By: Eric Sprott and Etienne Bordeleau On July 18 2013, the city of Detroit officially filed for bankruptcy under Chapter 9. At $18 billion,
Nobody gets it!
That includes Sprott, the economists, politicians, bureaucrats and all the others in their respective supporting casts. Sprott points out that the government promised more than it could ever pay - what government doesn't? That aside, going through all the historical accounting, economic,finance and legal numbers and rhetoric does very little to identify the issues and learn what could have been done to avoid this collapse. Or to even find any remaining ways to salvage a situation, that is bound to get worse.
Detroit is not alone in this regard, there are many others out there. If fact, many of those entities are actually countries, who are following the now famous "Nauru Template." These nations include Greece, Spain, Cyprus, Italy, Venezuela, Egypt and many more. Defining that template is straightforward - it is an economic situation that is no longer sustainable because the available resources for economic production and consumption are diminishing rapidly to exhaustion, while populations remain constant or expand requiring the same or greater production for consumption..Not good math, as it leaves many folks ultimately desperate for a means of basic subsistence.
Outside the physical constraints, there were three obvious conceptual causes behind these collapses. First, the policy-makers and leaders foolishly continued to hang onto archaic mainstream economic doctrines that had no basis in reality
Two, they all failed to properly evaluate trends in physical resources, population growth, environment, competition and positioning for long-term activity, particularly as certain activities were predictably becoming obsolete. For instance, if their once physically based economy was shifting to a conceptually based economy - then how could these cities/nations build advantages to attract and retain these types of economic concern. Such advantages are complex taking years of dedicated effort to build and "most importantly" - do not bring politicians immediate rewards and votes.
That's the cost of doing the right things for the future - personal sacrifice!
Anyway thirdly, there was no longer-term business plan, strategy, nor a permanent central-economic board to oversee these strategies, plans and implementations, regardless of the political influences of the times. Random and in-cohesive actions and decisions have little chance of success.
Clearly, these situations are open to prime application of many common seafaring metaphors. The ones we recall sound like this: - No Captain! No Compass! No Destination!. Means? - NOBODY Gets IT!
INVESTORS' INSIGHTSFirst Financial Insights
September 11, 2013
Famous Statues' Motown Chorus:
“Nobody Got IT”
...shanna, na, nah, bee boop de loo..
