Thursday, July 18, 2013

Bankrupt Detroit Officially Ready to Downsize

Detroit has finally filed for bankruptcy.  Many years of population flight, an eroding tax base, excess civic infrastructure, and overpaid public employees have sealed the city's fate.  I discussed Detroit's condition one month ago.  The city simply did not have enough time to fix all of its problems before its bills came due, and no external rescue could have stabilized the city's finances.

Detroit is now free to nullify any city employee union contracts that burden it.  No city deserves to be a permanent hostage to union greed.  It is also free to implement its long-discussed downsizing plan.  I sure hope they take my initial analysis seriously and go for as much permaculture as space will allow.  The sad recent spectacle of Detroit fast-food workers agitating for higher wages was comedic.  Those folks won't be laughing once their fast-food joints are bulldozed for farmland but they will certainly be eating healthier.

I have no sympathy for any investor who bought Detroit municipal bonds.  The handwriting for bankruptcy was on the wall for a very long time.  Bondholders will get nothing.