What does it mean when a city such as Detroit goes bankrupt? How should the federal government get involved, if at all? What lessons can be learned?
A city that hit it's "hayday " in the 50s and has tried to be and spend ever since as
if those days hadn't been over for 40-50 years. Following the Big 3 lead in allowing
the Unions to help run those companies the City did the same with employee
contracts that were more lucrative than could be afforded. Large retirements after
only 20 years of service help populate the States of Florida and Arizona. During
all these many years of poor management only recently did the State step in,
much too late, in attempting to force responsible change.
One can bet the American taxpayer, responsible and irresponsible ones, that
actually work are going to be called upon to pay the tab. This is but one of about
a dozen cities that have been run about the same for far too many years. This
story is going to be an interesting one as to the Press and Administration's
actions and determination of policies to fix this municipal bankruptcy.
It means that it is time for Big Government and Big Business to get out of the same bed and go there separate ways.
I'm afraid Detroit's biggest problem has been their CICs (crooks in control).
I've just looked at some pictures of Detroit over several decades; and it used to be a devastating city with almost two million citizens.
I understand it now has less than one million and the Muslims has taken control.
Is our entire nation next?
What do you mean by that Nemo? Are you condeming the auto bailout?
What did big business have to do with the demise of Detroit?
Capt: I say amen to your post.
No I am not Libertine. This has nothing to do with it. I an talking about the city and big business.
That s gov, you understand.
What big businesses Nemo?
What did they do to Detroit?
Detroit's the canary in the coal mine. You can't keep promising these ridiculous defined benefit pensions and guaranteed health care benefits. It's just another tax on our grandchildren without having to pass the bond-issue.
This malfeasance is now just starting to see its reckoning.
I think the bond-holders need to take it on the chin here. They made a horrible investment.
I'm not sure how the pensions are wrapped up in this but I think the pensioners should be protected to they degree possible. They planned their lives around these ridiculous unaffordable promises and it's not right to hang them out to dry if it can be avoided.
I posted an article yesterday in the "Rolling Stone" reactions that might tell you how the USA is headed today.
Our "leaders" have become the "takers".
Moonglow1: another money grab by corporate hucksters and the new Republicans. Take tax money, government buildings, pension money and give it to their corporate friends. They in turn will raise prices on goods and services so you lose again. This is the new "economy." Taxpayer as suckers. The hucksters dont pay taxes. They live high on the Caymans. Well I hope climate change (which the hucksters tell you they dont believe in but do so in private) causes massive flooding in the Caymans. Swim for it hucksters. Who will "bail you out" now. Swim baby swim.
Ben your 9:10AM comment, worded like a true teapub!
Moonglow1: police officers, firefighters worked for a living and deserve their pensions unlike bankers, wall st, and huckster politicians who take from you to give to themselves.
I think Ben's right, except in regards to Detroit being the canary. I think they had the perfect storm...a dying industry, overpowering union and a global economic collapse. There aren't too many cities that are in the same position.
gdiafante - What is the dying industry? Automobiles are being mass produced everyday. If anything, it could be blamed on management, politics & business.
Detroit has been mismanaged for decades. Their main problem is lack of diversity of industries in their economy. When the auto business when bust they had nothing else to fall back on. That's a sign of bad leadership.
What blanket said. And that the unions dealt with the city as they would the big 3. Apples and oranges.
Detroit's leadership did little to draw other industries and to bring jobs. As much as people hate it when a mayor strikes up "deals" to get businesses to move to town, it does provide jobs and growth and a base for other entrepreneuors such as restaurants and retail.
Let it rot, cities come and go with the changing times. You pack up and move like the Okies did in the Dust Bowl.
Hey, they dont call it "The Rust Belt" for nothin!
By: gdiafante on 7/22/13 at 9:48
I think Ben's right, except in regards to Detroit being the canary. I think they had the perfect storm...a dying industry, overpowering union and a global economic collapse. There aren't too many cities that are in the same position."
