Whence Detroit and Bankruptcy? In The Answer Lies the Solution.

Detroit’s bondholders and other creditors face enormous write-downs on debts owed by the City – huge financial losses that will devastate pension beneficiaries and others who own and depend on those claims against Detroit’s empty treasury.  However, there is a solution.  It’s big, it would likely produce enough wealth to repay the creditors 100 cents on the dollar.  It will also be extraordinarily controversial, because it’s private, it requires no taxes or federal bail-out money and hinges on wealth creation rather than wealth confiscation and redistribution.  The process that destroyed Detroit can be reverse engineered to take the city back from the political power-players who wrecked it.  In the right hands, Detroit is a gold-mine!

Detroit was once a great city because it was occupied by free men and women who built a community as a means to sustain and accommodate their lives, personal and commercial.  Incidentally, and much later they formed a governing body, and unfortunately over time ‘City Hall’ morphed into an entity with its own “life” with demands separate, independent and in competition with those of its constituents.

Eventually, it began to use the power to tax to accumulate the funds needed to ‘feed the hungry’ and to buy (i.e. confiscate from private hands) billions and billions of dollars worth of artwork, transit systems, museums, sports and entertainment venues, and on and on – assets that could be exceedingly valuable in private hands, yet are moribund in the custody of a non-economic actor.  Consequently, they require additional, ever-increasing inflows of money for their maintenance and operation – not to mention funds for food, staff, offices and limousines for the mayor and thousands of functionaries.  All of that unproductive government activity is funded with tax dollars until the voters catch on, and then the golden goose leaves town.  Then begins the borrowing, borrowing and ever more borrowing (sounds familiar?). . . until there’s a sucking sound that takes the form of a Chapter 9 bankruptcy.

In time, America’s CURE will share its plan to reconstitute Detroit.  Rather than subsidizing it, all Americans will be offered a chance to own a part of the resurgence of that City and taste again the thrill of victory.  Then the fun begins, as we’ll apply the same plan to our nation’s $17 Trillion debt.