Dear Bondholders: "Irrespective of what your expectation is...that's gotta change."

[corktownyuppie]

Bondholders will be taking a haircut when this is all said and done.

See end of video...

http://www.freep.com/videonetwork/22...peaks-to-media

[rb336]

i didn't catch that at the end of the video. what minute/second?

[corktownyuppie]

i didn't catch that at the end of the video. what minute/second?

I'm sorry...had the wrong link. I will edit. Here's the right one:

http://www.freep.com/videonetwork/22...peaks-to-media

50 seconds in.

[Richard]

So now in the future the city is going to have to offer a higher wage ,because the mode of working for lower wage but secure in your retirement will no longer be a factor. Good help will be indeed hard to find.

Short term gains.

So now in the future the bond holders will coincider COD high risk and higher interest will have to be paid to make the investment attractive.

Short term gain.

When we want it now we pay the price in the future tenfold,you are going to get what you asked for and pay dearly for it long term.

But no worries if it all goes south so can you all it takes is a Uhaul.

[rb336]

sounds like a balanced approach. tell them hey, it's this or bankruptcy, in which case you are SOL. Detroit is already paying sky-high interest.

[Packman41]

Yes, things are going to change for the bondholders. But before Kevyn Orr said that he also said the pension funds are going to change too.
What makes any of you think that only one side is going to bear the brunt of the cuts? Really ALL parties can expect that things are going to change. It’s called “shared sacrifice” for a reason.
Then there was this in the Detroit News today:
http://www.detroitnews.com/article/2...xt|FRONTPAGE|p
The salient parts are copied below.
But Detroit's harrowing financial position is far worse than headline-grabbing numbers.

An emergency financial manager … would be barred from violating protections for vested pensions enshrined in the state Constitution. Only a federal bankruptcy judge is empowered to order sweeping changes to dangerously underfunded pension funds covering police, fire and municipal retirees.

"If the moderate- to worst-case scenarios are true, then I don't see how Detroit avoids bankruptcy," Eric Scorsone, a Michigan State University economics professor specializing in public finance, [said] "The pensions are probably dramatically underfunded. Even an emergency manager wouldn't be able to touch pensions.

"You'd be talking about hundreds of millions that would need to be paid into those pension funds. ..snip.. The city's General Retirement System, [[GRS) adjusted for market value of assets and actuarial assumptions, is just 32 percent funded, according to individuals familiar with analysis conducted for the city by an independent consultant. For the Police and Fire Retirement System, [[P&F) the corresponding funding level is 50 percent, in both cases substantially less than officially reported by Detroit.

Of the city's estimated $14 billion in long-term liabilities, $1.57 billion are due over the next five years. That means roughly $300 million of Detroit's $1.1 billion annual budget would go to pay obligations before the first police officer or firefighter is paid, before catch-up contributions are made to dangerously under-funded pension funds.

It is true that all those obligations — exacerbated by early retirement schemes that burn fund assets at a faster rate — are not due and payable today, next month or next year. But they exist and they must be funded over time from revenue collected by the city lest their unfunded status keep growing.

It gets worse. Detroit's liability for retiree health care, also known as "other post-employment benefits," totals $5.7 billion, according to the city's 2012 annual financial audit. Those benefits are not covered by the constitution's pension protections, meaning they could be reduced or eliminated by an emergency manager, a bankruptcy judge or both.

The two pension funds have been saying they were [[P&F) 99.9% funded and [[GRS) was 82.8% funded. On another DYes thread I figured they were 54.7% and 41.2% funded. Now the experts thing they are more like 50% and 32% funded. Worse than anyone imagined.