Stockton, San Bernadine, and San Jose California are all in the same situation.
Public service pensions will push the state of California to the brink.
The government doesn't follow the same pension funding laws that it requires of private businesses.
Moonglow1: there is a big money making enterprise in Motor City. Yes you read that right. JP Morgan and two other "legal criminal enterprises" or better known as banks are manipulating the aluminum market. They maintain warehouses in Detroit filled to the brim with aluminum. Why is this a story? Because by hording the metal, you the consumer pays more for canned products big time. The Federal Reserve has granted these crooked banks this loophole, but due to lobbying efforts by coke and beer producers who bring their product to market in aluminum cans the issue is now newsworthy. However JP and others own a piece of the London Metal Exchange so it's one big happy family manipulating the commodity pricing and thus costing you money. So yes, some people are earning big bucks in Detroit while the city goes bankcrupt. Now if these crooked banks were found guilty of market manipulation, the fines they would pay would be enough to bail out Detoit. But no, these bank deals and behind the scenes commodity manipulation rarely comes to the light if day. Just as their warehouses are most likely infested by bugs, they infest the world economy with crooked business practices and harm us all. Read all about it at bloomberg.com or Google to find the story.
In Detroit some 750,000 people most that live directly in the city are unemployed,
underemployed, retired, or sitting idle have a debt or committed debt of some
10-15 billion dollars. $10,000 will buy you a livable house, of course, it may be the
only "livable" one on the entire street. Police respond to calls with about 58 mins.
Moonglow, that's interested. I'll check it out.
Me thinks Libertine is sitting on a hefty 401K and comfortable stock options.....
How about the whole state of Illinois and California, gd? They are in the same boat and without revision will follow the same fate.
bfra, I said the bondholders should take the hit, not the pensioners. how is that any different than your position?
SACRAMENTO -- The Democratic-controlled state Legislature on Friday overwhelmingly approved a moderate budget that saves some new revenues for a rainy day and pays down California's massive debt while still beefing up K-12 education spending by billions of dollars.
Standard & Poor's analyst Gabriel Petek said the budget shows California's finances are on stronger footing. But he said it is uncertain the state can sustain revenue gains that helped propel it to a budget surplus. S&P in January upgraded its rating on $73.1 billion of California's general obligation bonds one notch to A from A-minus and put a stable outlook on the state.
Anyone been to Pittsburgh lately? Like Detroit, Pittsburgh almost collapsed under the pressure of losing a single industry. But rather they do what it is suggested that Detroit do, Pittsburgh reinvested in the city itself..... It is now a thriving community and one of the leaders in the country in the area of AI research.
Yes, Pittsburgh has come a long way.
Honestly you COULD fix Detroit in about 5 years BUT it would take some decidedly "unAmerican" actions in order for that to happen.
-confiscation and redistribution of property
-cash & or property incentives to attract desirable businesses and individuals to the area.
That's just the first few on the list. Basically we'd have to adopt principles used to attract settlers out West in the 19th century. So yeah, it HAS been done by us, I just doubt we're willing to do it again.
By: Blanketnazi2 on 7/22/13 at 10:29
What is your point? California has a short term surplus of $1.7 billion, but has $300 billion in unfunded pension obligations.
Do you see that as a problem?
"According to the study, California’s major retirement systems now have $222.2 billion in unfunded pensions, up from $211.4 billion five months ago. The report says that number was $110 billion in 2007-2008, meaning the state’s unfunded pensions have doubled in six years.
Some observers think those numbers are actually underestimating the state’s unfunded liabilities.
In January, Sacramento Bee columnist Dan Walters used figures from Moody’s to estimate that California “could have unfunded pension debt approaching $300 billion, plus another $100 billion for retiree health care.” In 2010, Gov. Arnold Schwarzenegger’s administration claimed the pension overhang for California State Teachers' Retirement System, California Public Employees' Retirement System and the University of California Retirement System was $500 billion,"
By: brrrrk on 7/22/13 at 10:39
Anyone been to Pittsburgh lately? Like Detroit, Pittsburgh almost collapsed under the pressure of losing a single industry. But rather they do what it is suggested that Detroit do, Pittsburgh reinvested in the city itself..... It is now a thriving community and one of the leaders in the country in the area of AI research."
