Benchmarking the Consent Agreement. Show me the progress.

[corktownyuppie]

The U.S. government could have bought those banks for pennies on the dollar and given the $3 trillion to metro Detroit... but, no, we're going to give Detroit austerity so that the banks get their interest ...

Hold on a sec. Even if this were to be a reality, you'd have to accept that there's no way the US Government would give or loan $3MM to Detroit without simultaneously demanding oversight of how it was spent and who it was spent on.

You are right that it's unfair for the poor to suffer at the hands of dynamics that are far out of their control, though.

[Detroitnerd]

Hold on a sec. Even if this were to be a reality, you'd have to accept that there's no way the US Government would give or loan $3MM to Detroit without simultaneously demanding oversight of how it was spent and who it was spent on.

Why not? That's essentially what they did with the banks...

... it makes me sick at heart that we're shoveling money into the pockets of wealthy crooks and demanding poor people tighten their belts. It's disgusting.

[corktownyuppie]

I don't understand what you mean by shoveling money into the pockets of the wealthy.

JP Morgan stockholders lost 70% of its value.
Bank of America stockholders lost 85% of its value.
Citigroup stockholders lost 96% of its value.
Lehman Brothers stockholders lost 100% of its value.

I mean, I too am unhappy with the way that the bank bailouts are not opening capital markets to our poorest. But just because the government gives a capital infusion to the banks doesn't actually mean that the bankers get to actually keep that money for themselves.

[Detroitnerd]

The Federal Reserve's 'breathtaking' $7.7 trillion bank bailout
A new report on the 2008 financial crisis reveals some shocking numbers that dramatically exceed the $700 billion TARP bailout

http://theweek.com/article/index/221...n-bank-bailout

Oh, yeah. I'm sure they're just borrowing the money and will pay it all back. With crap.

[corktownyuppie]

The Federal Reserve's 'breathtaking' $7.7 trillion bank bailout
A new report on the 2008 financial crisis reveals some shocking numbers that dramatically exceed the $700 billion TARP bailout

http://theweek.com/article/index/221...n-bank-bailout

Oh, yeah. I'm sure they're just borrowing the money and will pay it all back. With crap.

All of that true, I'm still not sure why you are treating the "banks" equally to the "bankers". If I authorize an emergency 400 Billion loan to Citibank, none of that money is going to change the fact that people who own the banks [[the "bankers") have still lost 95% of their stock value.

[Detroitnerd]

All of that true, I'm still not sure why you are treating the "banks" equally to the "bankers". If I authorize an emergency 400 Billion loan to Citibank, none of that money is going to change the fact that people who own the banks [[the "bankers") have still lost 95% of their stock value.

And they should have been bought out for pennies on the dollar. They should have been fired. They should have gone to jail. The banks should have been federalized. At the very least, if the government helped, it should have been able to impose stringent standards on banking. None of that will happen.

The banks will continue to peddle crap to make money, all knowing that Uncle Sugar will bail them out. They are immune to prosecution. And the government just keeps shoveling money at them to keep them afloat.

I am not going to feel sorry for the poor, poor bankers. Why don't they write to market? Why don't they stop keeping millions of homes off the market in shadow inventories? Why don't they stop bundling junk loans and selling them? Again -- WHY AREN'T THEY IN JAIL?

Oh, that's right. It's the Detroiters of the world who get the tough love. Not the rich.

[corktownyuppie]

And they should have been bought out for pennies on the dollar. They should have been fired. They should have gone to jail. The banks should have been federalized. At the very least, if the government helped, it should have been able to impose stringent standards on banking. None of that will happen.

The banks will continue to peddle crap to make money, all knowing that Uncle Sugar will bail them out. They are immune to prosecution. And the government just keeps shoveling money at them to keep them afloat.

I am not going to feel sorry for the poor, poor bankers. Why don't they write to market? Why don't they stop keeping millions of homes off the market in shadow inventories? Why don't they stop bundling junk loans and selling them? Again -- WHY AREN'T THEY IN JAIL?

