Detroit files for bankruptcy

[tpaulus_2]

Did I jack another one?

You leave the dudes in your neighborhood out of this!

 

[broncosmitty]

Smitty still living in a card board box? How much is that mortgage? Just busting chops.

I'm still at work right now. So.... A little more than I can afford sadly. It rained today, so I'll be checking out the "home" market in the dark tonight.

 

[VulturesRule]

For as much as I hated to see the bankruptcy filing, it is needed to move the fiscal house forward for Detroit. I have a relative who retired in his early fifties on a thirty years and out program. It's unfortunate that his defined benefit pension will be at risk now, yet hopefully he accumulated other assets along the way just in case something like this happened.

Detroit peaked in the fifties, not the seventies. This process and inevitable conclusion wasn't a phenomenom of outside forces (i.e., foreign competition, current recession, gasoline prices); it was due more to politics handing out too generous of packages in exchange for power, and not curbing those pacakges earlier in the process.

As has been aptly pointed out by others, it is devastating when an employee will not get what they were promised. Regardless of your views on government assistance, crime and poverty are huge drains on the city's resources, and must be addressed now. It is also true that Detroit does not have a magic checkbook, where it can issue dollars without having to deposit monies to cover those checks.

Hold on tight, the really hard decisions are just beginning for Detroit. If done correctly, they may lead to the new model of what large revitalizing urban centers will look like in the 21st century. If not, then this becomes the cautionary tale of what can go wrong.

 

[TBBishop]

Not a mortgage, student loans. My home is free and clear already because I bought it for a song and renovated it (most of it, still some work to do) myself.

Student loans are a whole 'nother issue.

But my point was that if an employer doesn't have to pay their employees money that was promised, via a legally binding contract that is protected by our state's constitution, then what the hell do I have to honor a piece of paper I signed?

I do pay my student loans, for what it's worth. It just seems like the government operates on a total double-standard. The feds raising their credit limit a few years ago is a great example. I think I should just max out as many credit cards as I can, then call the companies when I run out of $$ and tell them I'm raising my credit limit...

But again where is the money supposed to come from? I get that you pay your debts but if push came to shove wouldn't you tell them "I'm sorry but your not getting paid?" I don't see the double standard. I feel awful for the people and hopefully Detroit can figure out a way to make things square with them but if there's no money there's no money. they can't print it.

 

[tpaulus_2]

I get that there's no $$ TB, that's why they filed (rightfully so) for bankruptcy. But in that filing they're not supposed to be able to include those pensions, but Snyder illegally approved just that. That's all I was getting at...

But you all have a valid point that they can't pay anything without having the $$...

 

[TBBishop]

I get that there's no $$ TB, that's why they filed (rightfully so) for bankruptcy. But in that filing they're not supposed to be able to include those pensions, but Snyder illegally approved just that. That's all I was getting at...

But you all have a valid point that they can't pay anything without having the $$...

I'm going to bet when it's all said and done Detroit will be able to proceed with the bankruptcy but will not be allowed to include the pensions. They'll still be on the hook for it. Where the money will actually come from to pay it is a good question though.

 

[gandydancer]

Ingham County judge to rule July 29 on Detroit bankruptcy pension case | MLive.com

 

[Naughtymax]

That's no fault of the people who are getting robbed out of the pensions they were promised as part of their salaries for the years they worked.

It's against the state constitution to declare bankruptcy protection on those accounts, yet Snyder signed the damn thing anyway. He's been a far more effective governor so far than Granholm was, but his blatant disregard for state and federal laws as well as the our state and the US constitution is down-right criminal.

Don't get me wrong- the city of Detroit absolutely needed to decaler bankruptcy, but that pension $$ should be 100% untouchable.

If not, then why am I required to pay Wells Fargo back the $$ I borrowed from them? Same exact logic as not paying workers $$ they've already earned. A promise is a promise after all...

Actually, you're NOT required to repay Wells Fargo (I just repaid them my full mortgate today!). You, too, can declare bankruptcy and receive a discharge if it's appropriate. You cannot squeeze blood from a stone, nor can anyone but Obama print money.

