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Old Dec 07, 2012, 11:08 AM
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Detroit Bankruptcy

Planning for the worst:

http://www.detroitnews.com/article/2...text|FRONTPAGE
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Old Dec 07, 2012, 12:06 PM
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I know little about bankruptcy, which is a good thing. What is chap 9 and how is that compared to 7 and 11?

I expect to a see such a large number of cities filing it will create another financial blow out.
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Old Dec 07, 2012, 12:15 PM
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Detroit, just another liberal failure. I'll spare you guys my post of Crowder's, "Detroit in Ruins" uTube video.
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Old Dec 07, 2012, 12:29 PM
Radix malorum est cupiditas
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Originally Posted by Aaron 1 View Post
I know little about bankruptcy, which is a good thing. What is chap 9 and how is that compared to 7 and 11?

I expect to a see such a large number of cities filing it will create another financial blow out.
Ch 9 is like ch 11 - reorganization - since the .gov isn't going out of business.

Why do you think it would create any big blow out ?
The big impact would be on the gen obl bonds of the entities, but in general, the debt to rev of .gov muni bonds is quite low, so I would expect little to no impact after the shock on repayment. The big hit will be to the pension promises - and that impact is mainly to those individuals, not bank or any other institutions.

The killer here is that 50years of actuarials are wrong about what these cities can pay. With interest rates of zero and a flat stock market over 10 years, there is no way to make up the shortfalls below the 8% fund growth that was supposed to make the numbers work. I see local .govs that would have to pay 100% of revenue to retirees, and that can't happen. The defined benefit plan has turned into a bomb that is destroying everything it touches - it was based on forever growth, not on what has happened.
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Old Dec 07, 2012, 12:37 PM
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they could borrow money from the pawn shop
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Old Dec 07, 2012, 02:39 PM
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Originally Posted by BE77 Pilot View Post
Detroit, just another liberal failure.
Rick Snyder's a Republican, FYI.
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Old Dec 07, 2012, 02:48 PM
did a reversed Immelman..once.
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Novi, Michigan
Joined Nov 2002
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this prob has been building for years.Jobs and retail firms move out...many residents are delinquent on property taxes/water service..

...plus,the corruption of city officials,it was a sure thing.Police and other city workers have already made concesssions,but it's not enough.
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Old Dec 07, 2012, 02:52 PM
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No worries.

I am sure the UAW and AFL-CIO will pay of the debts for the city.


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Old Dec 07, 2012, 03:03 PM
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Not terribly surprising. Detroit has been spiraling downward for a good long while. Hopfully if the city does go bankrupt, something new and better will form.

Overall, it does seem that the state of Michigan is examining new economic ideas. The old expensive blue model of government with big unions, is breaking down in the Wolverine state. Against wide spread union protest, saw right to work legislation passed in Michigan.

"‘Right to Work’ Passes in Michigan; Governor Expected to Sign Legislation"

http://dougpowers.com/2012/12/07/rig...n-legislation/
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Old Dec 07, 2012, 03:29 PM
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Originally Posted by CrazyLittle View Post
Rick Snyder's a Republican, FYI.
being Republican doesnt make one conservative BTW there are plenty of RHINO'S
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Old Dec 07, 2012, 03:33 PM
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Becoming a Right To Work State will be a good thing for MI, but too late to help Detroit in the near term. I wonder how many retired government workers from Detroit have $100,000+ pensions.
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Old Dec 07, 2012, 03:43 PM
Radix malorum est cupiditas
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Originally Posted by Big Foot 48 View Post
Becoming a Right To Work State will be a good thing for MI, but too late to help Detroit in the near term. I wonder how many retired government workers from Detroit have $100,000+ pensions.
Detroit has been in a tough spot for so long that I don't really think you will find the types of runaway benefits like in CA that were fueled by screaming realestate values. Even more reasonable defined benefit plans explode under the pressures of bad investment gains and a shrinking tax base. Many of our cities set up their plans for growing or at least stable populations and decent investment returns - now that neither are true, the gap just grows until something has to give. Take a look at how many schools are closing in our older communities and you get a very clear look at what the future budget looks like - a very hard transition to make, impossible with the dysfunctional leaders on the Detroit city council.
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Old Dec 07, 2012, 06:01 PM
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being Republican doesnt make one conservative BTW there are plenty of RHINO'S
http://en.wikipedia.org/wiki/No_true_Scotsman
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Old Dec 07, 2012, 09:01 PM
LcJ
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Quote:
Originally Posted by radix2 View Post
Ch 9 is like ch 11 - reorganization - since the .gov isn't going out of business.

Why do you think it would create any big blow out ?
The big impact would be on the gen obl bonds of the entities, but in general, the debt to rev of .gov muni bonds is quite low, so I would expect little to no impact after the shock on repayment. The big hit will be to the pension promises - and that impact is mainly to those individuals, not bank or any other institutions.

The killer here is that 50years of actuarials are wrong about what these cities can pay. With interest rates of zero and a flat stock market over 10 years, there is no way to make up the shortfalls below the 8% fund growth that was supposed to make the numbers work. I see local .govs that would have to pay 100% of revenue to retirees, and that can't happen. The defined benefit plan has turned into a bomb that is destroying everything it touches - it was based on forever growth, not on what has happened.
Excellent post. The sad part is that so many were warned and let they let the unions just keep forcing the issue. What surprises me is how much money was wasted from the first knowledge of ill winds.
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Old Dec 07, 2012, 10:56 PM
ARFs make me BARF
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United States, MI, Roseville
Joined Dec 2000
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Originally Posted by CrazyLittle View Post
Rick Snyder's a Republican, FYI.
Whos' only been in office 3 years. Nor is he the Mayor of Detroit. That is Dave Bing,(D), before that Kwame " the Felon" Kilpatrick (D), before that,Dennis Archer (actually tried to do good,D), and Slick Coleman (Krugerand theif)Young
Detroit hasn't had a Republican Mayor in over 40 years. Look at Detroit of the early 60's vs Detroit now....thats where out entire country is headed. Too many takers and not enough workers. Too many handouts. Too much govt dependancy and entitlement mentality.

Just look at that idiot JoAnn Watson:
Detroit councilwoman to Obama: We voted for you, now bail us out. (0 min 56 sec)


YOU bail out the city! Send your Cali taxpayer dollars to Detroit, we'd love to have them! (then blow the $ and put our hand out for more!)
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