Right, Left and in Between
What caused the financial downfall of Detroit?
Published: July 31, 2013
It took Rolling Stone magazine to zero in on another factor that’s largely being ignored in all the analysis of Detroit’s historic bankruptcy filing: the foreclosure crisis.
“Between 2004 and 2006, a full 75 percent of mortgages issued in Detroit were subprime,” reported Laura Gottesdiener. “By 2012, banks had foreclosed on 100,000 homes, which drove down the city’s total real estate value by 30 percent and spurred a mass exodus of nearly a quarter million people.”
Using information provided by the Detroit-based activist group Moratorium Now!, Gottesdiener pointed to information conveniently ignored by all those who want to blame Detroit’s economic crisis solely on corrupt politicians and liberal economic policies:
“Starting in the mid-2000s, foreclosures eroded millions of dollars from the city’s tax base. This shortfall forced the city to begin borrowing money from Wall Street by issuing municipal bonds in 2005. … As a result of a series of interest rate swaps and other financial acrobatics, the debt spiraled out of control. The city further shut down services to cut costs, which spurred even more people to leave — taking their tax dollars with them. In the last five years, the city lost $1.6 billion from declined property tax revenue alone.”
Also looking at the situation from the leftists’ perspective is Darwin Bond-Graham, writing for the publication CounterPunch:
“The piranha-like feast of the bondholders on the fiscal carcass of Detroit has been insanely unsustainable for over a decade, and most of the lenders realized the riskiness of their loans. Hungry still for every last morsel of social wealth, capital is maneuvering to ensure itself the best spot at the table. Mastication of Detroit’s pension obligations is one of the final rites of the ritual slaughter of a once-great city, a hub of global manufacturing and epicenter of multi-racial working class Americana. Motown is being ground down.”
Curt Guyette is Metro Times news editor. Contact him at 313-202-8004 or firstname.lastname@example.org
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