Pay close attention because it may be coming to you soon, Los Angeles, Baltimore, Chicago, Philadelphia. —Charlie LeDuff
Is Detroit's bankruptcy a scary template or a freak show with little to teach us once we get beyond the grisly image?
The panic lens is popular. At the New York Times, Charlie LeDuff paints a dismal picture of his city and issues a stern warning:
"Pay close attention because it may be coming to you soon, Los Angeles, Baltimore, Chicago, Philadelphia. In 2011, Moody’s calculated the unfunded liabilities for Illinois’s three largest state-run pension plans to be $133 billion. (It is expected to be even larger this year.) That’s the size of six Detroit bankruptcies — give or take a few hundred million."
But beyond the pension crisis parallel, LeDuff offers few specifics to back up his dire warning.
More detailed is Meredith Whitney, the Wall Street prognosticator famous for having correctly called the 2008 financial collapse. In 2010, she predicted a wave of municipal bankruptcies, a wave that never hit, leading critics to contend that Whitney missed the mark.
"Nothing close to that level of muni bankruptcies has occurred," says Yahoo News, "to date, but ask yourself: Was Whitney 'dead wrong' on 60 Minutes, as her critics continue to claim, or just early?"
Is Los Angeles heading down Detroit's path?
“I think your city of Los Angeles is probably two to three years away from being in the same position that Detroit is where there is not enough money to pay the bills," California Pension Reform president Dan Pellissler told the Huffington Post in a video interview.
Relax, says Daniel Gross at the Daily Beast: Detroit is a mess due to a unique set of circumstances not replicated in any other state or city. With an economy based purely on cars, it had little ability to adapt when that industry declined.
Gross argues that Detroit is unique and that other states and cities have tremendous flexibility to adapt and that the most challenges jurisdictions are facing is growing their economies.
"The U.S. is not Greece," Gross writes. "California is not Greece. Detroit may be Greece. But it’s not America."