Skip to comments.Detroit Plans to Cut Pensions by 84% or 16¢ on the Dollar
Posted on 10/28/2013 8:47:05 AM PDT by Hojczyk
Another Democrat Success Story The 23,500 pensioners in Detroit are going to have to adjust their budgets. The city plans on cutting pensions by 84 percent. Doug Ross and Reuters reported:
On Friday, city financial consultant Kenneth Buckfire said he did not have to recommend to Orr that pensions for the citys retirees be cut as a way to help Detroit navigate through debts and liabilities that total $18.5 billion.
Buckfire said it was clear that the city did not have the funds to pay the unsecured pension payouts without cutting them.
It was a function of the mathematics, said Buckfire, who said he did not think it was necessary for him or anyone else to recommend pension cuts to Orr.
Are you saying it was so self-evident that no one had to say it? asked Claude Montgomery, attorney for a committee of retirees that was created by Rhodes.
Yes, Buckfire answered.
Buckfire, a Detroit native and investment banker with restructuring experience, later told the court the city plans to pay unsecured creditors, including the citys pensioners, 16 cents on the dollar. There are about 23,500 city retirees.
Lawsuits as far as the eye can see.
Misinterpretation of the Michigan state constitution to claim this cannot happen because it is alteration of compensation agreements.
Moves by Obama, probably indirectly, to bail out Detroit, and especially the unions of Detroit.
The people need to take it up with a city council who kept promising more than they could ever deliver and made themselves rich doing so.
couldn’t happen to a nicer bunch......
Well DUH! A fourth grader could have told you that.
“It was a function of the mathematics, said Buckfire, who said he did not think it was necessary for him or anyone else to recommend pension cuts to Orr.”
One little part of the Entitlement State come crashing down...
Are all the other creditors only getting one-sixth of what they were owed?
That is gonna leave a mark.
..."LOL...we don't need no stink'n taxpayers!"
Detroit retired LIBs only getting 16%. That’s probably more than they deserve. Bwahahahahahahahahaaaaaaaaaaaaaaaaaaaaaaaa.
What’s your point?
My understanding is that Detroit has an art museum with numerous valuable pieces that are somehow owned by the city of Detroit. Its art could be sold for many billions of dollars.
I hope the Detroit pensioners recognize their level of importance in the world of liberal priorities.
No, it was a function of years and years of politicians making promises to the city employees that they would be taken care of. Instead of doing what any sane person would do - figure out what this week's paycheck would do to the employees future retirement funding and deposit that amount in a separate account as a "lockbox", they just said "we'll worry about taxing people later". You can get away with incurring debts now and paying in the future if you are growing, but as soon as Detroit's population started shrinking between the 1950 and 1960 census, i.e. long before the current employees and most retirees were hired, that there was no way to plan on that.
That headline is either bad math or bad English.
Do the f**kees get 84% of promised or 16% of promised?
Surely, this had to have been written by a lib - since math and libs are most definitely not acquainted.
That doesn’t really matter to Math. Math always wins.
Do you really think that politicians are affected by any laws that they pass?
If they did, they wouldn’t pass them — consider Bambicare. for instance.
According to the article, all the other unsecured ones are only getting the same thing. And most creditors don't requlire a city to put up collateral so I bet this would include the vast majority of the creditors.
Yep. Recall, these are people who think a reduction in an increase is a decrease.
Awwwwww — 16 cents on the dollar is still too much.
Is this for people already retired and collecting?
There is going to be riots
Detroit has been funct-up for decades ....
Warms my heart to see this. Nothing pisses me off more than seeing some 45 year old collecting a pension.
There’s nothing left to burn down.
More of a question.
Isn’t cutting by 84 percent 84 cents on the dollar?
I know it’s a question, but it is a question that begs a point. I think I know what it is.....just wondered what you would say.
Reminds me of that Ayn Rand quote, We can evade reality, but we cannot evade the consequences of evading reality
That, and some seriously bad pension management and oversight. You wonder if they chose a plan based on one year's good returns, and then projected that growth rate over twenty years? A high growth rate would really cut down on contributions, wouldn't it? Or, did they not see attrition coming, and plan for lower contribution rates?
And isn't it funny, the same entities that depend so heavily on a robust stock market and economy to drive their pension plan growth, are the same entities working their hardest to create a political and regulatory environment that won't allow businesses to be successful?
I’m sure Nebraska has more than enough money to pay for this.
Not all creditors are equal in the eyes of the law. Bankruptcy has several levels of creditors who have various rights.
Because I'm wondering if all creditors are feeling the pain equally or if the city retirees are bearing the bulk of the costs.
I'd also like to know if any of the former mayors and councilmembers who drove the city into the ground and who may also have city pensions are covered by the same plan as the rest of the city employees are. If not, then do they get 16 cents on the dollar as well?
Just waiting for the cries for the federal govt. to bail them out!!
That’s what I thought. Your inner liberal is showing. Your assumption that these retirees are innocent victims is just breathtaking. They are not victims...THEY ARE THE PROBLEM. They demaned these provisions, they voted for those who promised them - they are the ones who were so ignorant as to think these were realistic or sustainable.
This is at least a partial answer...although the city employees through their unions pretty much caused the problems so they should be the ones to bear most of the burden!!
I didn't post the article or write the title, but yes, it's and 84 cent cut, but it leaves a 16 cent on the dollar payout. The unions will scream bloody murder!
YES.....doodle pay attention to my man here....
Don’t smirk dear people - who’s Social Security do you think is going to pay China back for the 18 Trillion dollar loan?
Pray you get 16 cents on the dollar.
“Because I’m wondering if all creditors are feeling the pain equally or if the city retirees are bearing the bulk of the costs.”
Bonds are sold with different risk levels. A secured creditor bond probably has to be paid in full. But Obama changed 200 years of law when he dictated that Chrysler’s secured bond holders would take only x% and he gave the rest to the unions, which had ZERO rights. Let’s say Chase Manhattan bought a secured bond for $100 million dollars plus 12% interest. I believe they are owed all of it so Detroit would have to sell assets to pay the amount. It has to be this way or the system of getting loans based on bonds collapses and the way cities are financed disappears.
The city workers are not secured creditors.
Was it them or the incompetents who ran the city? In any case you can say all the creditors aided and abetted. So all should pay the price. Even the secured creditors.
If you planned your entire life around this you are now SOOOOO SCROOOOOOD.
Don’t EVER believe a promise made to you for thirty years in the future. Nobody has a crystal ball that big.
I don’t think so; the vendors had nothing to do with the city’s decision to spend more than they had.....the employees though are directly responsible for electing gov. officials that willingly gamed the taxpayers to get sweetheart deals for their retirement. Pension funds are the main culprit. Sorry but the city leaders and city employees are the guilty ones here and it is poetic justice that they have to cough up their ill gotten pensions for it!!!Ponzi schemes only benefit the early culprits...sooner or later the bill comes due!!!
People can criticize the pensioners, but they had a good-faith agreement with the city that those pensions would be honored, and 16-cents-on-the-dollar will likely put them on welfare at best and on the streets at worst. The city had an obligation to manage its revenues to support its obligations. Now, IF the pensions had a medical insurance component, THAT is the part that should be cut or rolled-back.
The greedy unions and greedy politicians made deals promising each other Other Peoples Money. They failed in any fiduciary responsibility they had.
Let the public officials who made those promises pay up.
I wonder what the first year was when the tax revenues were lower than the previous year. 1992?
Unfortunately government exempted itself from having to fully fund their pensions. These workers should have been able to contribute more to their pensions too.
Sell their bodies for parts and fund the pensions. That might put a stop to this nonsense.