Detroit.........

[FinanceDude]

I can not say I am surprised. Huge unemployment, etc., it was only a matter of time before the city ran out of money...........

 

[Ready]

They clearly needed to declare bankruptcy to get out from under all the legacy payments. However, it doesn't make the employees relying on pensions, nor the bondholders, feel very good. It will position them for a better future, but at the expense of a lot of lives, many of which were already struggling even with their pensions.

 

[ls99]

The latest Motown hit tune: AAAAAAAArrrrrrrgggh!

 

[almost there]

David Bowie - Panic In Detroit - YouTube

 

[pb4uski]

My BILs bro is retired Detroit PD. I wonder what will happen to his pension. Haven't been following until now. Sounds like a FUBAR situation.

 

[gauss]

There will be legal challenges. The Michigan state constitution prohibits laws that reduce accrued pension benefits. The current challenge asserts that the law that authorized the EM (emergency manager) to take the city into Federal bankruptcy with the intent of reducing pensions was an unconstitutional law.

On the other hand, the state government in Michigan, including judicial branch, have quite a conservative makeup in recent years.

Stay Tuned...
-gauss

 

[NW-Bound]

I saw that the debt that Detroit incurred runs up to $18 billion. So, what can they do? The pensioners will be hurting, I am sure, such as some retirees who have no SS to fall back on. Their situation makes SS look like a good deal by comparison.

Think about it, why should this be a surprise to anyone? Keep kicking the can down the road, and it will come down to this some day. It's amazing how long people can be in denial mode.

By the way, I found a few photos on the Web that captured the decline of Detroit in abandoned buildings. The following is a public school that was closed in 2005.

More with this link: Detroit's Beautiful, Horrible Decline - Photo Essays - TIME

PS. Detroit's debt works out to around $26,000 per resident. Unemployment is 16%. Per capita income was $15K in 2011.

How is it going to work out?

 

[Bikerdude]

PS. Detroit's debt works out to around $26,000 per resident. Unemployment is 16%. Per capita income was $15K in 2011.

How is it going to work out?

I think they need a printing press.

 

[travelover]

........How is it going to work out?

I've lived in metro Detroit all my life and I don't see any easy answers. The city proper is 138 square miles with 700,000 mostly poor and poorly educated residents. In other cities, there are the poor, but Detroit has managed to concentrate that poverty in an extreme way. The result is way too much infrastructure that cannot be maintained and giant legacy costs from all the past city employees, most of whom have long fled the city.

For the near term, I see a city with services reduced to the absolute minimum just grinding along day to day. Until there is a reason for the middle class to move back within Detroit city limits, there is no recovery or growth.

In the meantime, we have schadenfreude and finger pointing.

 

[ERD50]

I've lived in metro Detroit all my life and I don't see any easy answers. ..... The result is way too much infrastructure that cannot be maintained and giant legacy costs from all the past city employees, most of whom have long fled the city. ...

I recall someone was looking to buy up city blocks and use them for vegetable farming? Sounds crazy, but IIRC the city would be willing to give the property away, as then they don't need to do any maintenance on infrastructure.

Kind of a win-win, but all in lower case.

-ERD50

 

[CH]

There will be legal challenges. The Michigan state constitution prohibits laws that reduce accrued pension benefits. The current challenge asserts that the law that authorized the EM (emergency manager) to take the city into Federal bankruptcy with the intent of reducing pensions was an unconstitutional law.

On the other hand, the state government in Michigan, including judicial branch, have quite a conservative makeup in recent years.

Stay Tuned...
-gauss

Doesn't federal law trump state law? I am not a lawyer, but I don't think a bankruptcy filing can be withdrawn. I have never heard of that being done.

 

[heirloom]

Doesn't federal law trump state law?

Yes, it does. No lawyer here either but I heard it on a couple talk shows.

Some of you may of heard this, but I think it is so generous. Bill Pulte, grandson of the man who started Pulte homes, is going to the poorest area of Detroit, Britemore, and voluntarily demolishing all the abonded homes in that area. He said when they are finished cleaning it up, it will be a viable area again. When they are finished demolishing, he is partnering with someone else and re-seed the area. They found a dead body during the clean-up.

That's step 1. When asked what he will do next he said it is up to the community..

When asked why he's doing this he said "why not...Detroit has given his family everything they have."

So lets see if Mr. Buffett and Mr. Gates will help....this is their country and being Detroit was the 4th largest city in this country they sure did help MSFT a lot.

I agree that too many people lived off the gov. too long and it didn't help, but this is happening everywhere. Our gov. has to start putting some restrictions on how long you can live off of them and start demanding they go to a trade school. If they want to go to college, wait until they get a job and go part time.

 

[bUU]

Doesn't federal law trump state law? I am not a lawyer, but I don't think a bankruptcy filing can be withdrawn. I have never heard of that being done.

The assertion here is that the bankruptcy filing was made without standing. Government officials couldn't, for example, sell the state to another country, so any papers they prepared and submitted along those lines would be without force of law, just like if someone sold you property that they didn't own.

