Shouldn't Detroit leave the dollar zone ?

[Hazir]

Isn't it clear that Detroit would be much better off if it introduced its own currency that would give it the ability to devalue itself out of the mess it is in presently? If they could print their own money they'd be competitive in no time and could be producing cars for the entire country again like never before.

[Dreadnaught]

Clever.

And I legitimately see some merit to the comparison. Though Detroit's bankruptcy is handled in federal bankruptcy court, and everyone's known that's been a potential endgame from the start. It also didn't just appear in the Federal government a few years ago.

Though I'm not sure even the anti-Euro folks here have specifically felt Greece should devalue its currency to get back afloat. My sense was they want Greece to (if they choose) devalue and live with the consequences of their stupidity.

[wiggin]

Ah, but the point is that the state and federal government have effectively taken over the city and are restructuring it, and damn the bondholders. None of this wishy-washy half-measures from a eurozone which believes Greece et al are sovereign. Detroit isn't sovereign, period. It has had a leader imposed nondemocratically, its debts are going to be summarily torn up (more or less; I imagine the federal court will give bondholders pennies to the dollar instead of some drawn out official bailout), and relatively large fiscal transfers from other parts of the state and country will shore up its budget - as much of the budget already is shored up, through federal/state safety nets (Medicaid, unemployment insurance, etc.), federal deposit insurance and a failed bank resolution mechanism, etc. There's also no statewide or federal political crisis over Detroit - it's more or less an isolated problem the rest of the country is fixing with little regard to some deep constitutional issue.

The point I and others have been making for years now isn't that the issue is with not having an independent monetary policy per se - it's having said policy without the attendant fiscal and regulatory framework found in, say, a federal system. Greece would never have gotten this bad if it was a state in the US of Europe. Personally I have no dog in the fight - Europe can integrate much more, or they can decouple monetary policy. But the current half-hearted integration is a recipe for disaster, and American economists have been saying so since the 90s if not earlier.

[RandBlade]

If there'd been a Detroit currency only 6 years before this blew up, and Detroit was its own sovereign country, and the rest of the USA was made up of sovereign nations that wouldn't deal with the issue, if it was the IMF and other nations dealing with the mess over years, if every American was like you not wanting their taxes to go to the nation of Detroit, if there wasn't existing major federal policies already up and running let alone able to be agreed, etc, etc ... then yes that could be a good idea.

Basically what wiggin said.

[Hazir]

Ah, but the point is that the state and federal government have effectively taken over the city and are restructuring it, and damn the bondholders. None of this wishy-washy half-measures from a eurozone which believes Greece et al are sovereign. Detroit isn't sovereign, period. It has had a leader imposed nondemocratically, its debts are going to be summarily torn up (more or less; I imagine the federal court will give bondholders pennies to the dollar instead of some drawn out official bailout), and relatively large fiscal transfers from other parts of the state and country will shore up its budget - as much of the budget already is shored up, through federal/state safety nets (Medicaid, unemployment insurance, etc.), federal deposit insurance and a failed bank resolution mechanism, etc. There's also no statewide or federal political crisis over Detroit - it's more or less an isolated problem the rest of the country is fixing with little regard to some deep constitutional issue.

The point I and others have been making for years now isn't that the issue is with not having an independent monetary policy per se - it's having said policy without the attendant fiscal and regulatory framework found in, say, a federal system. Greece would never have gotten this bad if it was a state in the US of Europe. Personally I have no dog in the fight - Europe can integrate much more, or they can decouple monetary policy. But the current half-hearted integration is a recipe for disaster, and American economists have been saying so since the 90s if not earlier.

It may surprise you but I actually do agree with you. Which makes it utterly funny that Randblade just stated the same

[RandBlade]

Not really as if you'd stop to think about it then we're not always that far apart in analysing the problem and the cure. The current mess is unsustainable, caught between two opposite horses. Either an independent nation doing what it needs to fixing its mess is needed - or an integrated federal nation doing what it needs to fixing its own mess (and accepting DetroitGreece as its own) is needed.

The difference between us is not in being able to identify the problem, its in choice of solution. I don't want a single integrated nation of Europe and don't accept Greece as my mess. You do want an integrated nation of Europe yet for some reason are not willing to accept what that entails as accepting Greeks and the situation as your own fellow countrymen that your taxes must resolve.

[Hazir]

Not really as if you'd stop to think about it then we're not always that far apart in analysing the problem and the cure. The current mess is unsustainable, caught between two opposite horses. Either an independent nation doing what it needs to fixing its mess is needed - or an integrated federal nation doing what it needs to fixing its own mess (and accepting DetroitGreece as its own) is needed.

The difference between us is not in being able to identify the problem, its in choice of solution. I don't want a single integrated nation of Europe and don't accept Greece as my mess. You do want an integrated nation of Europe yet for some reason are not willing to accept what that entails as accepting Greeks and the situation as your own fellow countrymen that your taxes must resolve.

I am fully willing to accept what federation entails. I am not willing to accept what federation entails without federation though.

In a new developement; the Detroit dominoes are making life difficult for other local governments (mainly neighbors of Detroit) to get their financing needs met.