Oh, that's right. It's the Detroiters of the world who get the tough love. Not the rich.

Hey I don't have sympathy for the bankers. I'm just saying that giving the bank emergency loans is not the same as putting money in the bankers' accounts.

I don't agree that the banks should've been nationalized, but I do think that each of the "too big to fail" banks should've been split into 25 independent regional banks all competing with each other. The shareholders should've lost everything. And then let the bondholders keep an equity stake.

And, even as a Detroiter myself, I think we deserve much of the tough love we get even though I agree that the banks should've gotten more themselves.

[Scottathew]

For instance I read that there are some 80,000 streetlights of which 40 per cent don't work. Is it fair to expect to see that improved to a 20 per cent failure rate 12 months from now?

The goal is to balance the budget, not light the streets. All goals should be budget-health oriented, not service.

[mwilbert]

The goal is to balance the budget, not light the streets. All goals should be budget-health oriented, not service.

I wonder whether, if we drove the entire population out of the city, the revenues that aren't population-dependent could pay the city's debt service and pension costs and whatever other spending we couldn't eliminate given that there are no people to serve. If not, a strict budgetary approach isn't likely to work. If so, might be interesting to try.

[Wesley Mouch]

Why not? That's essentially what they did with the banks...

... it makes me sick at heart that we're shoveling money into the pockets of wealthy crooks and demanding poor people tighten their belts. It's disgusting.

I don't agree with you on this issue... but I must point out a critical difference.

You may not like the bank bailout -- I didn't. But a bailout is different than a handout.

Detroit has no possibility of reforming itself internally. Of this there can be no rational doubt. The mere idea of fighting a Consent Agreement is proof.

You may hate banks. But they are in existence, and they are not in need for a handout or bailout today.

Detroit on the other hand will be back at the trough of handouts in a Motown Minute.

[Detroitnerd]

I don't agree with you on this issue... but I must point out a critical difference.

You may not like the bank bailout -- I didn't. But a bailout is different than a handout.

Sure it is. It was bought and paid for with bribes. Hahahaha.

[rb336]

You may not like the bank bailout -- I didn't. But a bailout is different than a handout.

Really? how much of it has been given back? Did they require that the banks re-write mortgages at the current market value of the homes? were they required to do anything? No? HANDOUT

Detroit has no possibility of reforming itself internally. Of this there can be no rational doubt. The mere idea of fighting a Consent Agreement is proof.

You may hate banks. But they are in existence, and they are not in need for a handout or bailout today.

Detroit on the other hand will be back at the trough of handouts in a Motown Minute.

And that loss of $3 billion from whatever bank that was shows just how much the banks have changed. They will continue to make stupid investments based on short-term goals until they pull the economy down again. All the while, the republicans will push for fewer and fewer regulations.

I give Detroit a better shot at long-term reformation than the banksters

[mwilbert]

The only difference between a bailout and a handout is the motivation. You give a bailout out of fear; you give a handout out of compassion.

In any case, bailing out the auto companies amounted to a substantial bailout of the city [[and state). However bad the city's situation is now, it would be much worse if GM and Chrysler had gone bankrupt.

[Wesley Mouch]

The only difference between a bailout and a handout is the motivation. You give a bailout out of fear; you give a handout out of compassion.

In any case, bailing out the auto companies amounted to a substantial bailout of the city [[and state). However bad the city's situation is now, it would be much worse if GM and Chrysler had gone bankrupt.

I prefer to look at outcomes.

Banks and auto companies used the cash to reform themselves and are now strong.

Detroit has been taking cash for years, using it to avoid making structural reforms. They remain weak.

[mwilbert]

The banks haven't reformed themselves. There is zero evidence of that. The bailouts just let them get through a bad period.

[rb336]

I prefer to look at outcomes.

