Posted on 07/21/2013 1:43:58 PM PDT by whitedog57
Ingham County Circuit Court Judge Rosemarie Aquilina ordered on Friday that Detroit’s bankruptcy be withdrawn. Aquilina said the 2012 Michigan law that allowed Gov. Rick Snyder to approve the city’s bankruptcy filing, the largest municipal bankruptcy filing ever in the United States, violates the Michigan Constitution. Specifically, Article IX Section 24, which holds that pension plans and retirement systems “shall not be diminished or impaired.”
Aquilina said that she will ensure that President Barack Obama gets a copy of her order. “It’s also not honoring the president, who took [Detroit’s auto companies] out of bankruptcy.”
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“I know he’s watching this,” the Detroit News quotes Aquilina saying, noting that she predicted that Obama would eventually step in and take action.
Michigan Attorney General Bill Schuette on Friday appealed a state judge’s declaratory judgment that the bankruptcy petition Detroit’s emergency manager filed in federal court Thursday should be withdrawn. The appeal of ‘s Friday order was made in the Michigan Court of Appeals on behalf of Governor Rick Snyder, according to a statement from Schuette’s office. Additional motions seeking emergency consideration were expected to be filed later on Friday, the statement added.
Detroit is near the statutory limits of its ability to tax. That power has been dragged down by a drop in the city’s population, down 60 per cent from almost 2 million at the peak in the 1950s to just under 700,000. The led to a 40 per cent drop in tax revenues since 2000. The city has had to borrow money to meet its operating budget which has been slashed. With the City retiree pool currently outnumbering active employees by an over-2 to 1 margin and growing, the City must address pension and retiree!healthcare liabilities as part of any comprehensive restructuring.
Translation: protect the pensions and municipal workers at all cost and screw the bondholders. Just like the GM bailout. GM stockholders and bondholders were destroyed, but GM and its workforce survived.
Given the political contributions from related groups (like the American Federation of State, County and Municipal Employees), I am not surprised that Judge Rosemarie is waving a warning flag to President Obama. And ActBlue is no slouch on Democrat fundraising either.
unioncontrib
We shall see if the courts allow Governor Snyder and Kevyn Orr to succeed in placing Detroit in bankruptcy. Or if President Obama enters the fracas to protect municipal employee retirees. Or Detroit as a whole.
75years
Apparently, Judge Rosemary didn’t buy Kevyn Orr’s opening salvo in the bankruptcy appeal: 154747367-Detroit-Creditor-Proposal
“After decades of fiscal mismanagement, plummeting population, employment and revenues, decaying City infrastructure, deteriorating City services and excessive borrowing that provided short term band-aids at the cost of deepening insolvency, the City of Detroit today is a shadow of the thriving metropolis that it once was. The City does not provide basic and essential services to the residents who remain in the City. Crime is endemic. The City is infested with urban blight, which: (a) depresses property values; (b) provides a fertile breeding ground for crime and tinder for fires (with the attendant disproportionate devotion of police and firefighting resources to abandoned lots); and (c) compels the City to devote precious resources to demolition.”
Detroit leads the US in population decline, followed by Chicago.
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In percentage terms, St. Louis leads the US in population decline followed by Detroit. And then two Ohio cities, Youngstown and Cleveland. Followed by Gary Indiana.
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Now, Detroit Mayor Dave Bing on left the door open for a federal bailout after the city’s bankruptcy filing, saying the nation’s response would “set a benchmark” for aiding other struggling cities.
More than 100 urban U.S. cities “are having the same problems we’re having,” Mr. Bing said. “We may be one of the first. We are the largest. But we absolutely will not be the last. And so we have got to set a benchmark in terms how to fix our cities.”
Thanks for the warning, Dave!!
davebing
In fairness to the unions and Judge Rosemary, retirees were promised their pensions. And bondholders did realize that Detroit was a ticking fiscal bomb. Still, does it make sense for government to promise massive pension benefits when they can’t afford to pay them?
Well, we now know what kind of bomb the municipal pension promises were – the exploding kind.
Any city/state that has:
Public unions + huge free sh*t army + long term democrat rule is going to go bankrupt.
The problem with this is I can’t find an easy way to short municipal bonds. There’s got to be a way to make money off this.
Bet they are all run by democrats. Bet democrats have few successful cities to point to. The success stories, I am sure, have been counter-balanced by conservatives keeping democrat excesses in check.
As far as Bing's comments go, he's right. There are many cities that are clusterfiretrucks on their way to following in Detroit's footsteps. Flint, Pontiac, Chicago, Hamtramck, Inkster, Highland Park, and Toledo come to mind.
How about all those rural cities, Einstein?
He is right.
Democrat run and majority black or Latino is venom for urban success
The cure is extremely long run
This is the case of most US cities now
ALL DEMOCRAT CITIES!!!!
I haven’t done it but I think you can sell muni eft’s short.
More than 100 urban cities are being run into the ground by Democrats?
If we could somehow figure out the common thread among these 100 cities...surely there is a government grant trying to figure that out as we speak....
So it seems that it is now impossible to declare bankruptcy.
For every other city in trouble, they will simply find another Marxist judge to disallow reality.
So another tether to sanity is cut.
You have to find a sucker who will take the other side.
Perhaps you could sell derivatives to the public sector unions?
Just pay the Marxist Judges in Urban Bond Futures.
Dave Bing has been about the best Democrat mayor of the bunch but he’s about 30 years too late to be able to do any good for Detroit.
He did fire union bus drivers who called an informal strike and he tried to force the unions to collect their own dues but Detroit was just too far gone when he got there.
Trade Muni-Bonds for Food Stamps?
Shorting a long ETF is about the only way it can be done, but it would be better to be able to buy credit default swaps on specific cities.
Okay, Dave but none are as tragic or greater in scale and scope. A half century of history that nothing can change no matter how many other cities file for Chapter 9.
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