47 percent of the residents of the city of Detroit are functionally illiterate.

10) Less than half of the residents of Detroit over the age of 16 are working at this point.

11) If you can believe it, 60 percent of all children in the city of Detroit are living in poverty.

12) Detroit was once the fourth-largest city in the United States, but over the past 60 years the population of Detroit has fallen by 63 percent.

“Oh my”, you’re saying, “I’m already shaking my head.  There’s more”?  Oh, yeah, much more.

But here’s the important part – a part we’ve been talking about for quite some time”

A while back, Meredith Whitney was highly criticized for predicting that there would be a huge wave of municipal defaults in this country.  When it didn’t happen, the critics let her have it mercilessly.

But Meredith Whitney was not wrong.

She was just early.

Detroit is only just the beginning.  When the next major financial crisis strikes, we are going to see a wave of municipal bankruptcies unlike anything we have ever seen before.

And of course the biggest debt problem of all in this country is the U.S. government.  We are going to pay a great price for piling up nearly 17 trillion dollars of debt and over 200 trillion dollars of unfunded liabilities.

All over the nation, our economic infrastructure is being gutted, debt levels are exploding and poverty is spreading.  We are consuming far more wealth than we are producing, and our share of global GDP has been declining dramatically.

We have been living way above our means for so long that we think it is "normal", but an extremely painful "adjustment" is coming and most Americans are not going to know how to handle it.

I agree completely.  As I said in my first post about Detroit it is just the dead canary in the debt mine.  It was simply the worst off of the bunch.  But, remember, we were told this sort of stuff couldn’t happen and to quit worrying about.   That debt wasn’t really that important.  Well, in a microcosm, Detroit is the end state we can expect for any number of governmental units in this country (and others).  It is where everyone is headed, it’s just a matter of the speed in which they get there.

You cannot live as we’ve been living and expect there to be no consequences.  Let me modify that.  You can “expect” whatever you wish, what’s delivered will be delivered by reality, not your expectations.


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37 Responses to Detroit: The dead canary in the debt mine

  • You can “expect” whatever you wish, what’s delivered will be delivered by reality, not your expectations.

    Yeeeeeup.  And “HEH!”.

    Euuuurp will be along soon to tell us about life in teh “spirit world” of quanset fizzzicks.

  • RoboCop will save us…..

  • Well, if you listen to MSNBC, Detroit going benkrupt is the GOPs fault.  But that lunacy aside, I really don’t feel a drop of sympathy for anyone there. The riots drove out the producers, the leftocracy drove out what remained, and the kleptocracy squeezed out the last few dregs of producers who ran for the hills. So all that’s left are illiterate clients of the liberal/union alliance. And eff them all.
    Drop a dome around what’s left so the pigs can’t leave. People should be made to lie in the beds they made.
    Now Detroit is a nice big warning for the nation, but absolutely zero will heed it. It’s still time for candy in America, not quite time for strong – very strong- medicine. Not YET. But it’s coming. This nation has a rendevous with math. And math is a cold b*tch.

  • I might be surprised if not for all the predictions about the future of Detroit in the movie “RoboCop” (1987).
    26 years later, and life imitates art … or something

  • The three step program:
    1. Go to the website
    2. Search on Moynihan Negro Family
    3. Read the entire 1965 report
    You now know all there is to know about how Detroit got to this point. To see the future,
    1. Replace all references to Negro to White
    2. Reread the report
    You now know all there is to know about how the rest of the country will get to the same place.

    • Silence!  there is NO scandal!  I repeat, there is NO Scandal!   there is no there there!  There!

    • And that was a different William Wilkins!  Not the IRS William Wilkins, and if there’s a notation that it WAS him, then it was a fault of an intern who was working the desk that day, those days, however many days it needs to be, and the intern was wrong,
      and he’s a minority intern, so…….RACIST!
      What difference does it make!

    • Wilkins met with Obama two days before the new rules, Shulman met with Oba aone day before the new rules.
      So, what are the chances that two political appointees in the IRS meet with the POTUS within two days of the new rules for Tea party applicants ?

      • The chances…???  100%.  What are the chances they DID NOT discuss the whole deal with someone on the Pres. staff…???

      • Time for a squirrel!!!!!!!!  How many are left in the White House squirrel pen?!!!!!!!

  • On the plus side, they have a lot of green space now. Just look on Google Maps at a typical city block a mile or two from downtown, and compare it to the equivalent neighborhood in Cleveland.

    Seriously, you won’t believe how much open green space there is in blocks that used to have houses shoulder to shoulder on the whole block.

    • Then we just need to wait 40 years, go back in and pioneer the area.   Get back to the land, pitch wikiups.

