Detroit: Canary in the Mine for Blue States

Friday, July 19, AD 2013




Detroit has been de facto bankrupt for a very long time and yesterday it became de jure bankrupt with a Chapter 9 bankruptcy for the former Motor City.  Hard to believe that during World War II Detroit was the heart of the American industrial machine that produced more military equipment than the rest of the world combined.  How did the city that helped this nation win a world war end up looking like one of the bombed out cities of Europe circa 1945?  There are many culprits involved but W.R. Mead at his blog Via Meadia knows who the chief villians are:

Detroit has been spending on average $100 million more than it has taken in for each of the past five years. The city’s $11 billion in unsecured debt includes $6 billion in health and other retirement benefits and $3 billion in retiree pensions for its 20,000 city pensioners, who are slated to receive less than 10 percent of what they were promised. Between 2007 and 2011, an astounding 36 percent of residents lived below the poverty line. Last year, the FBI cited Detroit as having the highest violent crime rate for any major American city. In the first 12 years of the new century, Detroit lost more than 26 percent of its population.

And now Detroit’s desperate request for a bailout has been turned down by the Obama White House.

Progressive politicians, wonks, and activists can only blame big corporations and other liberal bogeymen for so long. The truth is that corrupt machine politics in a one-party system devoted to the blue social model wrecked an entire city and thousands of lives beyond repair. The sooner blues come to terms with this reality, the greater chance other cities will have of avoiding Detroit’s fate.

Continue reading...

12 Responses to Detroit: Canary in the Mine for Blue States

  • How stupid an investor do you have to be to hold Detroit bonds, ie to be a Detroit creditor? Don’t they deserve pennies on the dollar?

  • Obama in 2012 said, “We refuse to let Detroit go bankrupt . . . (under his breath)until after the Election.”

    This is just one of the 50 or so disasters needing to be ignored causing the Zimmerman verdict to get 24/7 propaganda air-time.

  • As I’ve long noted, Detroit exists so that Cleveland has some place to feel superior to.

  • Detroit’s population loss was second only to New Orleans, but N.O. has nature to blame. The blame for Detroit’s woes can be laid squarely on the shoulders of its residents for voting for the same people, the same policies and the same party for half a century, which is how long it’s been since it’s had a Republican mayor (Chicago, for its part, hasn’t had one since Herbert Hoover was president. Can it be far behind?)

  • “Can it (Chicago) be far behind?”

    Not so fast. Yes, Chicago does have some of the same problems in the form of pension liabilities, crime rates, population loss from the city (not nearly as drastic as in Detroit, but still significant), persistent cronyism and corruption, etc. However it has one significant asset that Detroit did not have: a more diverse economy not dependent upon one industry. A downturn or collapse in, say, the farm commodity market would not devastate the entire economy of Chicago the way that the collapse of the American auto industry destroyed Detroit. That said, there are certainly danger signs that bear watching, keeping in mind that if Chicago ever does go de facto bankrupt the entire State of Illinois would be dragged down with it (although a sovereign state cannot declare bankruptcy in the same fashion as a municipality).

  • Just to point out, the ratio of population of Chicago to its suburbs is 0.47. That for Detroit is 0.21. The dimensions of the Detroit municipality hardly transcend (if at all) the dimensions of slums of the Detroit metropolis as a whole. The homicide rate in the Chicago municipality bounces around a set point of 16 per 100,000. That for the Detroit municipality bounces around 40 per 100,000. The public schools in Chicago are appalling, but there are broad swatches of agreeable neighborhoods and many urban assets. Chicago needs a decent and capable human being in the mayor’s chair. Detroit needs a conservator. Two quite different situations. (Both would benefit from the creation of a metropolitan authority and a redistribution of functions between states, encompassing authorities like counties, and municipalities).

  • Dale Price lives in the area. I would be pleased to hear his take on this.

  • As I’ve long noted, Detroit exists so that Cleveland has some place to feel superior to.

