Merijn Knibbe — Fast population decline in Greece. Is it following the Detroit example?

Elstat has published new population estimates for Greece. And what happened to Portugal, Ireland, Estonia, Spain Latvia, Lithuania, Romania or Bulgaria is happening to Greece, too.…

Which is a problem: Detroit went bust because its population dwindled from 1.7 million to 0.7 million – and the city council wasn’t able to cut financial obligations (including pensions) to a level which could be sustained by this much smaller number of people. In may of these countries this process is aggravated by, very low birth rates.

Real-World Economics Review Blog
Fast population decline in Greece. Is it following the Detroit example?
Merijn Knibbe

Thom Hartmann — The Bankruptcy and Privatization of Detroit Is a Terrifying Preview of What Republicans Want to Do to the Rest of the Country

The Bain Capitalization of Detroit, perfected by Michigan "favorite son" Mitt Romney — load it up with debt, extract cash, and then sell it off piece by piece — just as the core is doing with the periphery in the EZ. Hey, "that's just capitalism" (read neoliberalism).

AlterNet
The Bankruptcy and Privatization of Detroit Is a Terrifying Preview of What Republicans Want to Do to the Rest of the Country

Thom Hartmann

Apparently, Shared Sacrifice Means Sixteen Cents on the Dollar [Detroit]

I have no idea what these retirees are supposed to do (boldface mine):

Allen and his colleagues are among 30,000 Detroit city workers, past and present, who are about to learn what will happen to their pensions and healthcare if the city is allowed to file for a historic bankruptcy – the largest of its kind in history…

The affected workers are owed about $3.5bn, in total, in pension payments, and another $6bn in healthcare benefits. The average Detroit pensioner gets $19,000 a year; a deal that gave 16 cents to the dollar would cut the benefit to $3,040.

Most aren’t eligible for Social Security either (they didn’t pay into it).

Mike the Mad Biologist
Apparently, Shared Sacrifice Means Sixteen Cents on the Dollar
(h/t Clonal)

Robert Johnson — The Real Story of Detroit's Collapse

State underfunds its pension system and puts the funds into corporate welfare. Then the fiscal scolds blame it all on poor people.

And not just Detroit. This is SOP.

INET
The Real Story of Detroit's Collapse
Robert Johnson

Marshall Auerback, Stephanie Kelton and L. Randall Wray — A Plan for All the Detroits Out There

MMT to the rescue. Pass it on.

Note that this plan is based on job guarantee but not the MMT JG in that compensation would be indexed so that the real wage would remain constant against inflation.

New Economic Perspectives
A Plan for All the Detroits Out There
Marshall Auerback, Stephanie Kelton and L. Randall Wray

Dirk Ehnts — The equity premium puzzle and the default of Detroit

Did the profession of actuaries by using the equity premium puzzle arrive at a “wrong” rate of return? If so, should not all plans be redesigned? How to do that, without causing an earthquake on financial markets? These must be unnerving questions for pension funds and financial sector firms in general. However, these should be questions to be discussed in the open, in newspapers and journal articles. The manipulation of the US stock market by the Fed might be legal, but as a result it should be clear to everybody that stock market prices are heavily influenced by the central bank and financial market regulation. Should the Fed have a goal for the Dow Jones? Should it just watch it slip down again after quantitative easing failed to increase economic growth and only succeeded in redistributing wealth?

Detroit’s financial problems leave us with urgent questions about the design of pension plans and the role of financial markets.

econoblog 101
The equity premium puzzle and the default of Detroit
Dirk Ehnts | Berlin School for Economics and Law

Juan Cole — Detroit's Collapse Reveals the Awful Dystopia that the United States Is Becoming

The big question is whether Detroit’s bankruptcy and likely further decline is a fluke or whether it tells us something about the dystopia that the United States is becoming. It seems to me that the city’s problems are the difficulties of the country as a whole, especially the issues of deindustrialization, robotification, structural unemployment, the rise of the 1% in gated communities, and the racial divide. The mayor has called on families living in the largely depopulated west of the city to come in toward the center, so that they can be taken care of. It struck me as post-apocalyptic. Sometimes the abandoned neighborhoods accidentally catch fire, and 30 buildings will abruptly go up in smoke.

AlterNet
Detroit's Collapse Reveals the Awful Dystopia that the United States Is Becoming
Juan Cole | Informed Comment | Professor of History, University of Michigan

Corpocracy: The Tyranny of Neoliberalism and Detroit's Financial Crisis

Abstract: 
The city of Detroit in 2013 is confronted with a financial crisis so severe that municipal bankruptcy may be the only viable solution. Racial mistrust unfortunately structures the political communication between political leaders in Detroit, the suburbs, and the state. Amid this contentious political climate of racial mistrust, allegations of mismanagement, incompetence, and corruption have been directed at the city of Detroit as causes of the crisis. The aura of racial mistrust makes it extremely difficult for city, county, and state officials to implement an equitable solution to the financial crisis. The most damaging aspect of racial mistrust is the obfuscation of the fundamental cause of the crisis. Building on the arguments of Wendy Brown (2003, 2006), Henry A. Giroux (2004,2005), and Michael C. Dawson (2012), we argue that the fundamental cause of Detroit’s financial crisis is the implementation of neoliberal fiscal and social welfare policies targeting the poor by chief executives and legislative elected officials in Washington D.C. and state capitals across the nation. This paper focuses on the Detroit’s financial crisis, and offers as an example, the policy solutions offered to address the thirty-five year federal government oversight of Detroit’s Water and Sewerage Department, to illustrate both the perils and challenges facing citizens and political leaders whom are opposed to the anti-republican nature of neoliberalism. The Detroit financial crisis is not merely an isolated local issue; it is a referendum on the duties and obligations of government toward its citizens. Will federal and state governmental officials become more responsive to the concerns of its citizens of color, or will elected officials continue to implement policies that elevate the political desires of the free market above those of the citizenry and transform American governance from an inclusive representative democracy into a corpocracy.

Corpocracy: The Tyranny of Neoliberalism and Detroit's Financial Crisis

Henderson Butler III and Ron Brown | Wayne State University

(h/t James in the comments)

Detroit on the block.

The idea is extreme, even in a city accustomed to fighting for survival: Should the state of Michigan step in to run Detroit?The governor has taken steps in that direction, proposing an unprecedented move that could give an appointed manager virtually unchecked power to gut union contracts, cut employee health insurance and slash services....

An emergency financial manager would have the power to privatize utility departments, as well as the bus system and other agencies. A manager also could sell off city-owned parking lots and even Belle Isle, Detroit's popular island park, LaFaive said.....

"It's daunting anywhere but, yeah, you can fix it," Schimmel said of Detroit. "First, I'd want a list of all assets the city owns — the land, buildings, operations the city shouldn't operate and should sell. The lighting system is still run by Detroit. That's crazy. I'd want to concentrate on privatizing core services. I'd want to get police and fire contracts in line."

 Read the whole article at CBS News
Detroit in a hostile takeover bid?

(h/t Mish)