The news cycle unfolds, and a key story escapes people’s attention – several American cities are teetering on bankruptcy – or diving straight in.
First came the Chapter 9 filing of Harrisburg, capital of former industrial powerhouse Pennsylvania.
What is really happening? The failures and contradictions of the larger system are being passed onto institutions that can complain the least. You can have a zero-interest rate policy to float Barclay’s and Citibank. You can bail out AIG and Fannie and GM. You can look the other way on LIBOR. But one day, the buck stops somewhere. Eventually, reality has its due. The powers that be hope to push the failings to the quietest places with the weakest institutions, so that blame can be localized.In Europe, they are localized to Greece and Portugal. In America, to cities and states.
These bankruptcies are quiet, but insistent. They will come at a more regular pace as the Great Game plays out.