- Detroit May Run Out Of Cash Next Month (ZeroHedge, May 13, 2013):
Another day, another US city on the brink of insolvency. This time it’s Detroit, whose recently appointed emergency financial manager Kevyn Orr said may run out of cash next month and must cut costs such as long-term debt and retiree obligations. According to Bloomberg, “Orr’s report says the cost of $9.4 billion in bond, pension and other long-term liabilities is sapping the ability to provide such basic services as public safety and transportation. He listed cutting debt principal, retiree benefits and jobs among options he may take. “No one should underestimate the severity of the financial crisis,” He called his report “a sobering wake-up call about the dire financial straits the city of Detroit faces.”
Funny, the above bolded sentence, because we have long since crossed into a stage where absolutely everyone is underestimating the severity of the financial crisis, which incidentally is long over if one listens to the broader media. As for Detroit, may we suggest the same medicine that the “expert economists” prescribe for every other instance of overlevered insolvency: just issue more debt. Surely with worthless Greek bonds soaring, there must be some Japanese investment funds that can’t wait to buy up all that paper on nothing but promises of untold riches courtesy of the endless carry trade that apparently can do no wrong.
Then again, Detroit may not be Greece: Continue reading »