Heads Up !!! - Detroit Bankruptcy Could Hit Millions Of Retirees - CNBC

[WillyT]

Detroit bankruptcy could hit millions of retirees
Published: Friday, 19 Jul 2013 | 8:01 AM ET
By: John W. Schoen | Economics/CNBC

<snip>

With its bankruptcy filing, the city of Detroit has entered uncharted territory. It's a dark place that no major U.S. city has ever gone—but that could change.

Despite the uncertainties surrounding what's expected to be a hard-fought legal battle, the outcome promises to inflict more pain on Detroit's already-beleaguered residents, businesses, creditors, investors and city workers, whose pension plans may now be invalidated.

The case will also set a legal precedent that will be watched closely by other major cities across the country, which are struggling under the weight of years of accumulated debt and underfunded pensions covering millions of public-sector retirees.

"Everyone will say, 'Oh well, it's Detroit. I thought it was already in bankruptcy,' " said Michigan State University economist Eric Scorsone. "But Detroit is not unique. It's the same in Chicago and New York and San Diego and San Jose. It's a lot of major cities in this country. They may not be as extreme as Detroit, but a lot of them face the same problems."

<snip>

More: http://www.cnbc.com/id/100898027

[SoCalDem]

1. Don't you think THAT was the plan from the get-go?

Labor theft during their working years and a stab in the back when they're too old to do anything about it..

Unions were ALWAYS forced into wage-concessions in favor of pension enhancements.

When you are young, strong & healthy, you bust your ass , in hopes that the deferred wages will be there when you are old..

The deck was stacked, the cards marked and all that was necessary was for republicans to take enough power to deal the cards...

[Liberal_in_LA]

19. yes nt

[ProSense]

2. It's

"Heads Up !!! - Detroit Bankruptcy Could Hit Millions Of Retirees - CNBC"

...too late. No one ever cares until after the fact. That's the sad fact. This takeover should never have happened.

Michigan Gov. Snyder: Bankruptcy Will Be ‘Foundation’ Of Detroit’s Future

Michigan Gov. Rick Snyder (R) said in a letter Thursday authorizing Detroit's filing for bankruptcy that the move was the only recourse for the troubled city.

“I know many will see this is a low point in the city’s history. If so, I think it will also be the foundation of the city’s future,” Snyder wrote, according to the Detroit Free Press.

He added: “Without this decision, the city’s condition would only worsen.”

http://livewire.talkingpointsmemo.com/entry/michigan-gov-snyder-bankruptcy-will-be-foundation-of

Typical Republican scam. Sweep in and spend a millions to line the pockets of cronies toward the final act of pulling a Mitt Romney.

New Detroit Manager Is Optimistic on Turnaround

MATTHEW DOLAN and JEFF BENNETT

DETROIT—Michigan's governor on Thursday named a financial overseer of Detroit, who said his turnaround work could be completed in as little as six months if all the stakeholders in the troubled city work together.

Kevyn Orr, a bankruptcy attorney and partner at the law firm Jones Day in Washington, D.C., was named Detroit's emergency financial manager, a role that will give him sole, sweeping power to map the future of the city of roughly 700,000 residents. Republican Gov. Rick Snyder said he picked Mr. Orr for his interpersonal skills, legal and financial acumen and a 30-year track record of work on complex corporate restructuring efforts, including the 2009 bankruptcy of Chrysler Group LLC.

<...>

Mr. Orr said he wouldn't rule out a municipal-bankruptcy filing by the city—which would be the largest such filing in U.S. history—but that he thought the restructuring could be done without one.

Mr. Orr, who will be paid $275,000 a year, said he was persuaded to take the position after meeting with Mr. Snyder, whom he described as passionate about the city's turnaround. In an interview with The Wall Street Journal, the 54-year-old lawyer called the job "the Olympics of restructuring."

- more -

http://online.wsj.com/article/SB10001424127887324532004578360340206713104.html

Detroit spending millions on consultants in turnaround effort

By Joe Guillen

Detroit has agreed to spend nearly $14 million since December to contract nine firms to provide a range of financial and legal services to help the city overcome its staggering deficit and costly long-term liabilities.

More than $3 million of that came in hiring emergency manager Kevyn Orr’s former law firm last month.

While Detroit’s turnaround team continues to expand, City Council members are questioning the costs and wondering exactly who is in charge of the consultants.

