Detroit City Bankruptcy Blues

Daily Business Report
Article Archives
US Economic Forecast for 2012 and the Election Year Cycle
Shop the Local Merchant Economy
Right to Work vs Union State Economies
Rational Tariffs Lower Irrational Trade Deficits
International Business - Davos Style
Banking, Housing and Mortgages
David Stockman's Viewpoint on the Obama Budget Disaster
Regulations Harm Small Business and Protects Corporations
Gas Prices as an Indicator of Energy Costs
Governments Acting as Venture Capitalists
College Education Economics
Industrial Wind and the Production Tax Credit
Medicare and the Ryan Budget
U.S. Corporate Tax Rate Consequences
Corporate Spying and Intellectual Theft
The Foolish Exporting Natural Gas Policy
A Matter of Time for a VAT Tax
Big vs Small Bank Loans
Bankruptcy Trends in the Post Meltdown Era
Money Center Banks and Stricter Financial Oversight
Electric Power Generation under NYS Article X
Growth in the National Debt
Advantages of Chinese Trade Policy
Unemployment as a Lifestyle
Immigration Hurts American Employment
Bank for International Settlements on Big Banks
Small Business Assault from Obamacare
Compound Interest and the Debt Bubble
The Federal Centralization Economy
Parking Offshore Profits Hurt the Domestic Economy
The Record of Olympic Economics
Financial Algorithmic Trading
Goldman Sachs Above the Law
The MF Global Magical Mystery Tour
Destroying Internet Freedom by Taxation
The Permanent Unemployment Economy
Jackals of Jekyll Island - Federal Reserve Audit
QE3 Blowing Up the Debt Bubble
Riots Over Rotten Apple Mania
Gap Between College Costs and Inflation
Counterproductive Minimum Wage Mandates
Derivative Meltdown and Dollar Collapse
Central Banks Game Plan: One World Currency
European Commission Single Supervisory Mechanism
Lunacy of FEMA Hurricane Insurance Subsidy
Taxmageddon Holding Hands while Jumping Off the Cliff
The Direction of Equities in the Obama Economy
Is it FAIR to Tax the Rich out of Business?
California Dreaming: Bankruptcy, Pensions and Taxes
Pay Differential - Private Sector and Federal Government
Long History of HSBC Money Laundering
Swan Dive of 2013 Economy
Federal Reserve May Pause Quantitative Easing
The Economics of Sequestration
The state-owned Bank of North Dakota
Chinese Takeover with Free Trade Zones
Low Interest Rates Impoverish Savers
Bond Bubble Expectations
Currency Wars - Race to the Bottom
Government Subsidizes and Bankrupt Companies
Economics of Gun Control
Refuse to Buy or Sell with the Federal Government
The Cyprus Great Bank Robbery
Keystone Pipeline Blockage
Move Over IMF for the BRICS Development Bank
Obama Budget Proposes Cuts to Social Security and Medicare
The Risk and Reward of Bitcoins
Farm Supports and Social Welfare
Internet and Sale Taxes Dialectic
The Warren Buffett House of Cards
IRS as a Political Hit Squad
Revenue Budget Projections
Google and the NSA Connection
The Roubini - Faber Debate
Hydrofracking Boom or Bust
Goldman Sachs - first learn, then earn and serve
The Federal Reserve after Ben Bernanke
Implications of a Pyrrhic Real Estate Rebound
The New Normal: Part-Time Employmentyment
U.S. & Europe Trade Deal Honeymoon
Detroit City Bankruptcy Blues
J P Morgan and Commodity Manipulation
Strange Business Success Ventures
Business of Evangelism Religion
NFL Marketing Machine
Privacy Gone on Offshore Assets
Chinese Banks Quasi Government Institutions
Forecasts of a Doomed Economy
Financial Meltdown Five Years After
Corporate Profits and Worker Unemployment
Renminbi Soon to Be a Reserve Currency
Rehypothecation of Collateral
IMF Proposal to Tax Bank Deposits
Transfers excluded, JP Morgan Chase is Wired
Insurance Companies Profit from Obamacare
Climate Change by Executive Order
Economics of Non-governmental Organizations
Why Business Franchising is a Bad Deal
The Business of the Christmas Season
China Becomes Largest Trading Nation
Obamacare as a Jobs Killer
Does a 100 Trillion Debt Total Matter?
Underground Commerce is the Real Economy
Technology and the Future of Jobs
The Japanese Debt Economy
Individual Wealth in Perspective
Inevitability of Financial Bubbles
Russian Sanctions Backfire
Is the Dollar and Equities Ready to Crash?
Economic Reality of a Wealth Tax
How stable is the Bond Market?
Are International Stocks Safer than U.S. Equities?
David A. Stockman - The Great Deformation
Chinese and Japanese Deflationary Economies
Euro Crisis Deepens
Russia's SWIFT Settlement Alternative
The Swiss will not have more EU QE
Business of Global Warming Fraud
Economics of NYS Southern Tier Secession
Fear of IRS Tax Audits Diminish
Where is Global Economic Growth?
Government's share of minimum wage increase
Economic Growth Is Impossible
Replace the Business Cycle with Permanent Poverty
Who benefits from the lifting of Iranian sanctions?
Who Wins in a Currency Devaluation War?
Labor Day when there is no work
Municipal Bankruptcies and more on the way
Undeniable Social Security Demographics
Grinch that stole Christmass
Business Mergers Soar in 2015
The Chinese Market Crash
Driverless Vehicles Powered by Artificial Intelligence
U.S. Banks Ready for Negative Interest Rates?
International Trade Sinks with the Baltic Dry Index
SunEdison Green Power Bankruptcy Inevitability
Another Record Collection from Federal Taxes
Absurd Valuations on Unprofitable Tech Stocks
BATR Index
Forbidden History
Reign of Terror
Stuck on Stupid
Totalitarian Collectivism
Global Gulag
Inherent Autonomy
Radical Reactionary
Strappado Wrack
View from the Mount
Solitary Purdah
Dueling Twins
Varying Verity
911 War of Terror


Detroit City Bankruptcy Blues

The financial woes of Detroit were a long time coming. Even fume breathing onlookers cannot be shocked that Motown ran out of fuel. So why should anyone cry the blues for a community that prides itself on the Dream Girl mentality. With apologies to Fats Domino, the beat no longer plays.

