Career Calling

August 6, 2013

An Expert Explains Detroit’s Bankruptcy

Ellen Brown writes at the blog Web of Debt.  She probably understands the American economy and what is wrong with it as well as anyone, including Paul Krugman.  Writing in Common Dreams, she turns her critical eye to Detroit and who will win in the bankruptcy.  Brown points out that the city’s debt to banks are based on “swap” rates that favor the banks in the case of debt.  Further, the rates are based on LIBOR ratings, which were manipulated.  So did Detroit go bankrupt, or was it set up to fail by the people who are first in line to liquidate assets?

Brown goes on to examine the possible fall out of a Detroit bankruptcy.  Many cities and counties have problems similar to Detroit.  The formula seems to be:  Burn the workers to pay the bankers.  Brown presents an alternative:  Why not have a Bank of Detroit, a proposal first made by Virg Benaro in his run for governor in 2010.  North Dakota has had a bank for many years, and it does not need to ask for credit, especially time bombs likes the “swaps” used to finance Detroit.

Ellen Brown is great.  She understands that the banking system works too often to hurt the economy of main street.  In advocating for local governments to run their own banks, she pushes against the momentum to privatize public assets.  The problem is that many politicians, especially Republicans, worship what they call a “free” market.  They will not listen to any kind of argument for public investment or common good.  Voters need to dig deep and see that if we keep giving in to nonsense stories like the Detroit bankruptcy, the only winners will be the people who have been winning big for the last 30 years:  Bankers.

P.S.  On a positive note, Brown has a blog post that discusses San Francisco’s attempt to launch a city bank.

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