It is official. Detroit is bankrupt. Detroit is not only bankrupt they can now trash pensions owed to city workers. That is police, fire, hospital and a host of workers counting on those pensions for retirement. The U.S court ruling allows for a bankruptcy type for cities and towns, Chapter 9, to proceed and specifically puts pensions on the fair game bankruptcy chopping block.
Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them.
Remember when all said those GM bail outs were not worth it? Remember when we said give them the money? Well, finally we're seeing some payback, which one sure cannot say about the Bank bail outs.
When the first generation of historians begin their work on the Obama Administration, one of the more puzzling chapters will be the winter of 2010, when a major sea-change occurred in public policy that neither the administration nor the media were particularly eager to spend that much time trumpeting - namely, the revival of industrial policy after forty years or more beyond the pale of the Conventional Wisdom, as demonstrated by the success of the American automotive industry rescue.
While we wait for that generation of historians to get started being born, we can at least begin to learn some lessons about how and why the Big Three rescue worked when other industry bailouts have been such miserable failures.
One topic no one mentions in the Detroit Bailout controversy is all the offshoring that has been, and still continues, in the auto industry. GM just announced new plants in Brazil, Russia and India, coinciding with plant closings in America.
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