Bankrupting cities – the US’s new cut-and-run scheme

$18 billion – that is the cost of Detroit’s debt.

$18 bn – that is the cost of Detroit’s debt, as revealed on Thursday when the city filed for bankruptcy, setting a new record in the US. This figure is a gentle reminder of America’s inequality – consider, not only that 30 of the nation’s billionaires could single-handedly pay off Detroit’s debt, but the news comes amid a gloat of optimism in the US.

US jobs figures – the most scrutinised of monthly data in the world’s largest economy – has beaten all expectations in June, May and April (monthly payroll gains averaging 196,000). Other good-news data has encouraged Ben Bernanke, the US Federal Reserve Chairman, to “taper” quantitative easing and equities are topping unknown heights.

But all this means nothing for the citizens of Detroit, or at least those 78,000 who remain in the city, down from two million in its 1950s heyday. Along with the citizens of America’s other bankrupt cities – Stockton, Mammoth Lakes and San Bernardino – they are the dead weight that America must cut in her struggle to the surface of economic buoyancy.

The message is harsh, yet simple – economic recovery is not universal and struggling cities must pay for their own recovery. How many more American cities, then, will we see go bankrupt as the inequality spits ever further? And what if this US tactic caches on in Europe – could we see a bankrupt Nottingham or Liverpool? (Admittedly, America’s Chapter 9 bankruptcy is not quite as dramatic as "bankruptcy" in the UK).

For Detroit, though, this means many more years representing America’s blue collar bust; the demise of industry and the heartland of sub-prime mortgages, while the rest of the country gets back on its feet.  When asked by CNBC if Detroit’s bankruptcy will affect markets, Steve Brice, Chief Investment Strategist of StanChart replied “markets seem to shrugging it off quite significantly”. 

However, to end on a positive note, this filing completes Detroit’s fall from grace. Here on, things can only get better in America’s industrial heartland.  

Photograph: Getty Images

Oliver Williams is an analyst at WealthInsight and writes for VRL Financial News

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Russian pools, despatches from the Pole, and disagreeing with my son Boris on Brexit

My week, from Moscow to Westminster Hour.

With the weather in Moscow last week warm, if not balmy, I thought about taking a dip in the vast heated open-air swimming pool that I remembered from a previous visit. My Russian host shook his head. “That would have been the great Moskva Pool. Stalin actually tore down the Cathedral of Christ the Saviour to make way for it. But, after perestroika, they filled in the pool and rebuilt the church!” So I didn’t have my open-air swim, though I did visit the cathedral instead.

In the evening, spiritually if not physically refreshed, I addressed a gathering of Russian businessmen and bankers who were keen to learn what impact Brexit might have on the London property and investment scene, the UK being a prime destination for their money. We met in the old Ukraina Hotel, now splendidly refurbished and relaunched as the Radisson Royal, Moscow. A Rolls-Royce Silver Wraith was parked in the foyer, a snip at £150,000. “There is a great democratic debate going on in Britain at the moment,” I told my audience. “The issues are finely balanced. I’m for staying in. But on 23 June, the British people, not the politicians, not the tycoons, nor the lobbyists, will decide.”

I noted some uneasy laughter at this point. Russia’s fledgling democracy probably still has some way to go before matters of such moment are left to the people.

 

Culture club

I spent the next afternoon in the Tretyakov Gallery. A rich businessman, Pavel Tretyakov, collected thousands of items of Russian art (mainly icons and paintings) and donated both them and his magnificent house to the state in 1892. Over time, the state has added many more artefacts, including some from the vast storerooms of the Hermitage Museum in St Petersburg.

My guide, Tatiana Gubanova, a senior curator, had recently organised the loan of several items from the Tretyakov to London’s National Portrait Gallery, where they are currently still on display in the splendid “Russia and the Arts” exhibition. She said that she was looking forward to returning to London next year: “The Royal Academy is planning a special exhibition to celebrate the 100th anniversary of the Russian Revolution.” Whatever happens at the political level, it is good to know that our cultural links with Russia are still flourishing.

 

Heading south

Just before I left for Moscow, I attended ­Adrian Camrose’s funeral in St Bride’s Church, off Fleet Street. The scion of a great newspaper family, Adrian made his mark as the Daily Telegraph’s science correspondent.

In early 1984, I went to Antarctica with him. We shared a cabin on a British Antarctic Survey ship while it visited research ­stations “down south”. I was writing a book on Antarctica, subtitled “the Last Great Wilderness”, while Adrian sent a series of crisp despatches to the Telegraph via the ship’s radio-telex. Adrian’s dateline was “On board the John Biscoe, Antarctica”. Distant galaxies were Adrian’s consuming passion. I am sure he is filing stories from the spaceship Spacey McSpaceFace even as I write.

 

Green surge

As co-chairman with Baroness (Barbara) Young of Environmentalists for Europe, my life has been fairly hectic recently. I am sure it will get more so as the referendum day approaches. I know perfectly well that one of the reasons the invitations to speak or write articles ping into my inbox is the titillation factor. Are Families Divided on the Referendum? Is “Boris’s Dad” (that’s me!) going to Disagree with Boris?

Notwithstanding the family relationship, which I deeply treasure, the answer is “yes”. I am going to disagree. Boris and Michael Gove and other key members of the Brexit team have injected a wonderful level of vigour and energy into the referendum debate. They have raised issues, besides the economy, which needed to be discussed, particularly sovereignty, immigration and the EU’s general direction of travel. For this, the nation owes them a debt of gratitude. That said, I am convinced that this is not the moment to call time on the UK’s membership of the EU. As I see it, the best way to address the obvious problems is not to leave the EU but to “Remain” and to fight for change from within. In the end, this will benefit not just the UK but Europe as a whole.

 

Quiet no more

Last Sunday evening, I took part in the BBC Radio 4 programme Westminster Hour. My fellow panellists were the former work and pensions secretary Iain Duncan Smith and Baroness Smith of Basildon, formerly Angela Smith MP, now the shadow leader of the House of Lords.

We had a very lively and sometimes rowdy discussion. IDS is the “quiet man” who, since his resignation from the cabinet a couple of months ago, has regained his voice in no uncertain terms. Baroness Smith, a delightfully unpushy lady, sometimes found it difficult to get a word in edgeways. I don’t think I did so well myself.

But I did, I hope, make it clear that, from my point of view, there was still time to build on all that was good in the EU (such as its environmental record), while seeking common rather than unilateral solutions for the problems that persist.

On 24 June, if the Remain side wins, the government should go into action in Europe with all cylinders firing and with our politicians and diplomats working overtime, to get the arrangements that we need and deserve. On the way out, IDS said to me, “It won’t work. They won’t have it.”

He may be right. But I still think we should give it a go. You don’t file for divorce as a result of a single tiff, not after more than 40 years of marriage.

On the issues of immigration, for example, and possible changes to the EU’s freedom of movement rules, we may find more allies in Europe than we think.

Stanley Johnson is co-chairman of Environmentalists for Europe: environmentalistsforeurope.org

Stanley Johnson is an author, journalist and former Conservative member of the European Parliament. He has also worked in the European Commission. In 1984 Stanley was awarded the Greenpeace Prize for Outstanding Services to the Environment and in the same year the RSPCA Richard Martin award for services to animal welfare. In 1962 he won the Newdigate Prize for Poetry. He also happens to be the father of Boris Johnson.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad