Sorry for those who will be hurting from this.
I hope this gets Detroit on its feet in the future. the future of the city is at stake. we have to think about the children and continue the city
http://live.freep.com/Event/Detroit_...bility_hearing
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Sorry for those who will be hurting from this.
I hope this gets Detroit on its feet in the future. the future of the city is at stake. we have to think about the children and continue the city
http://live.freep.com/Event/Detroit_...bility_hearing
Nothing unexpected so far. He also says that the Pensions CAN be cut as the clause in the Michigan constitution is a contractual obligation. Don't have the article to post here [[I'm on my smartphone).
And of course, Kevyn Orr/PA 436 stays.
Just cleared the last hurdle: Detroit did not negotiate in good faith, but to do so would have been impracticable. Final ruling should come in a few minutes.
http://www.freep.com/article/2013120...hodes-pensionsQuote:
Originally Posted by 313WX
Of course there are people who need every penny, but I expect the cuts to be relatively modest. The way pension math works, small cuts turn into large savings, and the actual level of underfunding is still in dispute. As real estate and stocks have continued to recover, the pension funds should be looking considerably better than they did even when bankruptcy was filed.
Wow. Just wow. I didn't think that the Judge would rule on the pension issue today. I don't think anyone did.
The unions have made a monumental miscalculation that will cost the pensioners. They could have deferred the objection to the plan stage, and negotiated a better plan. Now what do they have to negotiate with, a threat of appeal? Good luck.
Oh, by the way, any objectors will have to get the judge's permission to appeal presently. It's called an "interlocutory appeal" and is not allowed in most cases.
That was a foolish, emotional move by the unions. And it cost their members big time. Shame.
Again, they should now negotiate their best deal, and take it. This judge is unquestionably putting residents and services first.
Hopefully its only small cuts. If not, I would expect another "housing crisis" like after the big downturn in the economy in 2008, 2009 and 2010. A lot of retirees especially newly retired, still have house payments.
Thanks Bankruptcyguy!
Any word on the DIA assets?
Let the healing begin.........
CAN is not WILL. Mr. Orr will craft a responsible plan, and the judge will review and approve or not.Quote:
Originally Posted by 313WX
And ultimately he cannot reduce the pensions below their actual funding level, which the trustees report as something north of 90% and Orr reports as something less.
Here's a question. How much can Orr craft the cuts. Does he just have to say everyone is going to get 95% of their pension -- or can he say people under $20,000 per year are taking a 1% cut and those over $100,000 will take a 50% cut?
Another question... an appeal has been filed of course. What is that process? Are appeals typically successful? Do they stop the process? That Rhodes ruled on the pensions suggests to me that he knows that this process must start moving fast. The pensioners no doubt want to stall this and hope that Orr is gone before he can get his job done. What's likely to happen?
I think this is good for workers, generally, though not good for the Detroit pensioners.
The sooner we can get away from defined benefit pensions, the better for workers. I don't even expect Social Security to be there for me as a thirtysomething, let alone any muni or company's pension.
I agree with your angle and tone.Quote:
Originally Posted by jaytheory
It's tough to see pensioners be put in this situation, but we've got to change things. I have a feeling that cuts won't be drastic and that creditors will take a much larger haircut than pensioners.
Certainly. Remember it's not pensions as a whole that are in play in the bankruptcy, just the unfunded portion. There is great disagreement on how much that it, but just for example, let's assume the pensions are 90% funded, and all unsecured creditors end up getting 30 cents on the dollar. [[Again, caution: I'M JUST MAKING THESE NUMBERS UP.)Quote:
Originally Posted by 48307
In that hypothetical, pensioners would get all of the funded portion plus 30 per cent of the unfunded portion, so they would end up getting 93% of what they had expected. On the other hand, a typical unsecured creditor would just get 30% of what was owed.
Now, a 7% cut to someone on a fixed income is not at all pleasant, and my heart goes out to all these folks that gave their working life to the City. But it's not the same pain the creditors will feel, and it isn't the disaster some have been predicting.
