Municipal bankruptcy – via Mish’s Global:
Detroit’s financial picture is grim, but Mayor Dave Bing says a complete overhaul of city government by 2010 could help the city avoid the appointment of an emergency financial manager or the filing of municipal bankruptcy.
Bing said Thursday there are no more creative moves to make — those budgetary tricks were all tapped by previous administrations — and the city is up against a wall financially. The only answer, he said, is to change how the city functions.
The time frame is pressing — Bing said the city could run out of money by the start of the second quarter, Oct. 1 — if a $20-million to $25-million hole is not plugged.
“There’s a reality that we all have to live with, and the reality of the City of Detroit is that we are broke and we are in a financial crisis,” Bing told the Free Press on Thursday.
What is clear to Mayor Bing, among other things, is that the government workforce is going to have to shrink – either in numbers, pay or a combination of these two things. The unions, of course, are mindlessly opposed to this – I guess figuring that Obama will come to the rescue, when push comes to shove. This should not be counted on – a very large number of America’s municipalities are on the brink of financial disaster. Shrinking tax bases and rapidly rising costs of government employees (especially in the areas of health care and pensions) are putting cities, as Mayor Bing says, up against a wall. Obama will not be able to get a generalized State and local government bail out through Congress – there might be a one-time shot for some places, but most are going to have to sink or swim on their own…and a lot of them will sink.
The real problem here – for the economy and Obama – is that a very large proportion of the new jobs we have are in government or government-subsidized entities. Obama, naturally, will not cut off the spigot for federal jobs, but what the Obama gives with one hand, economic reality will take away with the other. Very rapidly now, government employees around the nation – high paid and living pretty good lives – are going to suffer pay cuts and/or job losses. With that will go the very last prop to home sales, car sales and investment. Expect another rise in foreclosures, another financial collapse as financial institutions have not put aside sufficient reserves for this sort of thing and, as it were, the “second dip” of our “double dip” recession (we’re still in the “first dip” – we might have allegedly positive growth in the fourth and first quarters which will officially end the recession; and just watch as the Obamaniacs proclaim their man a sheer genius over this…but such celebrations will be very short lived).
Our liberals will say that I’m just talking down the economy and hoping for disaster. I’ve reviewed this and come to the conclusion that I’d rather not have this happen – I work for a bank and am not prepared, at this moment, for a career shift. I’d like to keep this job at least in to 2010…but as time goes on, I think there might be a rather nasty lump of corporate coal in my stocking this upcoming holiday season. So, I’d rather we avoided this – but liberal polices up and down the line are tailor made for it. In fact, if you wanted to deliberately sabotage an economy, just following the Obama model would do the trick. Its going to happen, sure as night follows day.
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