Detroit City

It was the finest city it was

Yes, Detroit City

It was the finest city it was

You don't need a lot of money

To have a real good time

The culture of municipal entitlement is a formula for inevitable bankruptcy. Especially in a dysfunctional economy like Motor City, the USA Today reports that in 1950 Detroit had the fifth largest population in the U.S. at 1,849,568 - now as of 2012, it stands at 701,475 in a startling decline.

The battle over filing a Chapter 9 has the financial community scouring over
Here’s how Detroit’s bankruptcy will actually work.

"Detroit is about $18 billion in debt, and will only be able to pay out a fraction of that in the short term. The two main groups of creditors arguing they’re entitled to that money are public employees and retirees, and bond holders. The investors are likely to make out better, since more of that debt is secured; the city will continue to pay water and sewer bondholders. Most of the pension debt has no similar backstop."

In the article,
Legal battle brews over Detroit bankruptcy filing, Detroit emergency manager Kevyn Orr has not yet specified the cuts to pensions he will seek through the bankruptcy process. He has proposed freezing pensions and moving workers to a 401(k)-style plan to help alleviate the pension systems' unfunded liabilities of $3.5 billion. He also wants to move retirees to Medicare or health care exchanges being set up through the Affordable Care Act.

CBS Detroit reports in Union Attorney: Pensions In Jeopardy After Detroit Bankruptcy Filing, that Richard Mack, Jr., an attorney for AFSCME Council 25 said the city shouldn’t be factoring in money owed to the pensions as part of their overwhelming debt, which Emergency Manager Kevyn Orr estimates is at a staggering $20 billion.

Whether the actual debt is 18 or 20 billion, the certainty is that an aching headache is coming. By what strange distortion of logic could a bankruptcy proceeding exempt "promises to pay" for outlandish pension costs, from a revenue stream that no longer flows?

CNN Money quotes this insane disconnect from reality. "This is money they've earned, they counted on," said Karen Ferguson, director of the Pension Rights Center, a nonprofit that advocates for retirees. "They need these checks to pay their bills."

Mainstream officials are denying the prospects that the screams for a federal government bailout from the vestige collectivist interests, will materialize. Well, in the video Detroit Mayor: No Federal Bailout 'Yet', is closer to the truth. At least Rand Paul Obama will bail out Detroit, states the obvious. "He is bailing them out over my dead body, because we don’t have any money in Washington," Paul said in a phone interview with on Friday.

Singing the blues in the Obama world of political correct economics produces the most outrageous thefts, guised in the cloak of a public investment. In case you forget, Thanks For The Bailout, Suckers! GM Builds A New Plant In China reminds that, "Taxpayers lost more than 10 billion bailing out GM because Obama thinks it’s fine for his corporate allies to embrace capitalism on the way up and socialism on the way down. Now, GM’s taking some of that money that it pilfered from us and it’s building a plant in China with it."

Can’t you just hear the rally exhibitionists all dolled up in the finest party garb that taxpayer redistributed cash can buy , what was good for GM is more worthy for the public servants, that need to be paid. If the GM bondholders can be intentionally defrauded with an illegal sleight of hand, what chance do investors have in municipal tax- exempt instruments?

Detroit is just the latest example of the habitual addiction of the ruling welfare state. In the essay, Public Employee Unions Guarantee National Bankruptcy, the scale of the unfunded public indebtedness is noted, as is the dependency on useless and destructive public employment.

"The U.S. is broke. Public Employee Unions refuse to void their unconscionable contracts. The taxpayer can no longer afford this destructive fraud. Society can only be rejuvenated through a total downsizing of all public services. The biggest deadbeats that skim off the system are your phony public servants. The only bright spot from a collapse and natural bankruptcy is the evaporation of the public sector."


The insightful Zero Hedge summarizes perfectly in Ponzi-Scheme Expert To Oversee Detroit Bankruptcy.

"For those who missed it, in the Kevyn Odd statement listing the primary reason for the bankruptcy of Detroit, this was the punchline: "Absent restructuring, the City is projecting cash flows of negative $198.5 million in the current 2014 fiscal year and negative $260.4 million in fiscal year 2015. This cash depletion would leave the City in a net cash position (after required property tax distributions) of negative $11.6 million as early as December 2013. The City also has experienced negative cash flow for years, and that trend is expected to continue and accelerate if not addressed.... For years, the City has spent more than it takes in and has borrowed and deferred paying certain obligations to make ends meet. The City is insolvent." In other words, a pure pyramid scheme whose final can kicking day has finally come. Which perhaps explains why the just appointed Judge to preside over the largest municipal bankruptcy in US history is none other than Judge Steven Rhodes, 64, who just happens to be the co-author of "The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes."

As the day of reckoning approaches, the lyrics of Bob Dylan in
Subterranean Blues, stands the better test of time and applies, to past, and the current regime in Detroit.

Thinking about the government

The man in a trench coat

Badge out, laid off

Says he’s got a bad cough

Wants to get it paid off

James Hall – July 24, 2013

Discuss or comment about this essay on the BATR Forum

a free speech forum open to the public

This site  The Web 


tumblr page counter