    You know, though, Cleveland has was a punchline for Rowan and Martin. Detroit did not really hit the skids until the 1967 riots, although disquieting signs were manifest a decade earlier. By around 1976, the place was considered the country’s A#1 urban disaster.

    I recall that around 1987 Irving Kristol pulled up stakes and moved from New York to Washington. He offered that in 20 years, New York would look like Detroit, and he would prefer to spend his old age in more agreeable surroundings. New York chose the right future, and that you would not have expected.

  • Detroit’s population loss was second only to New Orleans, but N.O. has nature to blame.

    New Orleans has a homicide rate which exceeds Detroit’s by about a third (i.e. about 53 per 100,000). Keep in mind that the New Orleans municipality encompasses more than 40% of the New Orleans metropolis. Jefferson Parish, suburban to New Orleans, has a homicide rate of 10 per 100,000. The Detroit suburbs have a rate of 2.4 per 100,000. Police forces in Louisiana tend to be understaffed, but their judges are quite happy to incarcerate people. Prison admissions per capita are half again the national mean (though mean time served is about average). Louisiana has most years the highest homicide rate in the nation; something is seriously wrong with the culture down there.

  • “Louisiana has most years the highest homicide rate in the nation; something is seriously wrong with the culture down there.”

    Louisiana has the second highest rate of single parent homes (MS has the highest.) In some areas of NO and Baton Rouge the number of single parent homes is in the 80’s. This alone is sufficient cause for a higher crime rate.

    Throw in that the effect of single parenthood on delinquency increases as the number of single parents in the neighborhood increases, then I think we have a lead on a large part of the problem. For example, Baton Rouge has a high murder rate. Almost all of that is black on black crime in, if I recall correctly, three zip codes. These are all areas with 80+ per cent single parent homes.

  • Hmmm.

    I have had a look at the descriptive statistics for Louisiana. You have a background rate and then spikes at particular locales. The locales in question are New Orleans, Baton Rouge, Shreveport and three small towns (Bogalusa is one and the other two I forget). The excess over the background rate is far higher for New Orleans than for Baton Rouge and notably higher for Baton Rouge than for Shreveport and the three towns. (Shreveport has what would be a normal inner city homicide rate most places up north).

    In New York, the background rate is between 1.3 and 2.8 per 100,000 and you see the spikes in dodgy inner city neighborhoods all over the state (worse Upstate than Downstate). That pattern is repeated in Louisiana. It is just that your background rate appears to be about 9 per 100,000. A post-industrial mess like Utica has a homicide rate on a par with what you would expect to see in the generic suburban or countryside locale in Louisiana.

  • To hear my (now 84-year-old) father tell it, when the family lived in NOLA back in the early 60s, there was no 9th Ward to speak of. It was a swamp (like what it’s right next to now) which was drained under LBJ’s Great Society in order to ship in Democrat voters.

    Little wonder the residents have stayed away in droves – the machine used them for a generation-and-a-half but utterly failed them when the tables turned.

It Is An Ill Wind

Saturday, April 14, AD 2012


Hattip to Instapundit.   As faithful readers of this blog know, I am, for my sins no doubt, an attorney.  My bankruptcy practice has grown 20-25% each year of the Obama administration:


Tax refunds being used to pay for bankruptcy filings. “More than 200,000 money-strapped households will use their tax refunds this year to pay for bankruptcy filing and legal fees, says a new study by the National Bureau of Economic Research.”

Continue reading...

6 Responses to It Is An Ill Wind

  • Former FDIC Chairman (was possibly the only competent person in DC since Bush left) has a modest proposal (Swiftian) in the Wa Post.

    She wants to end income inequality and stimulate the economy by providing to the American household the same loans Bernanke, Geithner, and Obama have been giving to Goldman Sachs, AIG, JPMorganChase, et al since late 2008.

    The Fed has been handing Trillons $$$ in basically interest-free loans to banks to spark the recovery.

    Ms. Bair suggests that each American household receive access to the Fed printing press by be granted a $10 million interest free loan.

