Posted on 07/28/2013 3:27:58 PM PDT by 1rudeboy
America’s biggest-ever city bankruptcy starts to roll
LARRY EDWARDS sits patiently in his wheelchair outside City Hall, waiting for a lift home. He worked as a gardener at Detroit’s Belle Isle Park between 1988 and 2011. That was before a knee injury, and then a stroke, forced him to retire. He remembers how beautiful the island was before people started to move out of town and the crooked politicians arrived. Mr Edwards will be 50 in December. The city already pays one-third of his full pension. He says that, since his pension is protected by a contract, he isn’t worried about the city’s bankruptcy. But he should be.
By filing for Chapter 9 on July 18th, Detroit sought protection from all its creditors, including pensioners like Mr Edwards. Nothing will change for the next six months. But Kevyn Orr, the emergency manager appointed by the governor of Michigan, says future and present retirees will see cuts to the unfunded portions of their pensions. Health-care benefits are also likely to be squeezed.
Detroit is the largest American city ever to file for bankruptcy. Its long-term debts are estimated at $18.2 billion, or $27,000 for each resident. Of this, about $9.2 billion is in unfunded retirement benefits. Since 2008 the city has spent around $100m more each year than it has brought in. Recent attempts to fix its finances have been thwarted by a feeble economy, a shrinking population and rapidly increasing legacy costs. Property-tax revenues have declined by 20% since 2008, and income tax by 30% since 2002.
The crisis has been brewing for decades. Fifty years ago the city was rich. GM, Ford and Chrysler cranked out nearly all the cars sold in America. Detroit was home to 1.8m people. Today only 700,000 remain. Many are poor and poorly educated—82% have no more than a high-school diploma. The city sprawls over an unmanageable 140 square miles (enough to swallow Boston, San Francisco and Manhattan). Delivering services to barely-populated neighbourhoods would be hard even if the city government were well-run, which it is not.
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No
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I don’t reckon something that is dead can be mended... it should be dissolved.
Not under current management.
Did I read that they building a new hockey stadium?
Funded how?
Economically Detroit is easy to fix. Slash taxes and regulation.
Politically its going to take a wide ranging round of indictments.
Socially it will take solid conservatives (Mostly black to begin with) promoting freedom in Detroit.
Basically its a matter of conservatives fixing the place through free market means or democrats will “fix” it with more of our money.
Faith, Family, and Free markets.
Can liberals admit their governing philosophy inevitably leads to bankruptcy?
I must know what time period we talking about before I can answer. (In the near term, No. In the very long term, probably not, but maybe.)
It certainly can, but accomplishing such a task will require some changes.
Foremost, Michigan must become a Right to Work state and end closed union shops for industry and government.
Second, local business regulation and taxes must be drastically reduced.
Third, the government, insurance industry and safety advocates need to get out of designing cars.
Fourth, the EPA must streamline its Superfund projects and ramp up development of Brownfields.
Not a comprehensive list, but a good start.
Buy to the sound of gunfire
FOR visitors expecting broken windows and muggers, downtown Detroit is a pleasant surprise. Busy food stands serve diners on lime and orange picnic benches, with live music provided by a classical guitarist. After lunch you can play a free game of outdoor table tennis, borrow a bicycle or take a stroll on the lovely riverfront.The city may be broke, but some parts are reviving. Property is so cheap that Detroit still attracts dreamers. Perhaps the most prominent is Dan Gilbert, the chairman of Quicken Loans, a mortgage provider. In 2010 Mr Gilbert moved Quicken’s headquarters from the suburbs to the centre of town. Another of his companies, Rock Ventures, owns or controls over 30 buildings in the area, which locals light-heartedly call “Gilbertville”. Mr Gilbert’s firms have invested around $1 billion in downtown Detroit and employ some 10,000 people there.
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OK here’s a thought experiment: Split the city in two chunks, just like Berlin...maybe run a wall right up Woodward Avenue.
Put a Conservative governor in charge of one half, and a Liberal in charge of the other. Each would have complete authority to do as he sees fit with 50% of the tax revenue. No city council, no state intervention, he’d have similar powers to the Special Masters who have been put in charge of schools by the federal gov’t.
Come back in 5 years and compare the two sides. Then tear down the wall and the winning side takes over the other. Or wait 10 years and the correct outcome will have occurred all by itself.
Bankruptcy: what bankruptcy? $444 million for the Detroit Redwings. Obama-cash no doubt.
I don’t care, I was always more of a Stax/Volt guy, myself.
Could Nagasaki or Hiroshima be mended on the first of September, 1945?
Somebody would WANT to mend Detroit. Nobody is stepping up.
At least nobody with a viable plan.
Raze the entire region to the ground and plant it to buckwheat. Then let the natural rules of economics determine if there should even BE a city there, and allow it to develop according to that economic model.
Resurrecting Detroit is akin to going into a Third World country and trying to bring it up to developed world standards. The city needs far more than investment to bring it back.
And where will those conservatives come from? The vast majority of the residents don't believe in free market principles and conservative values. They believe in a culture of dependency and big government. They accept widespread corruption.
If it weren't for the federal government, Washington DC would be another Detroit.
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