ThinkTank Says Bankruptcy Not As It Appears

[Gannon]

I love it. More ammunition for that federal judge to throw all this out and push a reset button...rolling back Snydely's illegal doings.

This was just published on the Freep's site:

http://www.freep.com/article/2013112...e-sharing-cuts


Puts a bunch of the culpability on the state withholding those revenue share funds.


Now that I know Duggan has experience with bankruptcies...I would just LOVE the whole bill for Orr's firm and all the rest to be dumped into Snydely's pocket. It is all his fault this was forced in the first place.

Doesn't mean some form of bankruptcy isn't necessary, just NOT the way it was done. Even though I'm sure Duggan had some help with his hurdles getting into office, I'm putting that aside for the overall good of the city.

From now on, Duggan gets the benefit of the doubt...

[DetroitPlanner]

Hmmm.....http://www.semcog.org/Semscope/SEMsc...index.html#/4/

[MikeyinBrooklyn]

This is hardly an independent study. Demos is a self-described progressive organization. They advocate with and for unions and higher government spending. Obviously they would push back against something that is bad for unions and will lead to lower government spending. But, if it makes you feel better...

[bailey]

This is hardly an independent study. Demos is a self-described progressive organization. They advocate with and for unions and higher government spending. Obviously they would push back against something that is bad for unions and will lead to lower government spending. But, if it makes you feel better...

Exactly.

Demos describes itself as nonpartisan but has been identified as a liberal think tank in past media stories. Its website says its mission is to “reduce both political and economic inequality” in America

Just as partisan and hacky and any report to come from the Makinaw center [[which also claims to be non-partisan).

Should be given just as much credence.

[DetroiterOnTheWestCoast]

This is hardly an independent study. Demos is a self-described progressive organization. They advocate with and for unions and higher government spending. Obviously they would push back against something that is bad for unions and will lead to lower government spending. But, if it makes you feel better...

And we all know the GOProud/Log Cabin crowd, all ten of them, hate anything progressive

[ndavies]

Does it really matter if this is true? The only thing that matters is Detroit doesn't have enough income coming in to pay its current obligations. If its from declining revenues or increases in pension costs, the results are the same either way. Every bankruptcy in the world comes from not having enough money to pay your bills. Detroit doesn't have enough cash to cover its obligations. All this is about finger pointing and doesn't solve the problem.

[Gannon]

Precisely WHY they should be heard.

Also why those in charge cannot be fully believed, either.

They are biased, too.


So? I'm HAPPY to hear an opposing viewpoint to that crook in Lansing and his gang of thieves.

I agree with you, N, the bankruptcy itself may be necessary, but I'd much rather it be run by local elected officials instead of those installed through an illegal law thrust upon the populace just after they voted down a very similar measure. The insult of inserting that appropriation into the bill so it COULDN'T be voted down again was the shit-icing on their crapcake.

[ndavies]

Sorry Gannon bankruptcy is the best thing that could ever happen to the city. Now things will have chance of getting fixed. And the local city leaders are completely clueless on how to fix it.

[MikeyinBrooklyn]

All non-partisan means is that a group does not affiliate with a party. It does not mean that they don't have and advocate a point of view. I am right wing, but I am not a Republican. Technically, I am non-partisan. But I generally advocate for conservative candidates.

[antongast]

Just as partisan and hacky and any report to come from the Makinaw center [[which also claims to be non-partisan).

Should be given just as much credence.

The Mackinac Center's reports on Detroit seem to me to have been given quite a lot of credence in designing the city's restructuring plan. Things like privatizing city services, selling the water department, and eliminating defined-benefit pensions are ideas the Mackinac Center has been tossing around for years in its position papers.

As Milton Friedman once said, "Only a crisis--actual or perceived--produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around." The Mackinac Center learned that lesson a long time ago, and they're now reaping the benefits at the expense of those of us who live in Detroit and want to see the city and its people thrive. I think it's long past time for progressives to recognize that two can play at that game, and that alternatives to free-market radicalism can be realized if people are willing to promote them without apology.

