Democracy, Detroit and Dinosaurs !
As the nation-state came close to defaulting on its debts last week Detroit, Michigan - once with a population of 2 million people, famously known as 'Motown' is now down to just 700,000 and with debts of anything between $18 and $20 bn - had not only filed for bankruptcy but has also asked for protection from its creditors. The court case starts today. Now why does this matter? Well, if protection is given Detroit would not have to honour its pension payments to huge numbers of retired policemen and women, firemen and other public employees of the city. The repercussions are significant since Detroit is not the only US city without money as places such as Providence, Rhode Island and San Diego are watching on with nervous interest. At present counties and cities across the United States have $574bn unfunded pension obligations, in other words, no money to cover this long term financial commitment. Now you might ask how can cities within this most 'democratically developed nation' get to this position? Could we imagine London or Brussels going or being allowed to go bust ? I have a suggestion let us ask the donkeys, the elephants and the newly appointed dinosaurs to meet up, once again, on 'the Hill' and agree another increase in the debt ceiling so they can help cities like Detroit from defaulting. Seriously, this most recent development is not really about the demise of these once proud cities, but the effects this could have on hundreds of thousands of retired American citizens. Moreover, it offers more evidence that the US political circus, whatever its make up, is no longer representing a nation-state that continues to be under real economic stress.