Frank Pasquale gets to the heart of it:

"If only Detroit were a big bank, Treasury officials would be working round the clock this weekend to save it. Alas, this city is no Citi. It lacks a "winning business model" (like lobbying and bonuses for key federal officials). So municipal bankruptcy is on the horizon."

It is always interesting to watch how the process of squeezing money from the least powerful happens so effortlessly and so loftily when "emergency" is declared. Pity the retired Detroit city worker who now faces the obliteration of promises made decades ago. No sanctity to that contract.

When GM hit crisis and went bankrupt for a time, the unions negotiated sharply lower salaries for workers. The claim was that it was essential in this emergency for the chokehold of union labor to be broken. The contracts had to be broken, it was, you know, like an emergency.

And yet, one can easily recall those days of emergency when AIG went bellyup in an entirely avoidable financial mess built on stupidity and greed at AIG (among other places). The word of the day from the Obama administration on down was sanctity of contract. The bonuses were paid in full. Like any profitable year, they were paid, only of course this happened when AIG had ceased to exist.

Detroit is clearly in an emergency situation. It is interesting to see which contracts will be the first that get sacrificed to the requirements of emergency.

Also will be interesting to see how many other major metropolitan areas would decline with the one-two punch of deindustrialization and slowing of military spending.


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