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Sunday, July 21, 2013

A story of city failure - Detroit goes bankrupt

Striking story in today's Sunday Star Times about a story of city failure: Detroit where the city has declared themselves bankrupt. Billions of dollars in debt, mismanagement, population decline and loss of tax revenue are the factors identified.

This is catastrophic, cities should not fail in this way. What of course is not mentioned is that Detroit's economy was founded on a fundamentally unsustainable business, that of making cars.

Debt of course can be a positive, but is also a millstone around the neck of western countries who have used it to fund public goods.

Sobering lessons.

Photo courtesy of NYTimes.com

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