In this case, the claim is that the state doesn't have the authority to file for bankruptcy because of the pensions. My instinct is that the claim is bogus because the bankruptcy filing itself doesn't necessarily mean the pensions will be affected. They probably will, but the filing doesn't make that happen. The action of the federal bankruptcy court (later) would do that. Then we get into a federal law trumps state law situation. The way I read Section 24, it is the diminishing of the pensions that is proscribed, not the filing for bankruptcy protection. Since the diminishing of the pensions is an action that would be taken by the federal government, I don't think the state constitution will apply.

 

[marko]

I've lived in metro Detroit all my life and I don't see any easy answers. The city proper is 138 square miles with 700,000 mostly poor and poorly educated residents. In other cities, there are the poor, but Detroit has managed to concentrate that poverty in an extreme way. .

Did Detroit 'concentrate that poverty' or is it the result of those better off slowly leaving and just the poor remained?

On another note, I remember reading a novel about 30 years ago about Detroit having been abandoned completely, returning to more or less forest and deer were running around what was once the main thoroughfares. At the time, it was unthinkable but that author seemed to have had a crystal ball.

 

[travelover]

Did Detroit 'concentrate that poverty' or is it the result of those better off slowly leaving and just the poor remained?
...........

...........
In the meantime, we have schadenfreude and finger pointing.

The reasons it happened are complex and most discussions along this line end up in a finger pointing contest, which have thus far proven unproductive.

 

[marko]

The reasons it happened are complex and most discussions along this line end up in a finger pointing contest, which have thus far proven unproductive.

Sorry. I was asking a question and not challenging the statement.

The original statement sounded (to me) like there was a deliberate/accidental concentration of sorts.

I was just asking not trying to take the thread somewhere.

 

[TuborgP]

Who and at what ability level is going to work for the city in a non teacher capacity when benefits and salary will pale in comparison with surrounding jurisdictions.

 

[Gumby]

Doesn't federal law trump state law? I am not a lawyer, but I don't think a bankruptcy filing can be withdrawn. I have never heard of that being done.

Pursuant to Article VI, clause 2 of the U.S. Constitution (known as the Supremacy Clause), federal law does indeed trump state law. See Supremacy Clause Once the case is filed, any party in interest, including the debtor, can ask the court to dismiss it. See 11 U.S.C. Sec 921(c). ("After any objection to the petition, the court, after notice and a hearing, may dismiss the petition if the debtor did not file the petition in good faith or if the petition does not meet the requirements of this title.")

However, except for an individual Chapter 13 case, the debtor cannot just withdraw the case without bankruptcy court approval, and I don't believe that a state court judge could enjoin a US bankruptcy judge. The state court might be able to compel the City of Detroit to file a motion to dismiss, but it cannot control whether that motion will be granted by the bankruptcy court.

In the case of Bridgeport, Connecticut's Chapter 9 bankruptcy case filed in 1991, the state objected under Sec. 921(c) and the case was dismissed by the bankruptcy court because the city was not found to be insolvent within the meaning of 11 U.S.C. Sec. 109(c)(3)

 

[clifp]

Who and at what ability level is going to work for the city in a non teacher capacity when benefits and salary will pale in comparison with surrounding jurisdictions.

A city 16% unemployment with a median home price of $50K, meaning house payments are <$400, should be able to find workers without too much trouble.

The one big advantage of Detroit is everything is cheap there.

 

[Gatordoc50]

A city 16% unemployment with a median home price of $50K, meaning house payments are <$400, should be able to find workers without too much trouble.

The one big advantage of Detroit is everything is cheap there.

+1
All you need now is an atmosphere conductive to doing business.

 

[bUU]

The one big advantage of Detroit is everything is cheap there.

Even food and energy?

 

[TuborgP]

That is why I added the at what ability level. Experienced policemen etc will just leave and take jobs in the suburbs as they have been doing. Finding bodies yes, bodies with skills at lower salaries and benefits? Would you?

 

[TuborgP]

Losing skilled workers to suburban jurisdictions is and as been a problem for many cities. That's part of why they dig financial holes for themselves trying to recruit and retain. The key word is retained as suburban governments love workers with 5-10 years experience with good track records. It cuts down own their training costs.

 

[hausfrau]

I've lived in metro Detroit all my life and I don't see any easy answers. The city proper is 138 square miles with 700,000 mostly poor and poorly educated residents. In other cities, there are the poor, but Detroit has managed to concentrate that poverty in an extreme way. The result is way too much infrastructure that cannot be maintained and giant legacy costs from all the past city employees, most of whom have long fled the city.

For the near term, I see a city with services reduced to the absolute minimum just grinding along day to day. Until there is a reason for the middle class to move back within Detroit city limits, there is no recovery or growth.

In the meantime, we have schadenfreude and finger pointing.

I've never been to Detroit, but there was a possibility that my DH would be transferred there in the mid-00s. I went to look at houses online and I couldn't believe how nice some of the housing stock is in Detroit proper. There's a lot of brick and lovely interior woodwork! I wish there was a way to transport some of those beauties.

I'm curious how some of those old churches are maintained, especially since the population has dwindled so much and aren't really in a position to give. Do people commute in?

 

[MichaelB]

Most businesses look for strong local demand before investing. Detroit doesn't have that, or really any other competitive advantage right now for business or skilled labor, and that would need to be part of a turnaround if we expect Detroit to recover.