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Many more US cities to go bankrupt: Analyst

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Press TV has conducted an interview with Dean Henderson, an author and columnist with Veteran’s Today, in Missouri about the economic situation of the US, with a particular reference to Detroit having received approval to move forward with its bankruptcy filing.

The following is an approximate transcript of the interview.

Press TV: What would Detroit bankruptcy mean for the US economy and its reputation?

Henderson: It’s pretty significant. I believe Detroit is the fifth largest city in America. We have this as part of an going process; you’ve got Stockton California, California cities going bankrupt, Orange Country; Jefferson Country, Alabama last year.

And basically, it’s kind of a metaphor of what’s going on because Detroit of course was the auto capital, you know, General Motors started everything, and Ford. And we’ve outsourced all these jobs. Globalization has taken a big toll.

I think the bankruptcy of Detroit is a big metaphor for what is happening with America. We’re not making anything anymore, we’re not manufacturing anything. So, that’s one thing.

Another thing is that it’s part of this continued right wing trend in America where, you know, we’ve got a municipal bond bubble now because the Republicans want to still basically not tax the rich not tax the corporations.

General Motors itself probably launders its money in the Cayman Islands and the Bahamas – If it pays any tax it gets a refund. The rich don’t pay, but there is 28-percent income tax in this country so what happens is that the middle class has to support city, county, governments because the federal government isn’t kicking in money anymore.

So, this is part of an ongoing process where I think really a lot more cities are going to go bankrupt unless we can turn this government around and create a new deal – a bigger new deal – where we actually start funding education and infrastructure and bridges and things for cities and helping them out.

So there are two things at play there; but it is definitely a sign of the times of what’s going on in America with this privatization craze.

Press TV: How contagious can such bankruptcy be and of course as you mentioned how much can we expect more industrial cities to go bankrupt?

Henderson: As I say the trend is there. Basically, a lot of cities may not have any choice…; there may be states going bankrupt in America before long because everything is just stretched to the limit.

Not only that, but the citizens of these cities are having to pay higher-than-ever utility bills for their water and sewerage systems as the cities can’t keep up with the dilapidated systems. A lot of these things haven’t been changed out since the 20s and 30s and 40s.

So it’s part of a trend, it’s going to continue and I think it’s part of the municipal bond bubble in America where we buy municipal bonds because until we turn this right wing tendency around in America and actually fund things through the federal government through taxes on the rich, taxes on corporations and banks, then these state and local government entities are going to continue to suffer.

Press TV: What impact would that have on the lives of people who are living in these cities, especially Detroit? Forced immigration perhaps?

Henderson: There is going to be a rough patch, but honestly in the end its probably the only alternative and the best thing they could do at this point.

I mean, General Motors filed for bankruptcy a couple of years ago, three years ago and a lot of Republicans again gave Obama a lot of grief for bailing them out through bankruptcy and it actually helped. General Motors is a healthy company again. So, honestly, it’s the only recourse and I’ll say in the end probably the citizens will benefit from this bankruptcy.

But it’s a sad state, a sad sign of the times and you know, the federal government is going to have to step up here. That’s the bottom line and these right wing politicians in Washington better start understanding what’s going on here.

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