“My concern was that we’ve brought in all these consultants, and I don’t know that it’s entirely clear to anybody exactly what they’re all doing and who’s monitoring them,” Councilman Kenneth Cockrel Jr. said during Mayor Dave Bing’s budget presentation on April 12.

- more -

http://www.freep.com/article/20130502/NEWS01/305020054/Emergency-manager-Detroit-lawyers-Kevyn-Orr

http://www.democraticunderground.com/10023294093

[MrScorpio]

3. That's the ripe, juicy fruit that the MI GOP has always wanted

The City's fucked.

[adirondacker]

4. Who needs pension funds in this bountiful, robust economy?

The stock market just hit a record HIGH!

http://www.democraticunderground.com/1014541078

end of sarcasm.


Pathetic, and sad.

[WillyT]

5. LOL !!!

[JPZenger]

12. A huge part of the stock market is owned by pension funds

A rising stock market is great news for anyone who is depending upon a pension. It hopefully will reduce the dangerous underfunding of many pension funds.

[xchrom]

6. du rec.

[gollygee]

7. Yes, this is the plan

People who actually live in the city of Detroit will lose their pensions, and rich people who live elsewhere in MI (such as the burbs) will end up getting even richer. The rich get richer and the poor lose their ability to support themselves. I read Shock Doctrine and everything seems much clearer.

[Crepuscular]

8. Any suggestions

about how Detroit is supposed to deal with the estimated $14 Billion dollars in unfunded pension obligations and long term debt that it has accrued, short of bankruptcy? Deficit spending can only continue for so long and Detroit is reaching the end of that rope, there is simply not enough money coming in to even come close to paying for the spending that is taking place and the obligations incurred.

So what exactly should happen, other than bankruptcy, to fix the situation in Detwah?

[gollygee]

10. Find the book Shock Doctrine and read it

There's even a shorter movie version online you can find if you search.

This is the scheme: Create a financial emergency, then destroy poor people's lives and say you had to because there was no other choice, and at the same time quietly make a bunch of money off it. Someone will profit off this, and meanwhile a bunch of people are going to be going hungry and not able to afford heat. It's not OK.

[Crepuscular]

14. Who created

the financial emergency? The City of Detroit did or rather the politicians entrusted with governing it. Are you suggesting that they are the ones who are going to profit from this? Come on, let's be serious.

My question was, short of bankruptcy, what suggestions do you have to solve the current financial situation that Detroit finds itself in?

[Rex]

9. The filing was ruled unconstitutional!

And they were sent packing to come up with a better plan. Read it here FIRST on DU!

[reformist2]

20. That's cold comfort for a city and state government that have no money. A federal bailout is needed.

[JPZenger]

11. Interesting quote

Interesting quote about the Detroit situation from one of the articles.


The person said we cannot sustain a public pension system where people work for 30 years and then collect a pension (and often subsidized health insurance) for the next 30 years.

[Crepuscular]

15. That is especially true

when the number of workers paying into the pension system are outnumbered two to one by the retirees who are collecting the benefits. Had the pensions been correctly administered for the past 30 years, Detroit would not be faced with such a huge amount of unfunded debt but the city government in the past routinely underfunded the pensions and spent the money on any number of other things, many the result of corruption.

[mstinamotorcity2]

13. A lot of those retirees

don't reside in Detroit. They live all over the United States. So it will effect everyone. Especially those who have worked for the city and live in the suburbs. looks like we won't be the only one losing some of their tax base.

[WillyT]

16. Bingo !!!

[mstinamotorcity2]

17. They shared in the pleasure

now they don't want to share in the pain. that's the problem when you want Detroit to go Bankrupt. Not to mention let Countries we went to war with build on U. S. soil. I am not saying we should not be in some type of trade agreements and policies, but to build on American soil??? I see all the old southern boys in politics like Senator Shelby (Ala.), Corker (Ky.), McConnell (Ky.) who got mad at the southern flight, with those automakers in their states, who are extremely wealthy. The only way a right winger would ever forsake his Patriotism is if you offer him enough money. then its the Free Market!!!!

[Liberal_in_LA]

21. retired detroit librarian explained that she was RECRUITED to detroit based on retirement benefit

Now they might be reduced

[reformist2]

18. If Obama doesn't guarantee their pensions in the end, he will have officially gone from hero to zero

The saddest part of all this is that, I'm really not sure anymore how much Obama will fight to do anything like this.