[MikeyinBrooklyn]

And we all know the GOProud/Log Cabin crowd, all ten of them, hate anything progressive

I can't speak for either of those organizations, as I am not a member. But I can say that gay conservatives are just as against redistributionist policies as our straight brethren.

[BankruptcyGuy]

I hope the person who commissioned this study didn't break the bank paying for it.

[DetroiterOnTheWestCoast]

I can't speak for either of those organizations, as I am not a member. But I can say that gay conservatives are just as against redistributionist policies as our straight brethren.

Its a total fallacy that conservatives are against redistributionist policies. Its just that they want a redistribution UP. Such as the several rich GOP congress critters who railed against food stamps while they fully avail themselves of crop subsidies for their farms. They are personal socialists lining their pockets at our expense.

[313WX]

While it's true that Detroit is ultimately broke at this time, nothing said in that article is false.

Two things to add:

1. The fact is the state of Michigan was well aware that this day would come and they did nothing to try and stop Detroit's decline. In fact, many have made the argument that the state of Michigan actually accelerated and aided in Detroit's decline by favoring agrarian and suburban policies [[not one policy that came out of Lansing prioritized capital investment in Detroit, such as the reluctancy to pass an RTA, the imposing of an EFM in what was a financially stable school district, the lifting of the residency requirement). Whether it was done purposely or unintentionally doesn't matter. And then when Detroit's decline threatens the health of the rest of the state, to put the cherry on top after watching its largest city and its citizens suffer for the past few decades, the state of Michigan tthen dismantles its government until nothing but skin and bones remain and leaves the citizens of Detroit completely out of the process. I nfact, that teabagger loon from Monroe said something that rubbed me the wrong way as well. He said something along the line that implied Detroit and its citizens was some foreign entity from the rest of the state.

2. To add to what Gannon said about the elected officials guiding Detroit through bankruptcy, I read an article on Deadline Detroit that shows much of the stuff Kevyn Orr is doing was proposals made by Dave Bing. The supposed claim is that he couldn't make any progress due to the City Council's "obstruction." In theory, once a bankruptcy petition was filed, couldn't the judge have imposed Bing's proposals without the need of a EM [[surpassing the City Council)? If a receiver was the best option, the elected officials of Detroit could have requested that the court appoint one [[or the citizens of Detroit could have elected a City Manager during the 2012 elections).

[MikeyinBrooklyn]

Its a total fallacy that conservatives are against redistributionist policies. Its just that they want a redistribution UP. Such as the several rich GOP congress critters who railed against food stamps while they fully avail themselves of crop subsidies for their farms. They are personal socialists lining their pockets at our expense.

I wouldn't label anyone favoring farm subsidies as conservative, even if they would. Farm subsidies have been disrupting the market and raising the cost of food for everyone since the 1930s. As for "redistributing UP" as you say, I would be against it if it were possible. But the genuinely poor in this country who do work, pay little in taxes. In fact, due to EITC and various assistance programs one can qualify for regardless of job status, many "working poor" receive more in benefits than they pay in taxes. Not every working poor person, but many. And, obviously, the non-working poor are only capable of receiving money, not paying it.

[DetroitPlanner]

Its a total fallacy that conservatives are against redistributionist policies. Its just that they want a redistribution UP. Such as the several rich GOP congress critters who railed against food stamps while they fully avail themselves of crop subsidies for their farms. They are personal socialists lining their pockets at our expense.

The overwhelming amount of time that the legislature has had the revenue sharing funds turned off a democrat was governor. The suburbs have been hurt by this as well. The State calls this revenue sharing for a reason: the State has constitutionally restricted locals from having a sales tax and there is a requirement to share the receipts from the state sales tax. This has not happened, or has happened in a way that has starved local units in favor of funding state government programs. You can't say that this is a party topic, it is more of a 'me first' attitude.

[steve from virginia]

The assumption is that Michigan is solvent while Detroit is not. That assumption is nonsense. Regardless of what happens in Detroit, Michigan is bankrupt. The effort of of Orr & Co. is to create a 'bad bank' out of Detroit where defective claims against Michigan can be shifted. It is no coincidence that the lead lawyer for Chrysler during its bankruptcy was hired to perform the same 'bad bank' maneuver on Detroit.