To answer the first question, the plan need only be "fair and equitable." Both an across-the-board cut and a progressive cut could be considered fair and equitable, considering the circumstances.Quote:
Originally Posted by Wesley Mouch
To answer the 2nd question, the judge will have to grant the right to appeal at this point. Until the final order of the court, an appeal is considered "interlocutory" and thus requires court approval. No, Judge Rhodes will not stay the case pending an appeal--I'm pretty sure he said that in court.
Is there somewhere definitive that states that the funded portion of the pensions is untouchable by bankruptcy court? having a conversation with some clients and he is hearing from his union brothers that I'm incorrect and that the whole thing could be cut.Quote:
Originally Posted by professorscott
Remember, the pension is a fund that has assets. Those assets don't belong to the City. The liability at issue was the City's obligation to give the fund extra dollars if the fund's assets are insufficient to pay its bills.Quote:
Originally Posted by corktownyuppie
Given the court's ruling today, the bottom limit would be that that City pays $0 toward that unfunded portion. The existing assets would fund [[a portion of) existing pensions. There is nothing to indicate that existing pension assets would be consolidated into the City's bankruptcy.
I don't agree. The move to defined contribution plans is not working out well.Quote:
Originally Posted by Eber Brock Ward
Obviously this is just my opinion, but it is very unlikely that Social Security will not exist in 30 years. It is possible the real value of the benefit will be somewhat less than it is today, particularly if you end up being relatively affluent. Even if no changes to fix the current modest actuarial imbalance were made at all, there should be sufficient money to pay about 75% of the expected benefits until after you are dead [[barring serious medical advances).Quote:
I don't even expect Social Security to be there for me as a thirtysomething, let alone any muni or company's pension.
Of course, by that time there will have to be some broader welfare programs to deal with the widespread unemployment which will be created by the replacement of most labor by automation.
Good catch, mwilbert. I should have written that "I don't even expect Social Security to meaningfully be there for me as a thirtysomething, let alone any muni or company's pension."
Detroit is officially BANKRUPT! folks.
Your city government will not pay your benefits.
Pensions will be cut, OH BOO HOO HOO!
Art for the DIA will be liquidated, OH BOO HOO HOO!
It's all Cavanaugh's fault, OH BOO HOO HOO!
It's all Coleman's fault, OH BOO HOO HOO!
It's all Kwame's fault, OH BOO HOO HOO!
No plan to cut spending, No plan to borrow more money. Snyder's puppet is calling the shots. There's nothing Detroiters and its city unions can do to appeal the judge's ruling. Appeal and protest all you want, that will not stop the creditors and banks of want their money back. That's what you all get if they borrow money and not paying back on time.
OH BOO HOO HOO!
OH BOO HOO HOO! Detroit is BANKRUPT!
OH BOO HOO HOO! My Pensions will be cut
OH BOO HOO HOO! Art from the DIA will be liquidated.
OH BOO HOO HOO! It's all Cavanuagh, Coleman, Kwame and Dave Bing's fault.
Yes, Judge says,"SELL IT ALL!"
Thanks, BG!Quote:
Originally Posted by BankruptcyGuy
Simple progressivity to whatever cuts are 'fair and reasonable' would make them much more palatable. Let's avoid hitting those with small pensions. And let those more fortunate carry their less fortunate brothers.
I'll just throw this out there, but if it turns out that Detroit pensioners do end up taking a big cut, is there a chance their union brothers and sisters will chip in to help make them whole? There's a lot of money still in the UAW, AFL-CIO, SEIU, ASFCME, etc. All for one, one for all, Solidarity, ...?
In his interview with the Freep this afternoon, Kevyn Orr alluded to having "multiple classes" of pension recipients getting different settlements. So it could be working vs. retired...it could be by income level. it could be 50 and under, 50-70, 70 and up...wouldn't give details.Quote:
Originally Posted by Wesley Mouch
So I think we're all aiming at a the most equitable way to do this, and now that the union can't sit with there arms crossed, saying "no cuts!", we might be able to work something out.
hahahahahahahahahahahaha. Best laugh in days. Just like the 'solidarity' of the UAW that supported two tier wages?Quote:
Originally Posted by Det_ard
Free Press listed a series of interesting scenarios:
■ Orr might shield the city’s oldest and poorest retirees and cut deeper into the pensions of younger, somewhat better off retirees.
