Bankrupt Cities

I was thinking more about the number of cities that have gone bankrupt in the last 5 years or so in the U.S. The primary cause of these bankruptcies is pension plans that were unrealistic always for city employees. In Good times they were feasible but in bad times obviously they were going to bankrupt ANY city. In order to keep various unions of city employees happy many promises like this were given backed up now by Federal and State Laws protecting the rights of Employees of cities, states, and Federal employees. (Let's hope Federal and State Laws become more realistic about this before we see states and even the Federal Government going bankrupt on these programs as well.

The point is not that the city, state and Federal Employees don't deserve these benefits. That's not the point. The point is that money has to come from somewhere and when it dries up in a crisis like "The Great Recession" or another "Great Depression" because banks still aren't regulated in a way to prevent something like this with something like a Glass-Steagle Bill:

Glass–Steagall Act - Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Glass–Steagall_Act‎

The Glass–Steagall Act is a term often applied to the entire Banking Act of 1933, after its Congressional sponsors, Senator Carter Glass (D) of Virginia, and ...

‎Gramm–Leach–Bliley Act - ‎1933 Banking Act - ‎Carter Glass

Until we have another Glass-Steagall Act (or something like it) expect cities to continue to go bankrupt all across the U.S.

Also, until cities and states are more realistic about the benefits they give retiring emloyees cities will continue to go bankrupt too.

States and even the United States have to watch out for pension plans too. The U.S. Government still has the FED with the power to just "print money" as a way to get out of bankruptcy for it. However, the states don't have that power so at some point we might see either really high taxes in some states or just see states going bankrupt too.

The way things presently are the biggest cities so far to go bankrupt in the U.S. are Stockton in California and Detroit in Michigan. Stockton's housing prices dipped too far too fast and drove Stockton into bankruptcy and in Detroit car manufacturing moving away combined with catastrophic drops in property values eventually created it's demise economically.

States and the Federal Government cannot step in to save cities because there are still hundreds more that might go bankrupt over the next 10 years or so. So, it is cost prohibitive for states and the Federal Government to step in to save cities. Besides, without reorganization that guts pensions plans all cities would eventually go bankrupt because of this as well because of all the economically unrealistic promises made. Like I said, it's not that people who work for cities don't deserve these pensions, it is that it is economically impossible to follow through on them for any city long term when bad times hit property markets.

It is very strange to me that cities are going bankrupt now but didn't during the Great Depression. We need to study more about what cities are doing wrong to survive good times and bad. I think as cities become aware of what they can and can't survive long term they will change the ways they do business in regard to their employees retirement plans and benefits.

Another sad part of this is cities going bankrupt often take out hundreds or even thousands of businesses that do business with the city both directly and indirectly. Sometimes these businesses ONLY do business with the city and so have no choice but to go bankrupt when cities do. Also thousands of people lose their jobs when cities go bankrupt too. So, it is often a chain reaction that destroys thousands to millions of lives both directly and indirectly and also contributes to the group malaise of that area and also causes crime to increase in areas where cities go bankrupt.

I think if more studies are done on this and the research applied correctly cities can learn to be more disciplined in their quest for survival long term. This will save thousands of lives and businesses long term and possibly contribute to a much higher sense of well being for all of the U.S. in general.