Across the nation, cities and states are watching Detroit's largest-ever municipal bankruptcy filing with great trepidation. Years of underfunded retirement promises to public sector workers, which helped lay Detroit low, could plunge them into a similar and terrifying financial hole. Thanks to a patchwork of accounting practices and rosy investment assumptions, it's not even clear just how big a financial hole many states and cities have dug for themselves.
The state of Pennsylvania is killing a contract with IBM because, as of July, the project was $60 million over budget and a whopping 42 months behind schedule, state officials said. It was, by any measure, a huge and complex project. It was to give the state a new computer system to track employee wages, employer taxes and handle unemployment claims, appeals, payments.
Dell’s (DELL) buyout is the latest in a series of firms leaving the public market. Since 1997, the number of American companies listed on stock markets has dropped by more than half, from more than 8,800 to roughly 4,100. Some firms leave the market due to mergers or going private (Dell), while many are delisted due to bankruptcy or liquidation (Circuit City, Borders, or Eastman Kodak). But Dell's buyout represents something bigger: The triumph of the virtual corporation.