Detroit files bankruptcy

[68Camaro]

The title says it all, but details at the link. $380M annual deficit with long term debt at least $14B with a "B". For a city on the downward slide with declining base. Yikes. Good luck with that.

Not unexpected, but the long-held belief that government cannot fail is crumbling. I got rid of my last local government bonds several years ago.

http://news.yahoo.com/detroit-emergency ... 40926.html

[Hawkeye]

It's kind of sad. Detroit used to be a model industrial city, but it's become almost a joke - a sad example of exactly how to kill the goose that lays the golden eggs. It's the biggest to fail so far, but I assume this is going to be happening more and more. If I were a government worker looking forward to a nice, fat pension, I'd be a little nervous right now.

[BlackOut]

Birmingham is still trying to get out after filing a few years ago. Corruption, poor decisions, and mismanagement of funds have led to their demise.

[theo]

It's kind of sad. Detroit used to be a model industrial city, but it's become almost a joke - a sad example of exactly how to kill the goose that lays the golden eggs. It's the biggest to fail so far, but I assume this is going to be happening more and more. If I were a government worker looking forward to a nice, fat pension, I'd be a little nervous right now.

Not so fast. Several pension funds are filing suit to block the bankruptcy, claiming that a reduction in pension benefits is prohibited by the state constitution. These unions truly have no shame.

If they fail to block the bankruptcy in court there will be serious discussion about a federal bailout.

http://www.bloomberg.com/news/2013-07-1 ... iling.html

[Hawkeye]

It's kind of sad. Detroit used to be a model industrial city, but it's become almost a joke - a sad example of exactly how to kill the goose that lays the golden eggs. It's the biggest to fail so far, but I assume this is going to be happening more and more. If I were a government worker looking forward to a nice, fat pension, I'd be a little nervous right now.

Not so fast. Several pension funds are filing suit to block the bankruptcy, claiming that a reduction in pension benefits is prohibited by the state constitution. These unions truly have no shame.

If they fail to block the bankruptcy in court there will be serious discussion about a federal bailout.

http://www.bloomberg.com/news/2013-07-1 ... iling.html

I should have seen that one coming. I'm just an average tax payer who still has 2 nickels to rub together. Somehow, they will find a reason to take them - Detroit clearly needs them more than I do.

[barrytrot]

It's kind of sad. Detroit used to be a model industrial city, but it's become almost a joke - a sad example of exactly how to kill the goose that lays the golden eggs. It's the biggest to fail so far, but I assume this is going to be happening more and more. If I were a government worker looking forward to a nice, fat pension, I'd be a little nervous right now.

Not so fast. Several pension funds are filing suit to block the bankruptcy, claiming that a reduction in pension benefits is prohibited by the state constitution. These unions truly have no shame.

If they fail to block the bankruptcy in court there will be serious discussion about a federal bailout.

http://www.bloomberg.com/news/2013-07-1 ... iling.html

This is not the first time a pension fund of some type has filed a lawsuit.

My aunt and uncle are the recipients of a massive pension that had to sue to prevent reduction a few years ago. And, I'm sure there were others.

Also as an fyi, why are you calling this a "shame on the pension fund"? They had a CONTRACT. So it's no shame to sue to enforce it.

Do I think the contract was a good idea: NOPE. But it was done legally and with all parties of (originally) like mind. So it would be very poor fund management for the pension manager not fighting for it.

[theo]

Also as an fyi, why are you calling this a "shame on the pension fund"? They had a CONTRACT. So it's no shame to sue to enforce it.

Do I think the contract was a good idea: NOPE. But it was done legally and with all parties of (originally) like mind. So it would be very poor fund management for the pension manager not fighting for it.

I believe that politicians who negotiated these pension contracts with the public employee unions were getting political donations from these same unions. Because of this conflict of interest the politicians were unable to effectively represent the tax payers. Therefore the contracts are arguablely void on the grounds that the influence of the donations destroyed the politicians capacity enter into said contract. Also, these over-generous pensions are a big reason why Detriot is bankrupt in the first place.

[barrytrot]

Also as an fyi, why are you calling this a "shame on the pension fund"? They had a CONTRACT. So it's no shame to sue to enforce it.

Do I think the contract was a good idea: NOPE. But it was done legally and with all parties of (originally) like mind. So it would be very poor fund management for the pension manager not fighting for it.

I believe that politicians who negotiated these pension contracts with the public employee unions were getting political donations from these same unions. Because of this conflict of interest the politicians were unable to effectively represent the tax payers. Therefore the contracts are arguablely void on the grounds that the influence of the donations destroyed the politicians capacity enter into said contract. Also, these over-generous pensions are a big reason why Detriot is bankrupt in the first place.

If everything done illegal by politicians was void as a result it would be pretty cool!

But that's unlikely, and this is probably only the 1,375th most egregious in the current list

[theo]

Also as an fyi, why are you calling this a "shame on the pension fund"? They had a CONTRACT. So it's no shame to sue to enforce it.

Do I think the contract was a good idea: NOPE. But it was done legally and with all parties of (originally) like mind. So it would be very poor fund management for the pension manager not fighting for it.

I believe that politicians who negotiated these pension contracts with the public employee unions were getting political donations from these same unions. Because of this conflict of interest the politicians were unable to effectively represent the tax payers. Therefore the contracts are arguably void on the grounds that the influence of the donations destroyed the politicians capacity enter into said contract. Also, these over-generous pensions are a big reason why Detroit is bankrupt in the first place.

If everything done illegal by politicians was void as a result it would be pretty cool!

But that's unlikely, and this is probably only the 1,375th most egregious in the current list

Politicians using taxpayer money buy off unions is a little higher on my list, but then that's just me. In terms of municipal bankruptcies, bloated public employee pensions is the #1 culprit. Well over half of Detroit's 20 billion dollar debt is owed to their public employee pension funds.

[Sheikh_yer_Bu'Tay]

My old man saw this day coming 34 yrs ago. He predicted the union pensions would all go belly-up. He told me in my lifetime I would see the worst depression ever, or a rebellion, or both.

[natsb88]

The most worrying aspect of Detroit’s decline is the parable for the entire USA. America is increasingly nicknamed “Kickcanistan” in financial circles as the government repeatedly kicks the can of budgetary rectitude down the road. Moreover, just as the Democrats oversaw the decline and fall of Detroit, Barack Obama accumulated more debt in his first term than the previous 42 American Presidents combined!

http://rt.com/op-edge/detroit-bankruptc ... onomy-405/

[slickeast]

Detroit isn't news. We need justice for Trayvon

[barrytrot]

Detroit isn't news. We need justice for Trayvon

classic!

[Treetop]

Very interesting. I expect federal bailouts, since we are still pretending we have money to spare federally. If unions sue now, which is expected what will the baby boomers do as it becomes impossible to cover medicaid,medicare and SS?? If you look at the numbers we simply wont be able to meet those obligations, I dont expect it will end wel and that is national. We wont have anyone to bail us out as detroit likely will on a few levels anyway.

This always leads me to wonder why more people arent seeing the writing on the wall in regards to a bloated government? next I wonder how the building militarization of police, and surveillance state will react through all this? After that I wonder if this build up of the police state IS the "answer" of tptb to our looming debt issues, because I cant imagine they are naive enough to think it can continue indefinitely.

I have already seen left leaning friends of mine point to detroit as a sign our national debt issues wont be so bad, even though we dont know how in full how this will even play out there yet. Very baffling.