    • What you are talking about is the ideal world of the Collectivist druids who want our world depopulated, only in microcosm.
      They hate people, you know.  All of them, except themselves.  Well, and maybe even then.  It is a deep, dark pathology.

  • Here is the meme from my leftie friend….the banks foreclosed on people in Detroit, and then they would stop foreclosure proceedings, and then not notify anyone, but the owner would still owe taxes. They claim this helped push Detroit over the edge.
    I am very dubious about this being anything more than a small factor, and some of the comments are illuminating (not the facebook ones, those are all idiotic) as to why banks did. (Sheer workload and low value of Detroit housing comes to mind.) There are also comments that to rebuild or renovate there is too expensive. Normally, I’d be more sympathetic to the banks even, but they showed some pretty crappy skillz so I don’t doubt they could mess these things up and be jerks.
    And then there are the True Blue commenters…the people screaming MICHIGAN HAS A GOP GOVERNOR! Or just banging on about the banks and capitalism.
    Also the claim that the banks don’t notify you might be true, but when you get the property tax in the mail, wouldn’t that pique your interest? I guess 47% illiteracy could mean they don’t read their mail closely.

    • I’ve seen a shole host of problems that caused Detroit to go belly-up.
      Apparently, the city had a hand in a number of Eminent Domain cases. 
      One involving GM, put nearly 2000 out of their homes, but the economic reward never materialized.

      • Story about Poletown…….
        To clear the space GM needed around the old Dodge Main site, Wayne County had to clear out nearly 2000 homes, businesses, churches, etc. In a rushed process, Wayne County made lowball offers, then used eminent domain to take the property needed to fulfill GM’s requirements as quickly as possible. Businesses, homes, and churches were disrupted and began to sue.
        Throughout the Eighties, courts slammed the government with damage rewards that valued the siezed properties at values the government was unwilling to pay. In the end, former Poletown property owners received hundreds of millions of dollars in excess of what the government thought it had to pay under eminent domain.
        If GM had offered the property owners a reasonable price for their blighted land, they would have sold overwhelmingly. Instead, government stole the property and paid dearly on the back end.

        • That whole “Poletown” deal was a snark on Antnee Weiner….right…???
          That will be Nuevo Ork’s new nickname if he wins…

    • Your leftie friend clearly has not lived in or near Detroit. I lived in/near Detroit for over 20 years.The rot begain in the late 60s, a combination of bigotry, welfare, corruption, and hubris. The bigotry drove the productive class out of the city neighborhoods, the Great Society welfare programs corroded the family by making men useless, the corruption drove the businesses out, and the union hubris killed the remains. I recall when most of Wayne county would wait with fear for the announcement of which of the  Big Three the UAW would choose for a target. The public unions just picked up the tactics of the UAW and the corrupt city government went along with them. Men who might have made good husbands and fathers were made to feel worthless as women could do just fine with welfare and housing: the more children, the more welfare and a bigger apartment; a man around and the money flow would dry up.

      • Of course he has no idea. He actually is an expat living in a low-tax pro-business environment…great for being a lefty wanting to Merica to have higher taxes.

    • Here is the meme from my leftie friend….the banks foreclosed on people in Detroit, and then they would stop foreclosure proceedings, and then not notify anyone, but the owner would still owe taxes.

      Remember that the Obama regime ordered banks to stop foreclosure actions?
      And whether they taxed were owed or not is irrelevant if they can’t collect…in foreclosure or out.
      Evidently the leftie friend understands banking and all that as much as they do self-defense law.

  • Also, wouldn’t any sane person in foreclosure, who is not paying their mortgage still stay in the house until eviction really happens?

    • Not necessarily.  Despite free housing until eviction, if that person is unemployed and broke, he still needs to eat.  He’ll move to where there’s a job.

      • or better welfare payments.

      • OK, so then the tax bill arrives at his old house and he doesn’t know about it?
        The article did say the banks don’t actually tell people if they stop foreclosure…though I wonder if that’s due to not wanting to imply they don’t have an interest anymore.

        • If they aren’t paying their mortgage, they’re not paying their taxes either (PITI).

    • Also, I checked Zillow and there are plenty of foreclosed housing being sold, so some banks followed through – I think that article was grasping for a reason to blame the banks.

  • Detroit would have made a great backdrop for the Ayn Rand Movie “Atlas Shrugged”
    Somewhere Ayn looks down on all this and reflects: “The point of my book was so that this wouldn’t happen”

  • So, New York can probably rush to join Detroit by electing Senor Carlos Danger in the next election.

    • They would make such a loverly couple…
      Well, three-some, counting Huma, the Muslim Brotherhoodlem “man” in the State Dept. under Old Walleyes Clinton.