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Murphy’s Rules In Detroit

Murphy’s law states that anything that can go wrong will go wrong. It might as well be called Detroit’s Law because it’s a perfect way of describing the city’s fiscal situation. Detroit is currently on track to run out of money at the end of the year. Michigan promised some much needed cash relief, but only if Detroit can convince the state it has its fiscal house in order. An important step would have been to appoint a legal firm that could help with its financial stability agreement. Detroit’s mayor David Bing supported this move, but the city council voted against it. Now January is fast approaching, and Detroit looks farther away than ever from giving Michigan the reassurances it needs. Reuters reports:

Detroit’s fiscal clock is ticking down again as the city faces running out of money by the end of the year unless a political squabble between the mayor and city council can be resolved.

Without a resolution, the state of Michigan will not release cash to keep the city running. Mayor Dave Bing, who contends that bankruptcy or bond defaults are not on the horizon, is prepared to put city workers on unpaid leave to keep the struggling local government operating.

Credit rating agencies are warning that political and legal obstacles could derail plans to get Detroit back on solid financial footing. Moody’s Investors Service last week pushed the city’s credit ratings deeper into the junk category and warned of a heightened risk of bankruptcy or default over the next year or two.

We’ve often noted that Detroit and California are textbook cases of blue model failure. The blue model not only gets cities and states into serious trouble; it also makes it harder to make changes when they can no longer be postponed. Detroit suffers from a lot of problems, including serious political corruption that makes good governance almost impossible. But its biggest problem is the failure of political imagination. As apocalypse looms, the politicians don’t seem able to change the behaviors that have brought the city to the brink.

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