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NEW YORK (
TheStreet) -- My apologies to
David Bowie for borrowing the title of one of his songs for this article. However, there is no better way to encapsulate the financial emergency facing this bankrupt shell.
What is a "panic"? It's when people behave irrationally in a crisis, generally due to either being in a state of shock, succumbing to some form of (mindless) "herd behavior" or both. In the case of Detroit, we are clearly dealing with the latter condition.
What makes Detroit such a significant case study here is not simply its size, but rather because it is well-known that the city is (was) a one-industry town. Specifically, "Motor City" got its nickname for being the hub of the once-thriving U.S. auto industry.
More importantly, as the city teeters on the brink of formal bankruptcy, we know what got the city to this state of ultimate crisis: the loss of its
tax base. We can establish this point not only on an individual basis, but also on a collective basis.
Individually, we have what has already been pointed out: the collapse of one industry in a one-industry town (state). More generally, however, when the financial collapse of Detroit is examined more closely, we see the same phrase crop up that we see in the chronologies of every U.S. city/state/municipality with serious financial problems: "overly optimistic revenue estimates."
The same governments who used to be able to make accurate revenue projections have not only seemingly and suddenly lost the capacity to perform this function. They all suffer from precisely the same (wildly) optimistic bias.
What is the more rational conclusion for us to draw in assessing this situation? Is it more plausible that once-sober bureaucrats from all across the U.S. all suddenly and simultaneously morphed into cock-eyed optimists? Or is it more likely that the data they have been given on which to base their calculations has become severely flawed? Garbage in; garbage out.
Specifically, the macroeconomic "statistics" being passed off on Americans (and the world) by the U.S. government have been demonstrated to be nothing but fantasy numbers. The mythical "job-creation" numbers from the Bureau of Labor Statistics can be proven to be fraudulent on
many bases; however, the most absolute proof was supplied by the corporate media itself: Job and wage numbers supplied by the BLS grossly overstate what the U.S. government is actually
taking in with tax receipts. The jobs don't exist.