As many of you have no doubt heard, Detroit recently became the largest US city to file for bankruptcy.
After decades of decay and decline, this watershed moment came as no surprise. But it should still give us pause as we consider the implications of where the US is and where it is headed – and what actions we need to take to protect ourselves through internationalization.
The fiscal position of the US government on all levels is desperate. As cities, states, and the federal government all approach a point of debt saturation, it is only prudent to expect higher taxes and more money printing. Cutting any meaningful amounts of spending is seemingly politically impossible.
Detroit will most certainly not be the last US city to find itself unable to cope with an insurmountable level of debt. Other dominos will fall, especially if interest rates continue to rise to historical averages.
As Jeff Thomas details below, one possibility is that the financial problems of Detroit and other bankrupt US cities will be advantageously transformed by politicians into social issues, rather than economic ones. And as a result, the US federal government could institute a sort of "No City Left Behind" bailout policy.
Detroit is just the latest in a long string of warning signs.
As the US government becomes more desperate, the window of opportunity to take action to protect yourself will no doubt become smaller and eventually close. You want to be sufficiently internationalized before that happens.
See you on Wednesday for the International Man Weekly Update,
Solving the Detroit Crisis
By Jeff Thomas
For Americans and, even for those of us who are not American, the bankruptcy of Detroit is a milestone event. The way in which the crisis is handled may well set the stage for how the US will handle subsequent municipal crises. In so doing, it may, in part, define the future of the US as a power.
It is no secret that many countries in the world today are facing fiscal collapse, and it is entirely likely that, prior to entire countries collapsing under the weight of their debt and governmental over-reach, individual cities may well fall first.
For almost all concerned, the overall discussion that takes place in the world prior to any decision by the US government will be based upon the question, "What is the best solution to stabilise Detroit and, hopefully, return it to a recovery of some sort?" And, of course, this will be the question that will be foremost in the media. Conservatives and liberals will then chime in, arguing back and forth as to what the appropriate immediate and long-term solutions are.
However, this is not what the Federal Government will do. They will, of course, state that their objective is the same as that expressed by the general public, but this will not be so.
As difficult as it might be to do, it is essential in understanding governments to recognise that they do not have the same priorities as their citizens.
Their primary concern is the maintenance and expansion of their powers. The well-being of the voters is secondary at best.
Taking that into account, the question that should be asked is not, "What is the best solution to stabilise Detroit and, hopefully, return it to a recovery of some sort?" The question to be asked is, "What will the US government determine serves their interests best with regard to the Detroit crisis, whilst appearing to be acting in the country's best interests?" If we look at the problem the way the US government does, we are more likely to accurately predict what their "solution" will be.
First, a general assumption:
Detroit, gutted of its major corporations, is no longer viable as a major city. The decision as to what is to be done about Detroit will be channelled into a social, not an economic, question. The fact that Detroit is not truly salvageable will be of little concern. It will be bailed out regardless.
As the US government is presently speeding up the transformation of the US into a collectivist state, it is safe to expect that, whatever decision is made regarding Detroit, it will reflect the "need" for greater collectivism.
Conservatives will likely argue that the unions need to back off, to allow new jobs to be created for those presently on entitlements. This will be unworkable, as it will not provide any short-term solution. In addition, it is disingenuous, as the jobs that have gone overseas will never be coming back, as US autoworkers are paid far more than their foreign counterparts – a gulf that cannot be bridged.
Liberals will have what will seemingly be a more sensible solution: a national bailout for the city. Whilst conservatives will argue that this will open the door to other cities declaring bankruptcy, the collectivist goal of the government will win out. Just as a collectivist-aimed Republican government passed the "No Child Left Behind" Act in 2001, so the present collectivist-aimed Democrat government will institute a national "No City Left Behind" policy.
Such a policy will not be economically practicable; however, it will be instituted regardless, under the reasoning that no city and its citizens can be disenfranchised in a country as great as the US.
Conservatives will, of course, be proven correct that Detroit will be only the first major city to seek a bail-out, but their objections will be fruitless.
In fact, it is not only possible, but likely, that, once the concept of "No City Left Behind" transforms public perception of a Detroit from municipal redundancy to humanitarian necessity, the door may be further opened, not only to other major cities, but to entire states.
As Rahm Emanuel famously stated, "Never let a good crisis go to waste."
Detroit may be used by the Federal government to establish the necessity to nationalise any crisis. (In 2009, it was a company – General Motors. In 2013, it may be an entire city: Detroit.) Having established government as the "solution" to fiscal failure, it should not be too much of a stretch to regard entire states as candidates for take-over by the Federal Government.
Along with states submitting to being nationalised, it will be declared only reasonable that they give up their states' rights; however, this minor detail will likely be revealed only after the takeover.
Cities that are no longer viable die. This is not a pleasant fact of life, but it is nevertheless a fact. Countries that become governmentally top-heavy also die. For the US to take on the burden of a debt ridden city or state will serve only to speed up the present process of national deterioration and eventual fiscal collapse. This process is now well-along, and we shall, in the not-too-distant future, see this come to pass.
Like a snake that eats itself, the stupidity and short-sightedness of this concept is undeniable, yet it happens. Governments that are in their death throes almost invariably attempt to gorge themselves on power and control, even as they are dying.