Detroit’s Economic Crisis and the Role of the Banks: Part of a Global Crisis

person pilloried by dollar signNote: The following address was delivered at a public meeting organized by the Moratorium NOW! Coalition to Stop Foreclosures, Evictions and Utility Shut-offs on the role of the banks in the financial ruin of the city of Detroit. The event was held at the Central United Methodist Church on May 4, 2013. This gathering was co-chaired by Debbie Johnson and Andrea Egypt of the Moratorium NOW! Coalition.

Since late March the city of Detroit has been under a so-called “financial emergency” where right-wing multi-millionaire Gov. Rick Snyder designated Kevyn Orr, a bankers’ agent, to head this municipality in total contravention of the political will of people not only here but around the state. When the announcement of emergency management was made, the corporate media never bothered to mention that a large majority of people within Michigan had just voted against Proposal II which would have changed the constitution to ensure payments to the banks irrespective of the interests of the people of this area.

Public Act 436 is nothing but a legislative and executive mechanism to further impoverish, exploit, oppress and repress the people of Detroit and Michigan. There is nothing good in this new law, which was passed illegally as an appropriation’s bill so it cannot be overthrown through referendum, it will only result in even more damage being done to the city and the state of Michigan.

Let’s just take a quick glance at what the banks have done so far to the city of Detroit. Over the last census period some 237,000 people were driven from the city through predatory lending, utility shut-offs, the flight of jobs and repression by the state apparatus.

When the city loses residents it means that tax revenues go down and this inevitably results in a greater drain of resources for the payment of civil servants and the maintenance of municipal services like public lighting, public transportation, public schools, etc. The banks who evicted the residents of Detroit do not pay taxes on the seized properties many of which now are controlled by Fannie Mae and Freddie Mac who are deadbeat property occupiers themselves.

At present there is no viable or legitimate government running the City of Detroit. The current corporate-imposed Mayor and majority City Council voted to abdicate their authority to the state and consequently the banks which have ruined Detroit.

Just last month this same Mayor and majority City Council voted to hand over another $3.3 million to Jones Day law firm, a multi-billion dollar outfit that was involved in the much-championed Chrysler bailout in 2009. These forces, which are the enablers behind Orr, were part of the auto pre-packaged bankruptcy that led to the loss of tens of thousands of jobs, the slashing of salaries and the institutionalization of a two and three-tier wage structure and attacks on the eight-hour day.

Jones Day is being contracted to supposedly restructure the debt for the city. We know that whatever they decide to do will not involve the people of Detroit.

We also know that the type of restructuring they are talking about has nothing to do with the interests of the people of the city which includes the need for jobs, economic opportunities, housing rehabilitation, municipal services, the re-building of public education, public transportation, food security, the maintenance of our water system and other public assets.

It’s Not Just Detroit

The imposition of emergency management has been enacted in all of the major centers of African American population groups throughout the state. At present the African American people of Michigan are under dictatorial rule and corporate fascism.

In essence what the banks and corporations are saying through their agents in the state and local government institutions is that people of color and working people in general cannot govern themselves. Yet if we look at what the state has done to Detroit, Highland Park, Flint, Benton Harbor, Inkster, Ecorse, Muskegon, Pontiac, etc., it has only further driven down living standards and forced more people out of the cities.
This in fact is a nationwide pattern involving many municipalities from California to New York State. In Stockton, California, the city is currently in bankruptcy court seeking Chapter 9 relief from the banks and bond insurers.

The position of the corporate interests in Stockton is that there is no crisis—that the city has money to pay the banks first as opposed to addressing the decline in services and the threatened pension and healthcare systems for workers. This is also taking place in San Bernardino, California where they are also seeking bankruptcy relief from creditors and considering legal action against the state which is threatening to withhold tax revenue because the city government does not want to turn it all over to the bankers.

San Bernardino city officials are now facing a recall campaign that is being initiated by the business community. What these proponents of the recall are not saying is that the banks and bondholders are at the root of the crisis and not the local politicians including the Mayor and City Council.

Other cities and municipalities in similar situations that have drawn national attention include Jefferson County, Alabama, Providence, Rhode Island, Harrisburg, Pennsylvania, as well as several counties in New York State.

The municipal bond market is now a $3.7 trillion industry where the banks are holding the future of the cities hostage to their own economic and political interests. The same credit default swaps (CDS) that drove the housing industry and the overall economy into ruin are being utilized at greater levels within municipal finance.

These developments pose opportunities for greater alliances nationally to address the crisis of the cities. We must work to form a united front among municipalities that are being ruined by the economic crisis in the U.S.

This is a Worldwide Crisis

The crisis is just not limited either to the U.S. Europe, the second leading center of global finance, countries and their state structures are being driven into deeper depression.

Just yesterday in Portugal, workers went on strike in response to the announcement earlier in the week that 15,000 government employees would be removed from their positions. Unemployment rates are astronomical and austerity has been imposed for several years.

It is the European Central Bank acting on behalf of the other financial institutions that are at the root of this attack on public jobs and benefits. In Spain, Greece, Belgium, Italy, Iceland, Cyprus as well as France and Britain, public and private industry workers are being downsized, having forced salary and benefits cuts imposed and driven even deeper into poverty.

In Spain, like in the state of Michigan, the government changed the constitution in order to ensure debt payments to the banks. In Greece they have cut the pension payments to retirees many of whom now cannot afford to buy food.

In some of these European countries like Spain, the official unemployment rate is way above 25 percent. People are out of work or working without paychecks for months and totally dependent upon charities for handouts of food and other assistance.

These realities must inform our approach to the crisis in Detroit. The corporate media would have us believe that since we are Black that this is the reason behind our underdevelopment and impoverishment.

Racism is used in an effort to isolate and alienate us from the suburbs which are also facing a similar crises of foreclosures, cuts to public education, job losses and business closures. The federal government has totally abandoned the cities through the destruction of public housing, the failure to provide relief to victims of foreclosure, eviction, austerity, job losses and cuts in public services.

Consequently, we are on our own as the people. We must self-organize based upon our material and class interests. No other solution will bring benefits and results other than what we can do for ourselves.

The current crisis is a reflection not of the strength of the existing system but its weakness. Our organization can be the decisive factor in changing this scenario to benefit the majority of the people, the 99 percent, as opposed to the 1 percent, who are at the root of the crisis.

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