Detroit seems to be the first major city to head down the municipal road to hell. As I have noted before I think Meredith Whitney is correct, but early, on her municipal bankruptcy econogeddon. Looks like it will start at the city level and then topple either counties or even states before it plays out. Ultimately it will destroy the Federal finances unless a line is drawn and someone says “Drop Dead” and forces a city, county or state to straighten up and fly right. Gerald Ford was absolutely correct to do what he did wrt NY State in the 70′s. Btw he didn’t really say “Drop Dead” IIRC that was the NY Times headline. What he did say was that it was not the rest of the country’s obligation to bail out mistakes made by any given state. Best thing Ford did as President. Because of course NY did get its act together and, with some setbacks (Dinkins being a major setback), it prospered. Bloomberg may be a nanny statist (to be nice, some may call him a fascist but I think he just has tendencies, unless of course he comes out of the closet that way, which he is close to doing [Bill may disagree about that and he just may be right, but that may be another canary to study]) but NY is still in better shape than other Blue States. Barely
I called Japan and California as the states to lead the popping of the gov debt bubble. Some may disagree and cite some European sovereign or some other Blue State ItAintAHellHoleBecauseWeAreProgressiveandHaveCulture State. You may be right. I’ll stick with my calls for now, even though Detroit seems to be the Greece of Michigan today.