The Phaserl


Detroit, Facing Bankruptcy, Refuses to Pay $2.5B in Debts

from Silver Underground:

Detroit, Michigan used to be a symbol of American industrial might. Once home to a substantial portion of the nation’s auto industry, Motor City has slipped into economic free fall after decades of government intervention into the economy. Public sector union bosses have long pushed for unsustainable labor contracts for city workers, many of whom are planning to retire on pensions paid for by the city. However, those pensioners are now facing the prospect of only receiving ten cents on every dollar of their promised pay, as the un-elected city manager, appointed by the state government, just announced that Detroit will be defaulting on $2.5 billion worth of debts in an effort to stave off what could be one of the largest city bankruptcies in US history.

Despite this bold movie, allegedly aimed at keeping police and firefighters employed while the city faces a mounting $17 billion in debt, there’s still a serious chance that Detroit will have to file for bankruptcy anyway. With its population fleeing to other states in search of jobs, one of America’s former industrial giants is left in shambles. Detroit’s situation proves that when politicians refuse to cut the budget, the budget will eventually cut itself.

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