Posted on 07/19/2013 1:58:38 PM PDT by Hojczyk
If the residents of the city of Detroit want to blame any person or organization for its Chapter 9 filing, they only need to look as far as the unions that controlled labor there and the politicians who ran it over the past four decades. Detroit earned its bankruptcy the easy way — through greed, the desire for political power and poor planning.
Bond holders do not deserve the kind of responsibility that those who ran Detroit do. However, they, and their bankers, were willing to keep the city afloat by buying paper that was risky. They took the risk and fed Detroit with money. Now, they get to take the sort of damage that goes with risking to much, too often and for too long.
As the people of Detroit and experts tear apart the history of Detroit, some blame will be placed with the car companies. But they built Detroit — Detroit did not build them. It is not fair to say they destroyed her. As a matter of fact, these public corporations, with obligations to shareholders, may have been among the few wise parties. The Big Three automakers exited slowly, as city services dissolved and Detroit became a less desirable place to live and do business.
Detroit’s elected officials have lost all of their power. Orr has it, and soon a court will. Unions and their members can only wait to see how badly they will will be gored as part of the Chapter 9 process.
In sum, each side knew that the city began to flounder a long time ago, and each tried to hang on to as much money, and privilege, as possible. Now, each gets to suffer the consequences.
(Excerpt) Read more at 247wallst.com ...
Undr Obama and the DemoRATS, the same fate is heading for America!!
I saw pictures of Detroit today ,it looked just like the Ethnic cleansing I saw in Croatia
What’s the over-under on how badly the secured bondholders are screwed to bolster the SEIU employees’ unsecured pension fund?
Right now, I’ve heard that secured bondholders were initially offered 75 cents on the dollar, but the pension fund was offered closer to 10. That’s before somebody’s pet county judge asserted authority over a Federal Bankruptcy proceeding by saying no pension payments could be cut.
Dems, Libs, Socialists, call ‘em what you will they kill perfectly good cities, nations with their socialist ideology, their socialist perspectives.
Swedish cars were great, but due Socialism they had to sell out to competitive automobile manufacturers. Some say GM killed SAAB, but Socialism is what drove SAAB to GM, and the GM guillotine. Socialism is what drove Volvo to Ford, and now China. NOTHING GOOD comes of Socialism.
Just a couple of examples of why Dems, Libs, Socialists all have fairies in their trees. (Look down to see the tagline I’ve had for almost the entire nine, and a half years I’ve been with FR.)
Another Democratic [sic] party success story. I predict it will soon be followed by demands the nation bail out that failed city.
And the long term question is what sort of damage will this do to municipal bonds and other cities? Municipal bonds used to have the lowest interest rates, because they were felt to have the lowest risk. However, now it turns out they have about the highest risk of default. Once Detroit screws their bondholders, and you know they will, what reason would anyone else buy municipal bonds from anyone with a lower yield than credit cards? Rising interest rates could blow up a lot more cities a lot sooner.
Only if they allow union public employees.
AND, if the unions are allowed to run the city's fiscal affairs.
To your Post 7:
Yes, if the Detroit bondholders get screwed, muni rates will go through the roof, and cities will have a funding their deficits with bonds. Taxes and user fees will go up and up. It will be a death spiral with two possible outcomes: finally starving government at the city level and bringing it under control, or much worse, a new regime of Federal financial support—basically a transfer payment from all taxpayers to the cities and their SEIU members.
Detroit isn’t a bankruptcy, it’s a crime scene.
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