■ He might impose the cuts equally across the board but phase them in over a number of years, in effect offering a measure of protection for older retirees.
■ He might cap pension payments at some basic amount, requiring cuts only to those getting the biggest retirement checks.
■ Orr could leave pensions for current retirees relatively intact but impose deeper cuts on the active workers who remain years short of retirement age.
■ He might impose smaller cuts on the city’s retired police and firelighters because their pension fund, the Police & Fire Retirement System, is in somewhat better shape than the General Retirement System fund for the city’s non-uniformed retirees.
Logical possibilities. Meanwhile, Danny, go away. You're not funny.
So logical, in fact, it has me wonder why it took all these years, a bankruptcy filing, and then a judge's ruling before getting it done.Quote:
Originally Posted by Ray1936
^^ Did someone hack your account?
That;s Bull s***.Quote:
Originally Posted by Danny
Unions act a lot like a club. If you're a member, they'll look out for you. If you're an outsider, forgetaboutit.Quote:
Originally Posted by jt1
Totally. Many years ago, when I was a young waiter, I was forced to be a member of HERE. The state head of the union was a regular, and he would never tip us. Just loved paying for his fancy car out of my check.Quote:
Originally Posted by jt1
I also disagree with getting away from defined benefits is better for workers, due to the fact most workers don't have a clue about investing and don't save enough money on their own.Quote:
Originally Posted by Eber Brock Ward
You never know, but I think the Freep is looking at this the wrong way. The amount at issue is the unfunded portion. The City will pay x% of the unfunded portion. I don't know how much the City will have to say about how the shortfall is distributed.Quote:
Originally Posted by Ray1936
At this point, I'd like to add the following editorial comment: "Gee, maybe the pensioner's attorneys should have thought of this before they argued that the pensions were actually fully funded." Again, a stupid argument that will now hurt their bargaining position.
Maybe someone [[Danny?) was just being sarcastic, but as far as the DIA artwork, I thought I read an article that said the judge thought selling it was a bad idea. I don't know what power he has to decide that and I think he was just making a statement. He was saying that the collection was worth 2 billion or less and it wouldn't make sense, but it would anger a large number of people.
Oh, I just noticed that begingri had started a thread about that.
Although I would hate to lose any DIA art, and will be happy if it doesn't happen, I can't understand the logic of not selling at least some of it. If someone owes you money and you get a lien against their property, they can't claim that a huge amount of their assets are exempt from the lien because the stuff has sentimental value for them. It's absurd. If I were owed money by the city, and they couldn't pay it all, to be told simultaneously that they're hanging onto the art anyway would infuriate me. The only legal reasoning I can imagine is if selling off of significant artworks would spell legal trouble with millage [[possibly voiding it, and causing the city more financial burdens in subsidizing the museum) or if a lot of works are deeded specifically only to the DIA, which might preclude a sale. I just think it's odd to think of a family having trouble putting food on the table and keeping lights turned on refusing to part ways with the pretty pictures on the walls. Like I said, I hope we don't lose any art. I just can't wrap my brain around how we can get away with NOT selling it.
Without a "defined", "guaranteed" pension plan [[and as the social security system crumbles) it's a sure thing that folks would get a clue and start saving...Quote:
Originally Posted by Cincinnati_Kid
I'm surprised you can't see why this isn't a very bad idea....Quote:
Originally Posted by MikeyinBrooklyn
Detroit will become the example by which every other city in the country will spin off their minicipal museums so that they will be protected from every having to go thru what Detroit potential will. They will learn from Detroit's suffering.
