Monday, July 22, 2013

Five Years After the Crash and Detroit

It's been five years since the US economy tanked and took Shearson Lehman Bros. with it. Of course, it almost took GM and Chrysler with it along with a number of national banks. Jay Carney says we've had 40 consecutive months of economic growth, but, unfortunately, no one outside Washington seems to have noticed that.

Three years into the "recovery", the reported unemployment rate is near 8% although no one really believes this figure accurately represents the actual number of adults and young adults unable to find work. The stock market fares well, thanks to the printing of $1 trillion annually by the Fed, but, again, no one rationally believes that the DJIA accurately reflects the health of American business' revenues and profits.

Now we have the city of Detroit, home of the American auto industry and the UAW, filing for bankruptcy protection because it cannot repay its $18 billion debt. I found it interesting that the UAW website has no comment on the city's filing, preferring instead to issue a statement on the jury's ruling in the Trayvon Martin case in Florida and commending the University of Michigan for offering in state tuition to illegal immigrants. I'm not sure more needs to be said here. After screwing GM bondholders and favoring the interests of the UAW, the Obama Administration has clearly cast its lot with the plunderers of Detroit and in return the unions have supported a Democratic, progressive agenda. But this is not "new" news: for the last sixty years the unions have uniformly supported Democrats and what they've gotten is Detroit. And Chicago, Philadelphia, Los Angeles, New York, Baltimore, Atlanta....

There will be no appetite whatever for a federally-sponsored bailout of Detroit; Jay Carney admitted as much today. But this story is far from over. The Obama-Reid-Pelosi troika has no oxygen without union support. It is difficult to conceive that the UAW, lodged in the Solidarity House in Detroit, Jim Hoffa and the cuddly Richard Trumpka, both headquartered in that union bastion of Washington, D.C., will not exert pressure on Valerie Jarratt to take some more visible action on Detroit. Let's face it: the words "Detroit" and "unions" can hardly be separated. Likewise, the words "unions" and "Democrat".

I think we know where this is going, and as soon as the Feds get behind some program of reorganization for Detroit, can other troubled cities be far behind?

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