Banks and auto companies used the cash to reform themselves and are now strong.

Detroit has been taking cash for years, using it to avoid making structural reforms. They remain weak.

from where has Detroit been taking cash? on the contrary, the state has not been giving detroit the revenue they contracted with the city in return for the city lowering certain taxes

Show me one example of a bank reforming itself

[Wesley Mouch]

...
Show me one example of a bank reforming itself

By reform, I meant putting themselves on solid financial footing. The banks are not crying for a bailout today and every day.

[corktownyuppie]

Detroit has been taking cash for years, using it to avoid making structural reforms. They remain weak.

This is the very problem, and I agree wholeheartedly. Despite my distate for the way we've dealt with the banks and the bankers, the bottom line is that the bankERS took major losses in exchange for the BANKS to get the bailout to remain healthy.

The problem with Detroit is that unlike the financial industry, where BANKS and BankERS are different entities with different consequences and experiences, in Detroit, Detroit and DetroitERS are one and the same.

I wish that was some analogous municipal situation where equity holders could lose 95% of their stake in exchange for a much need capital boost to restructure. The problem is that in our situation they're one and the same. You can't penalize one to fix the other.

[mwilbert]

I wish that was some analogous municipal situation where equity holders could lose 95% of their stake in exchange for a much need capital boost to restructure. The problem is that in our situation they're one and the same. You can't penalize one to fix the other.

Which is why, in the end, either there will be some kind of state bailout and/or the bondholders and pensioners will take a haircut. You can't get blood from a turnip. Not that it would be a substitute for getting the city's house in order, but fixing the administration of the city isn't likely to be enough to acheive fiscal stability, even assuming you can fix it. Or maybe we'll sell of the contents of the DIA!

[Wesley Mouch]

Which is why, in the end, either there will be some kind of state bailout and/or the bondholders and pensioners will take a haircut. You can't get blood from a turnip. Not that it would be a substitute for getting the city's house in order, but fixing the administration of the city isn't likely to be enough to acheive fiscal stability, even assuming you can fix it. Or maybe we'll sell of the contents of the DIA!

I suggest that it would be enough. But as a city, region, state and country we will not reform our governments.

Some of Detroit's problems are local. And these are the 'easy' ones to fix. Slicing departments and staff. Reducing needless services [[human rights for example -- not the city's job).

But the bigger problems are:

-> How do we create sustainable government? We can't run up the bill on future generations and make them pay as we have

-> How do we reduce the burden from bureaucracy and mandates from above?

-> How do we reduce duplication?

-> How can the entire region share in the pain of Detroit. I have no investment in the idea of a city called Detroit. To me, its just the legacy government that happens to be in place. The real problems of Detroit [[rust-belt disinvestment, sprawl, land management) are regional problems. These lay under the absurd current management problems of bloat, misplaced goals, waste, and corruption.

The 'real problems' are truly regional and transcend boundaries. Detroit's the canary in the coal mine. As is Hamtramck, Ecorse, Pontiac, Benton Harbor [[and around the country some well-publicized examples in California and Alabama that are not urban.)

The burden for solution does fall on the 'burbs' -- to a degree. In most cases, the residents of the burbs are the same people [[or children of people) who lived in the city and 'walked'. There's nothing wrong with moving out. But it doesn't relieve you of the burden of maintaining all the schools, roads, traffic signals, land, etc. that you left behind. They were built for you. And the capital burden is still being carried by Detroit.

We're all in this together, and while Detroit must solve some problems, we all have responsibility for a just, sustainable world.

End of ramble. I don't think I'm making much sense now. But sometimes you just must vent.

[corktownyuppie]

Which is why, in the end, either there will be some kind of state bailout and/or the bondholders and pensioners will take a haircut. You can't get blood from a turnip. Not that it would be a substitute for getting the city's house in order, but fixing the administration of the city isn't likely to be enough to acheive fiscal stability, even assuming you can fix it. Or maybe we'll sell of the contents of the DIA!