I WOULD be just fine with a ruling that made pensioners the 'full, seniormost secured creditors', meaning they get paid first from the city assets ahead of bondholders, etc. I think there are unfunded liabilities of about 8 billion and assets that should at least make a pretty good dent into that amount (the art collection alone is something like 2.5 billion). After that, if the city just doesn't have enough to pay pensions then they don't have it - crying won't make money appear.

It also makes me wonder why there aren't laws requiring all organizations offering pensions to fully fund them at all times - meaning they can never kick the can down the road on the amount needed to cover the cost, and once money's in the pension fund it can never be withdrawn by the company. That's the kind of Obama socialism I could get behind.

 

[themuzzer]

Actually, you're NOT required to repay Wells Fargo (I just repaid them my full mortgate today!). You, too, can declare bankruptcy and receive a discharge if it's appropriate. You cannot squeeze blood from a stone, nor can anyone but Obama print money.

I WOULD be just fine with a ruling that made pensioners the 'full, seniormost secured creditors', meaning they get paid first from the city assets ahead of bondholders, etc. I think there are unfunded liabilities of about 8 billion and assets that should at least make a pretty good dent into that amount (the art collection alone is something like 2.5 billion). After that, if the city just doesn't have enough to pay pensions then they don't have it - crying won't make money appear.

It also makes me wonder why there aren't laws requiring all organizations offering pensions to fully fund them at all times - meaning they can never kick the can down the road on the amount needed to cover the cost, and once money's in the pension fund it can never be withdrawn by the company. That's the kind of Obama socialism I could get behind.

That's what happens when Unions and Politicians sleep together.


Unions were a great Idea back in the day, the same with Social Security......I came to grips with it 10 years ago knowing damn well my social security won't be there when I'm done. It will go to pay more socialized programs and other people not carrying there weight.


401k's are the biggest joke going along with college tuition.

 

[gandydancer]

That's what happens when Unions and Politicians sleep together.


Unions were a great Idea back in the day, the same with Social Security......I came to grips with it 10 years ago knowing damn well my social security won't be there when I'm done. It will go to pay more socialized programs and other people not carrying there weight.


401k's are the biggest joke going along with college tuition.

That is one thing I love about the rail road. No social security!! Our $$$ goes into the RRB. I do not believe they will let the feds borrow from it a second time.

 

[RobBase]

That's what happens when Unions and Politicians sleep together.


Unions were a great Idea back in the day, the same with Social Security......I came to grips with it 10 years ago knowing damn well my social security won't be there when I'm done. It will go to pay more socialized programs and other people not carrying there weight.


401k's are the biggest joke going along with college tuition.

If I could give you 100 Mike Utley thumbs up I would. What age are you if I may ask?

 

[themuzzer]

If I could give you 100 Mike Utley thumbs up I would. What age are you if I may ask?

I'm 42 swarm.

 

[broncosmitty]

Actually, you're NOT required to repay Wells Fargo (I just repaid them my full mortgate today!). You, too, can declare bankruptcy and receive a discharge if it's appropriate. You cannot squeeze blood from a stone, nor can anyone but Obama print money.

I WOULD be just fine with a ruling that made pensioners the 'full, seniormost secured creditors', meaning they get paid first from the city assets ahead of bondholders, etc. I think there are unfunded liabilities of about 8 billion and assets that should at least make a pretty good dent into that amount (the art collection alone is something like 2.5 billion). After that, if the city just doesn't have enough to pay pensions then they don't have it - crying won't make money appear.

It also makes me wonder why there aren't laws requiring all organizations offering pensions to fully fund them at all times - meaning they can never kick the can down the road on the amount needed to cover the cost, and once money's in the pension fund it can never be withdrawn by the company. That's the kind of Obama socialism I could get behind.

I don't support the selling off of DIA collections what-so-ever. I don't support paying people's pensions either. Unless they want to move back within Detroits City Limits. Then I'd support giving them the money, or some of it. I'd support a tax on sporting events, hotels, casinos, concerts and the like. Nobody is going to skip going to a game on account of $3. But everybody will skip out on a trip to the art museum, when there's no art.

 

[RobBase]

I'm 42 swarm.