The sale of DIA artwork will inflict a serious wound for the DIA for a very long time, as far as future art donors goes. One of the 3 largest private art collections in the country belongs to Richard Manoogian, Chairman Emeritus of the DIA Founders Society [[included in his collection is his crown jewel... George Caleb Bingham's Jolly Flatboatmen, one of the 5 most important early 19th century American paintings in existence). If the DIA sells... then this will likely guarantee that his collection is NEVER donated to the DIA, as would be the artwork of countless others. The Ford Family has Edsel & Eleanor Ford's "loaned" collection, including Van Gogh [[Roulin Mailman, the finest of the DIAs Van Gogh's), a Degas, Cezanne, and other works that could be pulled from the DIA.
There are MANY on loan pieces that could end up never being bequested to the DIA, as well as future donations. Art collectors/curators nationwide are horrified at the prospects of a DIA sale.
One needs to remember that the worlds richest museum is the Getty in LA. However all it has ever been able to get its' hands on in the last 50 years for the most part has been 2nd tier artwork... with the first tier art tied up in museums around the world. If the DIA sells its' first tier art [[Brueghel's Wedding Dance, Van Gogh's Self Portrait, Church's Cotopaxi, Rembrant's Visitation, Matisse's Garden Window, etc. then we will just end up as another middling 2nd tier museum like the Getty, but without an endowment.
Now that the DIA has finished it's massive expansion, it has been working on getting its' endowment [[private donations for future acquisitions) built up to match that of other first tier USA art museums. Sell DIA artwork, and you can be guaranteed that will spell doom for the endowment effort.
Also, selling first tier artwork of the DIA, will almost guarantee that some of it will leave the USA forever. Foreign countries and oil sheiks will pay a beautiful dollar to get their hands on some of the best art. Just look at the recent megadollars spent on several enormous pink and blue diamonds sold at auction as of late... they all went to Asia.
Selling DIA artwork sends a bad message to potential donors/philanthropists, and diminishes the prestige of the institution. A bad idea.
Wow....Manoogian has Bingham's Jolly Flatboatmen? I didn't know that, and I love Bingham's work immensely.
As you say Gistok.....selling off the DIA treasures would be horrendous, and terribly short sighted on many levels.
Would I be correct in thinking some of the work donated to the DIA would have caveats included in that donation, to not allow this happening?
Thanks mikefmich! Yes Manoogian has Bingham's Jolly Flatboatmen. It was hanging in the National Gallery in Washington when Manoogian bought it from another art patron some time ago. As part of the sale, Manoogian has to leave the painting in the DC museum for a set number of years before he can have it moved.
http://0.tqn.com/d/arthistory/1/0/Q/...ma_1109_09.jpg
The DIA crown jewel of moveable art has to be WEDDING DANCE by Pieter Brueghel the Elder. Of the 45 Brueghels known worldwide, only 6 are outside of Europe. The DIA has arguably one of the 1/2 dozen finest of his paintings. It was found hanging in a British manor house in 1930, and legendary DIA Director Valentiner [[he commissioned the Rivera Murals) bought it sight unseen.
As to donations, yes there are enough caveats in a lot of DIA artwork that was donated to tie up artwork sale in legal wrangling for years. The DIA patrons have the very deep pockets necessary to assure a looooong legal road ahead for any attempt at plundering the DIA collections.
Since Judge Rhodes seems to be sympathetic to avoiding a DIA sale... he would likely allow legal appeals to proceed.
Another ramification that pops into my mind.....in a city that has already lost so much...can they afford to just become an emptier shell than they already are?
When I was still living in the area, out of town friends would visit and say.....take me to the DIA? Since Art History was my major, they didn't have to twist my arm very much. ;)
I already understood everything you wrote, but your post fails to point out why a court shouldn't [[legally) insist on selling some of the art. The advantages and qualities of the DIA are not a legal argument. This is a court case. I'm a member, and I have given memberships away as Christmas presents. The argument for saving the art is not on par with not closing firehouses.Quote:
Originally Posted by Gistok
Quote:
Originally Posted by Gistok
Great information.
I haven't been able to tell if that appraisal is market or insured. If it's market I'm pretty sure that we can add another 20% to that 2B number for the auction house's cut on the sale.