Intuitively, I think you're absolutely right. Either there will be a haircut, or perhaps maturity dates will be extended, and Pensioners might have to take a haircut or give up COLAs for some time.

IMHO, I think Pensioners living in the City should be granted better terms than suburban pensioners, and both of them should be granted better terms than out-of-state pensioners.

But in any case, no one will be even WILLING to negotiate restructuring the financial terms until the every possible efficiency gain has been gotten from re-structuring the dysfunctional city government and city services.

It's like, look...I'm fine helping refinance your mortgage and even providing up-front money for re-training and re-working your debts. But seriously...sell the boat, either sell or rent out the second home, start cooking instead of eating out, quit putting 3 people on the job when you only need 2. Then we'll talk.

[Det_ard]

In the business world, an entity like Detroit would be taken over and recapitalized by better management, but current Detroit managers and owners [[residents) would forfeit control.

Since the forfeiture of control won't be happening on a permanent basis, there's no reason to expect recapitalization by bodies that will have no control over the management of the city. The essential trade is money for power. If Detroit keeps the power they ought not expect the money.

[mwilbert]

But in any case, no one will be even WILLING to negotiate restructuring the financial terms until the every possible efficiency gain has been gotten from re-structuring the dysfunctional city government and city services.

I think that you are right, but of course sometimes you don't have the choice to wait. You probably have time to appoint an EFM before you negotiate, but there isn't any guarantee that you can get things into order before you run out of money.

In the business world, an entity like Detroit would be taken over and recapitalized by better management, but current Detroit managers and owners [[residents) would forfeit control.
.

I think this is not quite right. In the business world, an entity with no prospect of ever breaking even, like the city, would probably be closed down and liquidated. If it had operating cash flow and the reason it couldn't break even was the debt load, the equity would be extinguished and the debt holders would exchange their debt for equity. I don't really see how there is an equivalent for a city. Perhaps there should be some way to turn a city into a private development. If you had the ability to evict residents, as a private landlord would, you could probably clean the city up fairly quickly. You can do a lot once you abrogate all those pesky rights. Maybe if a city is in as poor shape as Detroit is, that would be a reasonable tradeoff.

[Wesley Mouch]

... If you had the ability to evict residents, as a private landlord would, you could probably clean the city up fairly quickly. You can do a lot once you abrogate all those pesky rights. Maybe if a city is in as poor shape as Detroit is, that would be a reasonable tradeoff.

Rights are not 'all or nothing'.

Certain rights .. life, liberty, and the pursuit of happiness lie close to the core of our country.

Other rights and entitlements were granted by various legislatures to protect or help citizens.

The right to trash pickup is fairly arbitrary. We could reasonably decide to require residents to take their trash somewhere. With recycling in many places, as much as 75% of what is considered 'trash' in Detroit is taken by residents to recycling depots on their dime. And they often pay for the privilege. This right can be re-thought and re-imagined easily -- to the collectively benefit of all.

The right to peaceful enjoyment of your private property is more difficult. For good reason. Government taking of private property is very dangerous -- regardless of the good purposes intended. We're OK with taking for roads, but less for taking for redevelopment.

To fix Detroit [[and lots of other places) we need to be open to new ways of addressing problems. Perhaps property rights are sacrosanct. No matter how much money you are offered to relocated -- you can say no. But it is not reasonable that you can always retain all your governmental/entitlement rights if you do. The city should be able to manage the resources it provides [[and the taxes it charges) based on your burden to your civic neighbors.

Some of these 'pesky right' can and should be changed to reflect today's realities. Others not. But everyone's goal ought to be for the common good. That might require some changes to things we hold dear.

[rb336]

By reform, I meant putting themselves on solid financial footing. The banks are not crying for a bailout today and every day.

yet they are still doing the same risky things that resulted in the meltdown of '08. how much of the "not a bailout" has been repaid?