‘Richard Larkin at Herbert J. Sims & Co. said there’ll be “hell to pay” for local bond issuers because of the default.
“It will certainly affect all the debt of struggling governments in Michigan, if not nationally,” Belle Haven’s Lowin said.’
Someone’s gotta pay for it. More here from Reuters by Cate Long:
‘Detroit Emergency Manager Kevyn Orr predicts that the chances of Detroit entering bankruptcy are about 50/50. But if we consider what the major participants, bondholders, public employees and retirees are likely to do, it’s almost 100 percent certain that Mr. Orr will be entering the federal bankruptcy court house on West Fort Street in Detroit.’
The bondholders will have to fight for as much as they can, as folks are stripping Detroit for anything of value, much like the abandoned and dilapidated houses inside city limits.
Detroit has a richer history, but since the auto and industry boom, and I’ve heard partly due to the Model Cities Great Society programs, it’s been downhill ever since.
The Bay Area had a tech boom, finds itself in sunny, dreamy California, but there are some common threads. From Michael Lewis’ article about California politics, here’s Chuck Reed, mayor of San Jose:
‘The problem, he explains, pre-dates the most recent financial crisis. “Hell, I was here. I know how it started. It started in the 1990s with the Internet boom. We live near rich people, so we thought we were rich.” San Jose’s budget, like the budget of any city, turns on the pay of public-safety workers: the police and firefighters now eat 75 percent of all discretionary spending.’
‘There’s a corruption here. It’s not just a financial corruption. It’s a corruption of the attitude of public service.”
Addition: Obviously, this goes deeper than a partisan or ideological issue, and is indicative of larger changes going on in our society, due in part to technology, globalization, and which our current politics won’t be able to entirely solve. It’s up to us, and I prefer free-market solutions, voluntary associations, and finding our way forward by keeping the pie growing.
Charlie LeDuff’s youtube channel here.
I tend to agree with Reason Magazine, that it’s cargo-cult economics to expect to build a train and then….profit, which California is still trying to do and Detroit wanted to do. Boondoggle time.
Hardly the time to be building new high-speed rail projects, eh, California?
Addition: A reader points out High-Line Park, that reclaimed former elevated rail-line in Manhattan which is actually quite well-done, and is bringing in revenue through tourism and re-development along its course. The word ‘community’ gets thrown around a lot in the video below, but I applaud the vision of those two guys who saw it through. NYC has tourism, trade, finance and private money enough and turn an abandoned rail-line into a park, not build an actual train in the hopes of generating revenue.
Addition: Hipster hope, artists, collectivists and small business types can’t save it either: A Short Culture Wars Essay-Two Links On Detroit & ‘Ruin Porn’
What about the popular arts and culture?:Update And Repost-From Grist.Org Via The New Republic Via The A & L Daily: ‘Getting Past “Ruin Porn” In Detroit’…A Few Thoughts And A Tuesday Poem By Philip Levine
GM is not a municipality, but good money got put in, probably after bad and it reeks of politics: From The Detroit News: ‘How The Treasury, GM Stock Deal Got Done’
Virginia Postrel At Bloomberg: ‘Detroit’s Van Gogh Would Be Better Off in L.A.’
Walter Russell Mead takes a look at the blue model (the old progressive model) from the ground up in NYC to argue that it’s simply not working. Check out his series at The American Interest.