Mitt Romney's campaign prediction has come true. Detroit, Michigan has declared bankruptcy ... the largest city to ever do so in the United States (see:
Detroit News Story). What a shame! I've only been to Detroit once or twice ... to visit the General Motors headquarters ... so I have not seen the central-city decay there cause by decades of irresponsible fiscal management. But there might be plenty of pain to go around once the courts have divvied up the few remaining assets.
Yes, pensioners there may suffer but, I suspect that the Obama administration will find a
sub rosa way of easing their pain. (There is something called the Pension Benefit Guarantee Corporation which will probably dump tons of taxpayers money into this financial chasm ... see:
Wikipedia Entry. Yes, this quasi-governmental company is privately-funded now ... but it is running such a huge deficit that we all know that taxpayers will eventually be forced to close this gap.) The other real sufferers will more likely be all the IRA owners around the country who either are directly or indirectly invested in Detroit municipal bonds. They, like the previous investors in General Motors debt, will take it in the shorts.
And many other major mismanaged cities around the country are going to find their municipal bond financing costs go up ... possibly dramatically. So we see that Detroit's pain will likely be shared by all of us ... even though we had no hand in the corruption and fiscal naivete that caused this catastrophe.
I do have a simple suggestion that might allow Detroit to make lemonade out of the bushel of lemons that it now has on hand (a thought I also had for the South Bronx when it was in rampant decay.) I think that tens if not hundreds of blocks of contiguous abandoned homes and businesses in downtown Detroit should be bulldozed and a gigantic verdant municipal park should be created ... as a centerpiece of an eventually revitalized city. It might even get Mitt Romney to donate the millions of dollars it will cost ... then name it for his father, George.
Afterward: For another interesting take on Detroit, see: The Diplomad Blog.
