Hamtramck, MI is wanting to file for bankruptcy. Others are possible.
A very diverse group of people such as hedge fund guru George Soros, JPMorgan’s CEO, economist Nouriel Roubini, financial expert Meredith Whitney and Bill Gates warn that local government finances are embarrassingly defective, if not criminal or highly unethical, and that there are likely to be many local bankruptcies and many municipal bond defaults.
Detroit’s population has crashed 25% in the past ten years to the level it was 100 years ago.
This means, among other things, that people with money and therefore people who pay taxes won’t be around to tax anymore, making Detroit’s budget situation even more perilous.
“Governor Rick Snyder has signed a bill giving broad new powers to emergency financial managers appointed by the state of Michigan to run struggling cities and schools, including the ability to terminate union contracts.
“This problem is so serious across this state, more than 60 communities that are on a Michigan Department of Treasury special watch list. ”
Of course, the unions and their political allies are very upset about this.
Michigan has a projected deficit of $1.85 to 2 billion and a total debt of $69.4 billion.
Taxpayer obligations for pensions and health care for retired public workers are unsustainable. Major problem.
Privately employed workers have diminished paychecks and perks.
15% of all workers in the state are government workers whose pay and benefits have increased!