Is Pittsburgh in on the aluminum market manipulation that Moonglo posted about?
Detroit has been the North American Mecca for Muslims. I think it's probably gone beyond hope now. What do you think D'arge?
Ben, you're blaming it on Muslims? Wow....lol.
Ben, you're blaming it on Muslims?
So did yogi. Great minds think alike, blanket. lol
Between 1980 and 2008 84% of white homicide victims were killed by whites...
When are we going to do something about this white on white crime epidemic?
The Federal Government should step in and take over the bailout and fire the Governor. This was the Governor's plan all along. He fired all of the elected officers in order to put his plan in. If he is successful, this will be the first city to go private. This is just the first step in destroying the middle class. Private companies do not have to give benefits or good working conditions. You will be at the mercy of big money with nothing for you to have a decent life. Haslam has already started this in TN Breaking the unions is the first thing that they do. The workers have no one to fight for their rights.
I suspect that what we're seeing in Detroit is nothing more than a sophisticated land grab..... much like they did in Benton Harbor when they snatched up the towns lakeside public park (a park that was donated to the town in perpetuity, stipulated that it never be sold) and turned it into a private golf course for the well healed in the area.
"Private companies do not have to give benefits or good working conditions. " And guess what? You don't have to work there.
That's how that works.
brrrrk - Kinda like Karl turning Nashville into his own "playground" with taxpayer's money & wants the Fairgrounds out of GREED & MONEY.
Public service unions put politicians in office who in turn give them retirement benefits that the city and taxpayers can't afford. A few decades later why should taxpayers in other cities and states bail the city out?
Libertine - What are you calling a public service union?
Unions that represent employees that work in the pubic sector.
We need to pay attention to how this plays out, I'm sure Memphis is right around the corner.
Pensions virtually do not exist in the private sector any more because they are not sustainable. They are a huge drain. Only state and muni workers (and some unions) still have them. We'd save ourselves a lot of cash if we'd just buy out the state employes currently on the pensions, or due pensions and simply allow them their 401k 403b etc...
Historically it's been easier to get decent retirement benefits for public sector employees than actual raises and higher pay. The public seems OK with that, raises for state employees and teachers just doesn't seem very popular at this point.
Libertine said on 7/22/13 at 12:57
"Public service unions put politicians in office who in turn give them retirement benefits that the city and taxpayers can't afford. A few decades later why should taxpayers in other cities and states bail the city out?"
It appears we have another anti-union cry baby on our hands here.... someone who believes in the free market when it comes to the corporations but decries the free market when it comes to labor, particularly organized labor.for the average worker. God forbid the average worker have the right to a decent wage, decent working conditions and a decent retirement after years of service.....
You don't see the conflict of interest with public sector unions? Politicians aren't accountable when they bankrupt a city, they have already retired on their own fat pensions.
Libertine said on 7/22/13 at 2:17
"You don't see the conflict of interest with public sector unions? Politicians aren't accountable when they bankrupt a city, they have already retired on their own fat pensions."
Are we talking about the politicians here... or the workers? Two clearly different subjects. The problem isn't so much the working stiffs who have put their time in, but those who are managing the funds.
How about all those communities and businesses around the country who are ethically managing their pension funds with some fiscal responsibility? That's right.... we never hear about those, do we....
Without pensions, America will become a poor nation. This is what sets America above other countries is their ability to care for its people. But, the GOP wants this great country to become a two class country, Rich and Poor. Go back and read history. When Unions were formed that is when the lives of individuals were raised to a decent living wage. The GOP has fought SS and Medicare from day one. Just think how many poor people would we have in the country if it were not for these benefits and pensions. The GI Bill was what lifted this country and educated the masses. Thank God for the far-thinking of some great Americans.