You're only 5 years older than me but wise like my dad (at least with union/Detroit automotive stuff).

I forgot to quote it but what NaughtyMax said is true, you can file for BK instead of paying back the contract you agreed to with the bank, but you won't be able to buy a home again for at least 4-7 years (if ever). Just walking away from your mortgage (no short sale, no BK just disappear) then you're pretty much fucked for life . But that is true, you'll have no more mortgage payment.

 

[Naughtymax]

agree, Rob. In conjunction, nobody is going to buy a city of Detroit municipal bond for a few years either...

 

[Naughtymax]

And while I agree that it would be a horrible shame to sell off one of the world's great art collections, the point of a bankruptcy is to say that you can't pay your debts. You always have to sell off or give to your creditors your valuable possessions to partially repay your debts as part of that process.

If the taxpayers of Michigan agreed to buy the art for its $2.5BB value and that money went to the creditors, that would be a fair solution to both sides, but otherwise Detroit has to fulfill its obligations to the best of its ability.

 

[tpaulus_2]

Actually, you're NOT required to repay Wells Fargo (I just repaid them my full mortgate today!). You, too, can declare bankruptcy and receive a discharge if it's appropriate.

Not true in this case. Private bank student loans cannot be erased via declaring bankruptcy. They are the single most untouchable, financially binding agreement out there (at least in the USA, other countries don't have student loan problems because they realize the value of making public universities free, just like public primary and secondary schools).

There is legislature trying to be pushed through right now to take care of that nifty little loop hole the banks have created though. Student loans have never traditionally been a big issue, but the rising cost of higher education, coupled with massive cuts in federal student aid and predatory lending have finally made Washington take notice.

We'll see where it goes though- banks have a ton of $$ and good lobbyists, and American politicians have became notoriously easy to buy off in the last 100 to 120 or so years. Once America became industrialized and huge sums of $$ started to get thrown around our lawmakers seemed to lose all sense of patriotism and decided instead to sell their votes to the highest bidder(s).

Sad, but that's the world we live in; our two party political system is drastically flawed. Two more independent political parties would really help that a lot, imo.

It also makes me wonder why there aren't laws requiring all organizations offering pensions to fully fund them at all times - meaning they can never kick the can down the road on the amount needed to cover the cost, and once money's in the pension fund it can never be withdrawn by the company. That's the kind of Obama socialism I could get behind.

I can agree with that, seems pretty black and white to me. If private citizens handled our finances like the government does our country would be in a financial disaster right now... oh wait, never mind. We can thank the Bush administration and this phony war for that one. Our budget deficit was at it's lowest level in decades until he took over. Love him or hate him, Clinton did a helluva job with our country's finances. We've had about 13 years of complete crap out of the White House ever since

.

 

[RobBase]

agree, Rob. In conjunction, nobody is going to buy a city of Detroit municipal bond for a few years either...

From what I understand, the banks are selling the majority of the best building to Dan Gilbert for cheap the same way 500k homes get sold for 200k during foreclosures. He owns Quicken and loads of other things. His personal goal is to basically own most of the business' downtown. So far he is doing pretty good.

 

[broncosmitty]

And while I agree that it would be a horrible shame to sell off one of the world's great art collections, the point of a bankruptcy is to say that you can't pay your debts. You always have to sell off or give to your creditors your valuable possessions to partially repay your debts as part of that process.

If the taxpayers of Michigan agreed to buy the art for its $2.5BB value and that money went to the creditors, that would be a fair solution to both sides, but otherwise Detroit has to fulfill its obligations to the best of its ability.

If the buck gets passed to the Michigan tax payers via maintaining the DIA as a state entity I could support that. If you values are right, that's a third of the way right there. And one of the few cultural parts of the city would remain intact. Anybody know where ownership of Belle Isle lies? (Lays, laid, laieth, is, was...)

 

[Naughtymax]

Ah, yes, student loans, one of the great scams of all time. In this case, though, you took a loan knowing that discharge was an impossibility. Not so with other loans and debts - while I'm not a legal expert most of the talking heads seem to agree that the Michigan constitutional ban on defaulting pension obligations won't hold water in bankruptcy court.