But as smart as these people are, they just can't seem to grasp a couple of proven scientific concepts.... the law of supply and demand and gravity.
Why gravity? Because just like gravity, you cannot continue to run a city with an annual 100 million dollar budget deficit and expect to pay off 18 billion dollars in committed debt. It's like being about to float in the air after eating a value meal.
The city of Detroit filed the largest municipal bankruptcy case in U.S. history Thursday, culminating a decades-long slide that transformed the nation’s iconic industrial town into a model of urban decline crippled by population loss, a dwindling tax base and financial problems.
Gov. Rick Snyder justified approving the historic filing by reciting a litany of the city’s ills, including more than $18 billion in debt, maxed-out tax rates, the highest murder rate in 40 years, 78,000 abandoned buildings and a half-century of residential flight. He said the city failed to provide basic services to residents or pay creditors.
The filing, which has broad implications for the nation’s municipal bond market and sanctity of public pension funds, was met with outrage, disappointment and a vow to fight. Some creditors adopted a war stance, threatening a prolonged battle. Others accused Emergency Manager Kevyn Orr of failing to negotiate in good faith — an essential requirement for approval of a bankruptcy petition — during his month-long push to secure concessions from creditors, including deep cuts to pensions.
“It’s war,” said George Orzech, chairman of the city’s Police and Fire pension fund.
OK. It's a war, but let me ask you a question. Will all those city pensions be paid in full? If you believe they can, refer to the gravity comment above.
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This is the canary in the coal mine for pensions and social security. Defined benefit pensions try to be rock solid with their payouts...to the point where they go into enormous debt to keep up with the promises of prior generations. They hang on, hang on, hang on. Never bending. But when they break, they break hard. Like an earthquake...wiping out the unlucky ones needing it most.
The concept of a giant social trust, funded by the masses, for the benefit of the masses, from which politicians can make promises of funds, and from which other agencies can quietly borrow from when they are short, is a disaster in the making.
How many more Detroits? How many more Califonias?
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