The study puts the responsibility where it lies, onto Lansing where the buck has been passed to Detroit for decades.

Another assumption is that the current Lansing regime will be successful in handing the poisoned chalice to Detroit claimants. This would only be true if, a) the claimants are ignorant, b) the State can make a compelling case [[scare story), c) the State's private sector creditors are themselves above reproach, and, d) the process can be concluded quickly.

a) The claimants have seen the same process in action for the past 5 years both in the US and elsewhere: claimants are robbed by the money center banks with the blessing of the bought-and-paid-for political establishment. It is hard to see how the banks are going to get away with murder this time, everyone knows the game by now; they have hangman's nooses ready and plenty of lampposts, all they need are the bankers' necks.

b) Bankers say, 'pay us or else the world ends'! Detroiters say, 'STFU!' they cannot be frightened by threats of collapse: the city has already collapsed ... let 'er rip already!

c) Uniformly, Detrot's private sector creditors are blatant criminals who deserve long prison sentences at hard labor, their loans to Detroit are iffy at best, odious at worst, like loans to Idi Amin, payable by Ugandans. Odious debt is not collectible. Neither are amounts under controversy by way of criminal conspiracies.

d) Both the EM and its stance are hard to justify due to jurisdiction. From here, neither the EM nor Lansing have standing. Determining standing will take ten years, plenty of time to reveal Detroit's lenders as gangsters, plenty of time for Orr to enrich himself so as to make Kwame look like a street beggar, plenty of time for Michigan [[and the rest of the US) to go pear-shaped and its millions of 'occupants' to migrate or fall into abject poverty ... given enough time pension claimants will die of old age so that the pension 'problem' fixes itself.

BTW: the entire USA economy is falling apart along with so-called 'productive' industrial economies around the world. The cause of this unraveling is the absence of any real value or actual productive goods. Our blessed stores are filled with illusions and self indulgence bought and paid for with debt. You might not 'believe' this but frankly I don't care what you believe in or not: I'm old and I have no children who might murder me in my sleep or curse me for being born. If you cannot see the evidence all around with your own eyes you have blinded yourselves and deserve everything that will happen to you.

I will just sit back and watch what is going to happen to you and your families as your precious banks steal your money leaving you to your own devices.

Forget Detroit: if this country isn't lucky it will turn into Syria.

[Det_ard]

Steve in VA, that was a hell of a rant. Fits in well with the other "blame the state", "Detroit's not really bankrupt" and "the banks made us do it" posts.

I care too much about Detroit's future to advocate unwinding the EM process and letting Detroit's rabble rousers figure it out on its own, but it would be fun to see how some of the loudest voices against the EM process would handle the financial and legal realities currently being dealt with by knowledgeable professionals.

[MikeyinBrooklyn]

Wow, Steve. A Ugandan citation! Well, that doesn't render anything in your post informed or rational, but it certainly is creative. I will just have to keep on rootin' for our uniformly criminal corporate citizens in our bankrupt state while trying to join The Man in keeping people down.

[Hermod]

From the report:

"He said state investment should be increased to “pre-crisis” levels and that tax subsidies for development in the city should be open to being reclaimed as part of the bankruptcy process."


Wow, the old radical liberal switcheroo declaring wasteful spending by the state to pour the money down the bottomless pit of Detroit as a "wise investment".


"Nowling said Detroit needs development subsidies to attract businesses downtown. He also said the state is unlikely to provide Detroit with more revenue since it already gets more than its per-capita share."

More than its share?

[professorscott]

The article is interesting but will not affect the proceedings, as it has not been entered into evidence; therefore Hon. Mr. Rhodes will not consider it.

Those of you clamoring for the bankruptcy to be denied, I hope you fully understand what that will mean if it happens. Detroit did not apply for bankruptcy frivolously in order to screw with pensioners and others. Detroit is not bringing in as much as it spends and the trend is worsening. Why that is - the subject of the report - barely matters. If every week I spend much more than I make, and I can no longer borrow money, then I'm doomed no matter what I decide to blame for my situation.

