Detroit Faces Imminent Financial Crisis
Michigan Live reports Detroit could run out of cash in December, plan must include layoffs
Bing is expected to discuss a confidential Ernst & Young report obtained by the Detroit Free Press that suggests Detroit could run out of cash by April without steep cuts to staff and public services.
That’s a grim prognosis, but according to Brown, the city actually could be unable to make payroll “as early as December.”
“I know the report says April, but there are certain risk assumptions that when you take those into consideration, worst case scenario you could run out (of cash) in December,” Brown said this morning on WJR-AM 760.
In his speech tonight, Bing is expected to propose privatizing the city’s public bus system and lighting departments, both of which have been failing residents but reportedly cost them $100 million a year in subsidies.
Expect to see more stories like these, just as I have said for years. Many major cities are walking dead including Oakland, Miami, Cleveland, Houston, Los Angeles, Newark, and quite frankly too many to list. Public unions, untenable union wages and benefits, and prevailing wage laws coupled with politicians buying votes of public union members are to blame for most of this mess.
Bankruptcy, huge clawbacks on public union benefits, scrapping of all prevailing wages laws, and the end of all collective bargaining of public unions are the solutions.
About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.