Report: Detroit Could be Broke in One Week, Faces State Takeover

June 9, 2012

Detroit, once America’s crone jewel of technology and enterprise, and then the liberals came … Like every other foundation or thing that was good about America, and then the liberals came … to infest the place like rats. Now the Detroit “ship” is taking water so fast, even Obama can see … But would rather avert his eyes and NOT see…

Detroit could run out of cash in a week if a lawsuit challenging an agreement with the state to fix the city‘s finances isn’t dropped, the city’s new chief financial officer said Friday, raising concerns of a full-fledged takeover by the state.

“If our city runs out of money, there is no bigger crisis that we would have in our city,” Detroit Mayor Dave Bing said Friday morning, adding that his frustration level is “off the charts,” according to the Detroit Free Press.

Finance chief Jack Martin offered his assessment a day after the state treasurer’s office told city officials Detroit is at risk of losing $80 million in revenue sharing because of the lawsuit. He said the city will be broke by June 15. He said the city should be able to make payroll for employees, but it will be operating under a deficit.

Bing, who wants the lawsuit withdrawn, told reporters Friday that the agreement with the state could be violated if the city runs out of money.

America’s frustration level with our Ostrich Economics professor is equally off the charts, and gonna blow. Five trillion in new debt can have that effect on you, no matter how dense you are.

Deleveraging — Depression

March 13, 2012

Typically when you borrow money, it provides the borrower with ‘leverage’ … borrowing money you don’t have, against future payments you make to the borrowing entity. Think credit card.

A depression is the economic contraction phase of a deleveraging. It occurs because the
contraction in private sector debt cannot be rectified by the central bank lowering the cost of money.

What do you think is now going on with our fed?

A deleveraging is the process of reducing debt burdens (e.g. debt/income ratios). Deleveragings typically end via a mix of 1) debt reduction3, 2) austerity, 3) redistribution of wealth, and 4) debt monetization.

In depressions, a) a large number of debtors have obligations to deliver more money than they have to meet their obligations, and b) monetary policy is ineffective in reducing debt service costs and stimulating credit growth. Typically, monetary policy is ineffective in stimulating credit growth either because interest rates can’t be lowered (because interest rates are near 0%) to the point of favorably influencing the economics of spending and capital formation (this produces deflationary deleveragings), or because money growth goes into the purchase of inflation hedge assets rather than into credit growth, which produces inflationary deleveragings. Depressions are typically ended by central banks printing money to monetize debt in amounts that offset the deflationary depression effects of debt reductions and austerity. To be clear, while depressions are the contraction phase of a deleveraging, deleveragings (e.g. reducing debt/income ratios) can occur without depressions if they are well managed.

What do you think Obama is doing to us? Just because they don’t say, doesn’t mean they are not doing. Roaring economy, I think not. Rearranging the economy? You decide.

When government tries to get in the middle, say to redistribute wealth, things go bad. Government can no more pick winners and losers that they can redistribute IQ. Unless the policy of socialism — nudge, shove, shoot is in the final stage.

Currently our real unemployment is 19.1 % and our real inflation is 8 %. Doesn’t sound that healthy when you use real numbers, does it?  Sounds more Jimmy Carter like than healthy.

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