One cock-block regarding selling cultural heritage that I did not consider was the possibility of the appraisal coming in so low. Yes, I assumed like most folks that once treasure chest was cracked wide open that the number would have been closer to 8 million. It's no secret that Orr is / was trying to squeeze [[read: exhort) the DIA and the philanthropic community of any where between 200 and 500 million dollars; depending on which reports you read. He's gotta be pretty pissed off right now; I'm sure he was licking his choppers over the artwork. Getting that number is going to prove near impossible now that the value is so low. It also kills stupid ass ideas / scams that have been peddled recently regarding monetizing the artwork.
Now I wonder if there may other "forces" that are protecting the artwork; perhaps in a de facto way. Did the auction house do a "solid" to the DIA because of the bad press they got doing the appraisal? Did the recent discovery of 1,000 + pieces of artwork that was stolen by the Nazis in WWII drive down the market price? The threat of 400 + pieces hitting the market drives the market price down? Are the pieces considered "toxic" if they hit the market driving the price down? Perhaps it's just happenstance . . . ?
Either way it looks like a huge loss for the corporate raiders of the DIA; Geckko would be most disappointed.
The court cannot insist that art [[or anything else) be sold. It is outside of the scope of powers in Chapter 9. Chapter 9 differs in that way from Chapter 11 [[corporate bankruptcy) where the court can insist that assets be sold.Quote:
Originally Posted by MikeyinBrooklyn
Banks and corporations get BAIL OUTS. People get screwed. The state and it's f*cked auditing along with the cities let this happen. Keep bending over. As long it's not effecting YOU personally why should anyone give a shit?! It may be what it is but that doesn't deny the fact, it's stinky!
not everyone is in a position to save enough for retirement and live day to day. just the facts. especially in country who's people are ok with $10 an hour jobs and higher costs of living, outsourcing, and undeniable greed.
Great point!Quote:
Originally Posted by MizMotown
Sad, but so many are not just "ok" with that idea but revel in it. If it means that they can get a pair of knockoff Hanes socks at Dollar General for $0.50 less then they're all for it.
You'd think with this bankruptcy going through you'd hear more conversation about the effect of losing local [[domestic) jobs. Detroit is the first major city in this situation, but not the last.
Which came 1st the chicken or the egg? Is "The state and it's f*cked auditing" primarily responsible and primarily the cause of the mess? or does "the cities let this happen" mean that they primarily responsible and primarily the cause?Quote:
Originally Posted by MizMotown
My thought is that badly chosen, corrupt, "elected officials" played one of the biggest roles in this mess. And like it or not... because they were elected by the voters and the non-voters alike, there's lots of responsibility to spread around.
The "State" has some responsibility, but when your elected officials make this big a mess who's really to blame? Look in the mirror, then reply...
Seems too simple a response. Especially considering that there are numerous other major cities facing the same dilema. And without having undergone the seismic economic implosion to the magnitude that Detroit has experienced. Cities being questioned include Chicago, Cincinatti, Philadelphia, Fresno and quite a few others. The U.S. is losing its manufacturing base. Those locations are feeling the economic pinch. Yet at the same time they still face the legacy costs associated with their former prosperity. They also tend to be older cities, which are experiencing higher costs associated with maintenance of their infrastructure. Roads, bridges, water mains, etc.Quote:
Originally Posted by Vic01
I was teaching a class today, and a person asked the same question that MikeyinBrooklyn did.Quote:
Originally Posted by BankruptcyGuy
Obviously, BKGuy is an attorney, and so that's the legal answer. The reasoning behind it [[I infer) is that unlike a corporate Chapter 11 -- where assets are liquidated to pay off debts until the corporation is empty and then dissolved -- in a municipal bankruptcy, the City still has to continue to exist long after bankruptcy.
50 years from now, most of the pensioners will be dead, but the city will still exist.
And so asset sales must have a different standard than simply, "sell it all, and divide the proceeds with the creditors". Orr, in fact alluded to this when he first arrived in Detroit, stating [paraphrasing], "You don't want this to go to bankruptcy court; the law tilts far in favor for the city [[and against creditors) in bankruptcy court."
