Guest Article: Bailout Detroit?

Stein's Law
By Charles Krauthammer

"If there’s an iron rule in economics, it is Stein’s Law (named after Herb, former chairman of the Council of Economic Advisers): “If something cannot go on forever, it will stop.”

Detroit, for example, can no longer go on borrowing, spending, raising taxes and dangerously cutting such essential services as street lighting and police protection. So it stops. It goes bust.

Cause of death? Corruption, both legal and illegal, plus a classic case of reactionary liberalism in which the governing Democrats — there’s been no Republican mayor in half a century — simply refused to adapt to the straitened economic circumstances that followed the post-World War II auto boom.

Corruption of the criminal sort was legendary. The former mayor currently serving time engaged in a breathtaking range of fraud, extortion and racketeering. And he didn’t act alone. The legal corruption was the cozy symbiosis of Democratic politicians and powerful unions, especially the public-sector unions that gave money to elect the politicians who negotiated their contracts — with wildly unsustainable health and pension benefits.

When our great industrial competitors were digging out from the rubble of World War II, Detroit’s automakers ruled the world. Their imagined sense of inherent superiority bred complacency. Management grew increasingly bureaucratic and inflexible. Unions felt entitled to the extraordinary wages, benefits and work rules they’d bargained for in the fat years. In time, they all found themselves being overtaken by more efficient, more adaptable, more hungry foreign producers.

The market ultimately forced the car companies into reform, restructuring, the occasional bankruptcy and eventual recovery. The city of Detroit, however, lacking market constraints, just kept overspending — $100 million annually since 2008. The city now has about $19 billion in obligations it has no chance of meeting. So much city revenue has had to be diverted to creditors and pensioners that there is practically nothing left to run the city. Forty percent of the streetlights don’t work, two-thirds of the parks are shut down and emergency police response time averages nearly an hour — if it ever comes at all.

Bankruptcy, which will radically cut payments to bondholders and retirees, is the only chance to start over. Yet, if a Detroit bankruptcy succeeds, other cities will be tempted to follow suit. Dozens of other large urban areas have similarly massive pension and debt obligations, with commensurately denuded services and exorbitant taxes — leading to a vicious cycle of depopulation that makes everything worse. Detroit has lost more than 60 percent of its population since 1950.

The moral hazard increases if the federal government steps in to help. The Obama administration is therefore firmly opposed to any “bailout,” recognizing both the political toxicity of the word and the fiscal consequences of a Detroit precedent that invites other cities to line up with a tin cup. Washington cannot afford a nationwide federal bailout of insolvent cities.

However, under pressure from the public-sector unions, whose retirees will necessarily be victimized, the administration will likely offer “assistance” — which implies whatever kind of non-cash payments, indirect funds from other ongoing federal programs and enterprise-zone tax subsidies that it can get away with.

But Detroit is an object lesson not just for other cities. Not even the almighty federal government is immune to Stein’s Law. Reactionary liberalism simply cannot countenance serious reform of the iconic social welfare programs of the 20th century. Nancy Pelosi and Harry Reid are pledged to their inviolability. President Obama will occasionally admit that, for example, Medicare cannot go on as is, but then reverts to crude demagoguery when Republicans propose a structural reform, such as premium support for Medicare or something as obvious as raising the retirement age to match increasing longevity.

On the contrary. Obama added one enormous new entitlement (Obamacare) and, in his last State of the Union address, proposed yet another (universal preschool).

None of this is inevitable. In Wisconsin, Republicans showed that they recognize the perils of unconstrained government growth and will take on the unchecked power of government unions. Democratic Detroit, on the other hand, has for 50 years conducted a contrary experiment in myopia and the most imprudent passivity.

It doesn’t take a genius to see what happens when the entitlement state outgrows the economy upon which it rests. The time of Greece, Cyprus, Portugal, Spain, the rest of insolvent social-democratic Europe — and now Detroit — is the time for conservatives to raise the banner of Stein’s Law and yell, “Stop.” You can kick the can down the road, but at some point it disappears over a cliff."

Current Rasmussen Polls

Here's how American voters feel about several subjects:

• 17% Say U.S. Public Schools Provide World-Class Education
• 52% Think It’s Good NSA Domestic Spying Was Exposed, 23% Disagree
• 26% Say U.S. Heading in Right Direction
• 33% Rate Obama Administration’s Response to Zimmerman Verdict As Good or Excellent
• 62% Think Government Should Cut Spending to Help Economy
• 52% Think Zimmerman Jury Would Have Found Black Shooter Not Guilty, Too
• 17% Say U.S. Public Schools Provide World-Class Education
• 25% of all voters who Strongly Approve of the way Obama is performing as president and 36% who Strongly Disapprove.
• 32% rate the Obama administration’s response to the IRS’s targeting of Tea Party and other conservative groups as good or excellent

This sums-up their feelings. What about yours?