I fervently hope the bankruptcy is allowed to proceed, then we can have the very reasonable arguments about who can be paid what. Then, with the structural debt issue resolved, we can go about figuring out how to actually provide a decent level of city services to residents; I trust Mr. Duggan with that much more than I trust Mr. Orr, and expect Mr. Orr will feel the same way and allow Mr. Duggan to take the helm of operations for the most part. COO role, as Mr. Duggan himself has put it.

[MikeyinBrooklyn]

Accepting the premise that Detroit's decline was caused by revenue decline and not by spending issues [[purely for the sake of argument; we all know Detroit has spent vastly beyond it's means for decades) begs the question: how is that relevant? Detroit needs to adjust it's spending to a) provide essential services and b) to correspond to revenues it can realistically raise. That equation necessitates substantial cuts to payements to creditors, including pensioners. Regardless of where one assigns blame, those payments need to be cut.

Picking up on an idea that Hermod hinted at: Declaring a solution to a budget problem to be the further spending of money that isn't yours seems only to further the budgetary problems.

[Wesley Mouch]

Accepting the premise that Detroit's decline was caused by revenue decline and not by spending issues [[purely for the sake of argument; we all know Detroit has spent vastly beyond it's means for decades) begs the question: how is that relevant? Detroit needs to adjust it's spending to a) provide essential services and b) to correspond to revenues it can realistically raise. That equation necessitates substantial cuts to payements to creditors, including pensioners. Regardless of where one assigns blame, those payments need to be cut.

Picking up on an idea that Hermod hinted at: Declaring a solution to a budget problem to be the further spending of money that isn't yours seems only to further the budgetary problems.

But you see, those who feel betrayed by the man believe it is their money. And of course there is validity to the idea that the game is stacked against the little guys. But you know what? It doesn't matter. Frankly Detroit's not that special. The problem is no different for Newark, South Bend, St. Louis or San Diego. The world's unfair. Some rise to the challenge. Other's just bitch about how they're being held down by the man. Some go about successful lives. Other's complain. We've make the wrong choice for too long. Time to stop looking for [[and finding) someone who's done us wrong. Its a long list. Get over it and move on. It can be done.

Bankruptcy is a chance to wipe clean at least some of the slate. Use it.

So while I'm on my little soapbox, there's a lot of complaining about pensions. You know what would be the best thing for most pensioners? A quick bankruptcy -- a minimal adjustment -- and then getting the whole pension back after Detroit gets back on its feet. Instead, we squabble over our little pile of marbles. You pick.

[Locke09]

Perhaps I commissioned the study, because they make some of the same points I and others who have actually analyzed the data in all the reports make. And they come to the same general conclusion that there were options other than bankruptcy.

People keep harping on 18 billion in debt. Well 6 billion is backed by water revenue and shouldn't even be on the table. That leaves 12 billion. 6 billion of that is retiree healthcare costs projected over about 30 years or more. Only problem is: a) that's over the course of decades and b) that's not really debt at all. Retiree healthcare costs can be ended outside of bankruptcy, as Orr has already targeted for February 2014.

That leaves 6 billion dollars of both secured and unsecured debt. But it's not debt immediately due. 3.4 billion [[according to the City) is "projected" pension fund debt payable over more than 30 years. Even the remaining 3 billion in absolute debt is not something immediately due. The City has funds to pay the annual amounts. That's why they have the ability to move 95 million dollars to pay for restructuring costs [[not services mind you).

BTW, revenue sharing is not money that isn't yours unless you get back more than your city generated.

[steve from virginia]

http://www.nytimes.com/reuters/2013/...s.html?hp&_r=0

BTW: Mikey 'in Brooklyn' is either an idiot or a paid shill of the banks. Detroit has been cutting operating expenses for decades ... for crying out loud it barely has a fire department! It is the state that overspends in the form of multi-billion dollar highway construction projects that never earn a penny and giveaways for private sector 'clients' that are simply refunded bribes.

Don't forget the pro sports teams. Without public sector dollars they might move somewhere else ... Horrors!