Michigan’s Treasury Department has conducted a preliminary audit
of Detroit’s books and found that the city’s fiscal situation is
even more dire than reported by city leaders. How dire? The audit
pegged the city’s long-term debt, including unfunded pension
liabilities, at more than $12 billion. That’s $2 billion higher
than estimated when the review was ordered earlier this month.

What’s more, the amount and value of the city’s assets that
might have helped cover the at least part of the shortfall has
fallen precipitously. Reports the Detroit Free Press:

In 2010, the city had net assets worth $265.1 million and
long-term debts of $8.6 billion, according to the report and
Treasury officials. This year, the value of the city’s net assets
is a negative number, and its long-term debt exceeds $12.3
billion.

Last year, Detroit had $33 of long-term debt for every $1 of net
assets. That number compares unfavorably to even financially
distressed cities such as Flint—already under an emergency
manager—which has only about 59 cents in long-term debt for every
$1 of net assets…

A major cause of the long-term debt is ballooning pension costs.
The number of retirees continues to increase, while the work force
that helps pay for pension obligations has reached historic lows.
The city makes health care and pension payments to more than 20,000
retirees, while only about 11,000 employees are on the active
payroll. In 1975, there were two active employees for every
retiree.

All of this means that a state takeover of the city’s books by a
financial manager with wide-ranging powers to tear up union
contracts, default on the city’s pension obligations and renege on
debt to bondholders is all but inevitable. According to Mayor Dave
Bing—a former basketball star who has proven to be more ineffectual
in running the city than
Shaquille O’ Neal at the free-throw line—Detroit can solve its
fiscal crisis if its unions accept an annual cut of $100
million.

But such suggestions are total anathema to city activists who
are already planning mass resistance. “We are going to mobilize and
continue to organize around this issue,” said the Rev. Charles
Williams II, a civil rights activist who is helping lead an
anti-emergency manager protest outside Governor Rick Snyder’s house
in Superior Township on Martin Luther King Day next month. “We are
going to send Snyder a strong message that we care about our
communities and our democracy, and we won’t tolerate dictators in
our community.”

If all this sounds familiar that’s because it is. This is
exactly how the
Greeks felt about the austerity measures that Germany demanded as a
price for throwing them a lifeline.

But given that America’s total unfunded liabiliites now
exceed the planetary GDP, Detroit might be only leading the way
for the rest of the county. But unlike the rest of the country, it
will have plenty of good Greek food along the way. That’ because
the only spot that has thrived as the city has steadily gone down
the tubes is Greek Town.

My column on why Detroit’s leaders need to do the decent thing
and invite Houston or some other city that has its act together to
run it like a charter city here.