    This way Main Street gets a piece of the action as well as Wall Street. And, no bureaucrats are involved.

    Makes as much sense as handing interest-free trillions to billionaire banksters.

    Tell me again why you voted for Obama . . .

  • Two of my daughters lost their homes and are now renting. One’s husband’s overtime was cut off. The other daughter’s job was sent to Japan (where their product was inferior because they did not know what they were doing) Now, she is making sandwiches in a Seven Eleven while trying to put her children, my grandchildren, through college. The bank refused to take the key to the house back, leaving her with a mortgage forever. My son and the famly all helped. Her house was sold, but there was only so much we could do. Do not let Obama tell anyone that the stimulus package was anything but to get him reelected. Obama is pretty sure of being reelected, but not with my vote.

  • Obama is pretty sure of being reelected,

    How so?

  • Art Deco: I am doing everything possible to ensure FREEDOM.

  • Middle class manufacturing jobs have been going overseas since the ealry 80’s.
    We started loosing jobs well before Obama came into office. It’s not him nor was it Bush. It’s the rules that allow the highest top 5% to run things the way it benefits them. Corporations have been getting breaks long before Obama and we were not getting those breaks before him either.
    We need strong middle class and a viable third political party.
    We can’t spend $trillions on poorly strategized wars that provide no clear winners and expect the economy to shine. It’s all of us – keep buying your goods from overseas, but keep complaining about the economy…my car was made in Indiana…how bout yours?…what percentage of durable goods in your household were built in America?
    Our policies stink and are counter to growing a strong middle class. Don’t need a president for that.
    We need to generate the political will to make the changes required. The republicans have the house, but what bills have they produce or gotten into law that help the middle class? This shouldn’t be us vs them…it should be how we are going to get together to solve the root causes of the problems you’re all complaining about. Certainly Mitt isn’t the answer…

Hard Times and Bankruptcy

Wednesday, January 6, AD 2010

Hattip to Ed Morrissey at Hot Air.   As regular readers of this blog know, I am, for my sins no doubt, an attorney.  I was examining the year end stats for my practice, and I noticed that the legal fees I derived from my bankruptcy representation of creditors and debtors almost doubled in 2009 over what they were in 2008.  Therefore, I was little surprised to read that bankruptcies were up 32% in 2009. 

U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted, an Associated Press tally showed Monday.

The AP gathered data from the nation’s 90 bankruptcy districts and found 1.43 million filings, an increase of 32 percent from 2008. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.

Continue reading...

2 Responses to Hard Times and Bankruptcy

  • “I am, for my sins no doubt, an attorney.”

    No, I’d say other people have to hire you because of their sins.:-)

    You do get a close-up look at the 7 Deadlies on a regular basis – I’m not sure how lawyers can avoid becoming deeply cynical.

  • “I’m not sure how lawyers can avoid becoming deeply cynical.”

    In my case Donna, because of a fairly robust sense of humor. I can see the humor in most situations, although admittedly that can sometimes be fairly dark humor.

2 Responses to Pension Wipeout

  • It is GM times 100,000. The tick tick tick under most local and state governments. Given the fact that at least a dozen states have publicly displayed their financial distress- CA, NJ, NJ, MI, others- root through the financial records and you will find this potential mess. Now switch to Washington and the administration of the Ponzi scheme that is Social Security. Which many experts will claim goes kablooey on or around 2016. You have a potential crisis that makes the current kerfuffles look trivial. Watch the next four to five years. There is radical change underway in virtually every major American institution. It is what Phila. Mayor Michael Nutter faces during his current round of community meetings to explain the $108 million tax revenue shortfall and why their neighborhood libraries, pools and rec centers will close. How ironic. Just before the Great and Handsome Apostle of Big Gummint assumes the Presidency, the Era of Big Gummint is coming to a screeching halt.

  • Quite right Gerard. I used to jokingly tell people that my retirement plan was to be carried dead from behing my desk at 85. Now I fear that my retirement plan may become a reality for many.