Remember Cyprus?

A few weeks ago a little place named "Cyprus" was capturing the attention of world leaders. Namely that government decided one good way to cover national debts was to STEAL money deposited in personal savings accounts. It is a fact that the government did take as much as 40% of personal savings from individual savings accounts. They gave no warning, had no right to steal, but did it anyway.

Can this happen in America? Who's in charge of our money? Congress delegated their responsibility of printing and coining money to the creation of the Federal Reserve Bank back in 1918 under the Wilson administration. We don't even know who owns the Federal Reserve but we do know that international banks are a strong influence over it.

The international banking community was paying close attention to the reaction to the Cyprus take-over of private savings accounts. Many Russian investors lost huge amounts of their money by having it in Cyprus banks. So much for protecting your investments.

Our Federal Reserve Chairman, Ben Bernanke, is building a huge stock market bubble. He along with Treasury Secretary Tim Geithner are working together to "Monitize" American debt. The net result is to devalue American currency, and cause inflation. That's bad for all of us and they just don't care.

Soon we can expect these people to pull the plug and cause the next crash. This one will make the Great Depression look like child's play. Bernanke has printed so many worthless dollars that there is no way we can overcome this fraud. Their solution to reduce American debt is to eradicate it totally by collapsing the monetary system.

Don't be fooled to believe that this will never happen. Look where we are today. This is the longest "recovery" in American history. Government statistics portray unemployment as 7.5 % but its more than double that figure. It takes more dollars to purchase groceries, gasoline, and all items that people rely on for their daily subsistence. We are NOT in a "recovery." Just the opposite. America is collapsing into itself. But the government will never let you think that because they tweak the stats to make things look better than they are. The charade continues until those controlling the $$ decide to pull the plug. That will erase our debt and solve that problem at the expense of the people who have savings.

Cyprus was the pilot test to see just how hard/easy that process of STEALING savings would be. Now the world bankers know it can be done and they WILL use it soon. The CRASH is coming. Hello "The New World Order."

Barry's World

Birds of a Feather

Not-So-Smart

Don't Give a Care

History Repeats

More Bad News From Detroit

Pensioners in Michigan are getting nervous about their own future and livelihoods. With the financial collapse of Detroit, Michigan many retirees may face a financial disaster of their own. The city of Detroit owes $19 BILLION dollars that it doesn't have. Just about half of that number is slated to pay for pensions and health care benefits for retired employees. The other half is owed to bond holders.

Kevin Orr is the new city emergency manager. He's telling retired police, firemen, city workers, and teachers that they will not see any cuts in their pensions or benefits for at at lease six months. THEN WHAT? Yesterday on TV Orr stated that the pensions and healthcare benefits WILL HAVE TO BE CUT sometime. He said "There are going to be some adjustments… We don't have a choice."

Part of Detroit's bankruptcy process is to sell-off some of its assets. This includes its international airport, Belle Isle, and other city landmarks. Let's hope they can do this and keep those pensions going as retirees expected them to do so.

The last thing about this situation is that the Federal government should keep out of this. Detroit put themselves into this situation for a variety of reasons. It should remain a LOCAL problem without Big Government interference.

Translated: NO MORE BAILOUTS! It's time to face the music.

Zimmerman's Solution

This is a no brainer. Acquitted George Zimmerman is facing a vigilante movement being spearheaded by HATE MONGER Al Sharpton. This is how Sharpton makes a living. He rebel-rouses uninformed minorities into feeling strong emotions against someone else. Call it for what it really is - HATE CRIME and causing Civil Unrest.

Even President Obama has joined the Anti-Zimmerman forces. Earlier this week, Obama said that He could have been Travon Martin 35 years ago. In addition, Obama has directed LIAR and perjurer Eric Holder to "investigate" this case for Civil Rights violations. So we know where the government stands.

Why isn't Sharpton labeled a "Domestic Terrorist" by the Department of Homeland Security? They along with FEMA label people who have more than three days of food and water stored at home as Domestic Terrorists and they don't even cause ANY uprisings! Why isn't Sharpton being charged for HATE SPEECH? Everyone looks the other way.

The Zimmerman Solution
Kill two birds with one stone. George Zimmerman should officially change his name to "Ben Ghazi." If he does so the Obama administration will run in the opposite direction and never pursue ANYTHING with "Ben" ever again. Obama will cover-up all references to the ex-Zimmerman, bribe or threaten any witnesses, and have Holder use his perfected stall tactics to ignore providing any information from the government about "Ben Ghazi."