Another way of looking at this is that there are certain city assets which make it a desirable place to live. If you sell off too many of those assets, then what will be left will not be a sustainable municipal entity anymore. We sell all the riverfront property to Canada. We sell all of the parks to developers.
Now that said, just because the Court can't insist that assets be sold, can the Court also reject the city's proposed Plan of Adjustment?
If so, Rhodes can use that hammer to "strongly encourage" monetization and also turn around to the pensions and "strongly encourage" a settlement, rather than taking this all the way the Supreme Court.
Next 3-6 months will be interesting indeed.
You are right that there isn't solely because of bad local leadership. We have a lot of bad leadership all across the country. We are far from alone on this.Quote:
Originally Posted by Kevgoblue
We are however near the back of the pack. And the lions and tigers you mention above are coming in for the kill. The whole pack is weak right now -- and we're the weakest.
Its much too simple to blame others for everything, too. We are to blame in so many ways that most cities -- even rust belt cities are not.
You would think so, but it's not always the case as it is increasingly difficult to save when it's getting more expensive to live period.Quote:
Originally Posted by Vic01
+100 This country has gone into the crapper as far as producing decent jobs for people. They've let all the good jobs be outsourced. $10 an hour jobs aren't the answer either. You aren't going to make ends meet on that pay scale.Quote:
Originally Posted by MizMotown
Sure my response was "simple", it was only meant to say what it said, period. Which was that the "State" [[Michigan) was not the primary cause, "they" didn't do it to "us". The fact that there are other cities in other states in close to our mess indicates that Michigan is not the guilty party here. And, yes jobs left and the economy took a dump, that's a given... I wasn't trying to cover all facets of the problems. I was simply stating that when "we the people" put bums and thieves in office, because we vote 'em in or don't vote at all, then "we" have to accept our share of the responsibility.Quote:
Originally Posted by Kevgoblue
Let me divide this into theory and practice:Quote:
Originally Posted by corktownyuppie
Theory: the US Constitution, pursuant to the Bankruptcy Clause, does not give a US non-Title III court the right to violate state sovereignty. So while Chapter 11 allows creditors to prepare a competing plan, it does not allow creditors in a Chapter 9 to do so. No creditor in a Chapter 9 can propose asset sales, nor could they, for example, propose higher taxes. Contrast with Chapter 11, where a creditor could certainly suggest asset sales or new sources of revenue.
The theory is that the US Constitution's limits do not allow interference with state functions like deciding which assets to own and what level of taxation to have.
Practically, my first response would be "who knows"? The EM draws his powers from state law. If the EM went to sell art, I'm guessing that the state legislature would prevent that.
On the other hand, I think a sale of the DWSD is likely. There is already legislation to create an authority, which would pay money to the City for the long-term rental of the sewer assets. The difference between the City's proposal and the state legislation is all a matter of control. Again, likely the state wins here.
Could the EM propose a plan that:
a) freezes pensions
b) provides for some limited contribution capped at specific figures going forward
c) provides for some DC plan for current non-vested workers?
The answer is yes. And in fact, the EM's consultant prepared a report detailing the costs of just such a program.
You said more than one thing. You said that the state was not primarily responsible, with which I agree. You also seemed to be saying that the voters were. I don't really agree with that--no question they also bear some responsibility, but as kevgoblue indicated, Detroit's problems are extreme but hardly unique and I would say are only about bad governance to a limited extent. And, of course, even if you want to blame governance for more than I think appropriate, the voters didn't have a lot of great options to choose from. It isn't as if there were lots of highly talented people vying for council seats or even the mayor's office.Quote:
Originally Posted by Vic01
Nobody was primarily responsible. It was dozens or hundreds of individual bad decisions. There's enough blame for all. But why Detroit, then. Would we really have been OK if the Big 3 had made Camrys and UAW employment were still 250,000? Maybe. I think we got here first because we were worse than every other city in hundreds of bad decisions by people in Detroit, the region, the State, the entire Rust Belt, the nation, and the world. So what? We remain primarily responsible for our problems, and we need to work together to solve them. Thank g0d we have the government to bail us out of our problem.Quote:
Originally Posted by mwilbert