Detroit's Sad Story ... Public Sector Unions and City Government's Promises ... The City's Welfare State Is Broke and Local Taxpayers Are Either Gone or Tapped

Detroit is broke. Government malfeasance did it.

And the free spending political elitists had the help and total support of the public sector unions in doing so.

It's a cautionary tale for America as a whole. Money doesn't grow on trees and bills eventually come due.

Government and unions spend money and wealth. The money and wealth that they spend must first be created by those individuals and companies in the much vilified and hated private sector that government and unions seem to always want to harm and have long declared as the enemy.

Well, now we see what that brings us. The next thing we're going to see is what that does to the payment of retirement benefits for city employees and ongoing public services of the city.

We're also going to witness the likelihood that creditors, taxpayers and entrepreneurs won't be anxious to come up with more money that the government and public sector unions can use as they choose. Hard choices lie ahead for bankruptcy officials. It's in the court's hands now.

The days of the blank check have come to a screeching halt in Detroit. They're on their way to many other venues as well.

Down and Out in Detroit is subtitled 'Economic decline and public unions have crippled Motown':

"Motown's problems have been mounting for six decades and are the result of economic decline and rule by government unions. City Hall made unsustainable promises to public employees so retirement obligations now constitute half of its $18.5 billion debt. Crime, high tax rates and lousy schools have driven middle-class families to the suburbs. Two of every five street lights are broken, only a third of its ambulances are in service, and there are 78,000 abandoned buildings. In essence, self-government collapsed.

Last month (Governor appointed emergency manager) Mr. Orr proposed an ambitious plan to arrest the city's fiscal free-fall by reinvesting in services and growing the economy. Bondholders would have to accept pennies on the dollar, and retirement benefits would be trimmed, but creditors said no.

Chapter 9 bankruptcy will now shield the city from bondholders while letting it restructure labor agreements and repudiate debts. But the process will be long, expensive and ugly. The city has more than 40 unions and a dozen capital-market creditors, which will be fighting for a limited pie. Bondholders are hoping to pre-empt the bankruptcy by arguing in court that the city should raise taxes and sell assets to pay its debts. The city of Stockton, California spent a year contesting such claims.

Meanwhile, unions aim to protect their pensions from any impairment—a necessity if the bankruptcy is to be successful—by arguing that their promised benefits are protected by the state constitution, never mind that the federal bankruptcy code trumps state law. It also authorizes the abrogation of contracts.

As the lawyers battle in court, the streets of Detroit will continue to suffer from deteriorating services, blight and crime. This is the real tragedy of Motown's fiscal collapse."

Summing Up

Thanks to foolish politicians and reckless public sector unions, aided and abetted by the support of blinded citizens over several decades, Detroit is flat broke and with no 'visible means of support'.

Since Detroit already has very high taxes, raising them once again is essentially an impossibility.

Getting blood out of a turnip can't work, and Detroit's politicians and public sector unions have run out of "blood" which they can drain from the city's dwindling and increasingly poor base of citizens.

It's going to be ugly. That said, it's going to be instructive as well.

So we'll follow it closely.

That's my take.

Thanks. Bob.