Wednesday, April 7, 2010

Detroit must go bankrupt

The CRC has released it's report on the fiscal condition of the city of Detroit.You can read it here.

The state of Michigan certainly can't bail the city out and the feds aren't going to pony up the money either.Besides,this would be the worst possible outcome.Just as it was with bailing out the big banks in 2008.I am certain that this country could be well on it's way to a true economic recovery if we hadn't.The fallout would have been more severe in certain segments immediately after letting those banks fail.However,the recovery would be real afterwards rather than the false recovery we are now seeing.

Detroit is in that same position.The fiscal policies of the city must be thrown out to allow any reorganization to have a chance at success.Everything about the way the city does business needs to be overhauled.The unions will heavily protest it because they stand to lose the most.However,a new budget based on tax revenues that will continue to shrink for several more years is the only thing that makes any sense.

If you don't do this now and simply try the standard old,band aid approach,the city will never survive.Just throwing some more money at it won't work.The citizens of Detroit will hopefully realize that this is their one and only chance to get this right and have any hope of resurrecting the city in the future.More to come...

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