This page has been archived and commenting is disabled.
Detroit May Run Out Of Cash Next Month
Another day, another US city on the brink of insolvency. This time it's Detroit, whose recently appointed emergency financial manager Kevyn Orr said may run out of cash next month and must cut costs such as long-term debt and retiree obligations. According to Bloomberg, "Orr’s report says the cost of $9.4 billion in bond, pension and other long-term liabilities is sapping the ability to provide such basic services as public safety and transportation. He listed cutting debt principal, retiree benefits and jobs among options he may take. “No one should underestimate the severity of the financial crisis,” He called his report "a sobering wake-up call about the dire financial straits the city of Detroit faces."
Funny, the above bolded sentence, because we have long since crossed into a stage where absolutely everyone is underestimating the severity of the financial crisis, which incidentally is long over if one listens to the broader media. As for Detroit, may we suggest the same medicine that the "expert economists" prescribe for every other instance of overlevered insolvency: just issue more debt. Surely with worthless Greek bonds soaring, there must be some Japanese investment funds that can't wait to buy up all that paper on nothing but promises of untold riches courtesy of the endless carry trade that apparently can do no wrong.
Then again, Detroit may not be Greece:
The Motor City is caught in a downward spiral of revenue from a shrinking tax base -- it has lost two-thirds of its postwar peak population -- while unemployment at 18 percent is twice the state level, according to Orr’s report. Managing an area larger than Boston, San Francisco and Manhattan combined has become increasingly difficult.
“Without a significant restructuring of its debt, the city will be unable to break the cycle of damaging cutbacks in essential municipal services and investments,” according to Orr’s report. He also cited the need for concessions from unions, and revamping the police and fire departments to protect residents beset by crime and arson-inviting blight.
Detroit’s long-term obligations are at least $15.7 billion, including unfunded pension and retirement benefits. The general fund this fiscal year, with revenue of about $1.1 billion, will pay about $461 million for debt and health costs, according to the report.
All the city’s revenue couldn’t pay off its debt in 20 years, said Bill Nowling, a spokesman for Orr.
“If we don’t change and restructure, we are going to run out of cash,” he said yesterday by telephone. “That shouldn’t come as a shock to anybody.”
Maybe Detroit can pull a Cyprus and just confiscate a few billion from the savings accounts of the locals. Oh wait.
So with that option out of the picture, the only other one is to scare everyone into the domino theory of M.A.D. unless someone ponies up and injects some more good money after bad:
“We want to be very clear and strong: This is exactly the situation the city is in, and our creditors need to know that,” Nowling said. “Some do. A lot don’t.”
Orr’s plan lays out alternatives for dealing with long-term debts, including reducing interest rates, stretching out payment schedules, outright forgiveness of principal or refinancing. The city’s credit rating is below investment grade.
It will be difficult to reach consensus among debt holders, said Doug Bernstein, a bankruptcy lawyer with Bloomfield Hills, Michigan-based Plunkett Cooney PC. Curbing pension benefits will be crucial to gaining an agreement from bondholders to cut debt costs without resorting to bankruptcy-court protection, he said.
“That’s an optimistic view, that you can do it by consensus,” Bernstein said. “Maybe when they read the numbers, they’ll agree. But given the number of different credit classes and collective-bargaining units, I don’t see them conceding voluntarily.”
So if a collective effort of sticking heads in the sand here is out of the question, the only other option is bankruptcy. Sure enough:
Orr’s report is probably a prelude to the city’s seeking Chapter 9 bankruptcy protection, said Manny Grillo, the New York-based head of restructuring practices for Goodwin Procter LLP. He said there are too many creditors, including 48 employee unions, to reach a consensus without court intervention.
“No one is ever going to be the first to cut a deal,” Grillo said. Michigan, led by Republican Governor Rick Snyder, may step in with financial help “to fill in the gaps” only after deals have been struck to lower debt costs, Grillo said.
And just in case there is any confusion about what the future holds for the once proud headquarters of America's automotive genius, the next steps include the city going dark. Literally.
Orr wants to continue an effort to turn over the aging streetlight system to a public lighting authority by 2020. The plan calls for eliminating almost half of 88,000 streetlights, concentrating replacements in more populous areas. The plan also says Detroit should exit the business of supplying electricity to businesses and municipal operations.
Finally, the vision of the creator of RoboCop, which was set in a crime-ridden Detroit in the "near-future" seems to have been 100% spot on:
Hiring a new police chief and restructuring the department will happen soon, Nowling said. Given cuts in the city workforce over the past few years, additional employees may be needed in the short term to implement more efficient practices, including the replacement of outdated computer systems, according to Orr’s plan.
So will the Detroit PD soon be staffed entirely by bulletproof cyborgs as a cost-cutting strategy? Perhaps they can be funded by whatever profits the robotic vacuum tubes that are the only traders left in this farce of a market. And what happens once said robocops begin a universal suffrage and demand a legal right to vote in one of their robotic brethren into public office?
Surely, more insane things have happened in the new centrally planned abnormal.
»
- 19786 reads
- Printer-friendly version
- Send to friend
- advertisements -
Since The City of Detroit is completely broken, according to Krugman, shouldn't this lead to an economic Renaissance?
Detroit is a sign of what is to come for the West as a whole. You chase out or breed out all of the productive people, coddle and subsidize all the nonproductive people, and this is what you're left with. Eventually you will run out of productive people willing to bail you out.
People in America generally have lost understanding of what a productive economy is. You can't have a nation full of Wal-Mart shelvers and fast food workers and expect to live a first world lifestyle. A decent percentage of people have to be actually pulling oil, minerals or vegetables out of the ground to give you a decent economy, and then you need people designing iPhones or Toyotas on top of that to give you enough wealth to have the LUXURY of a large service sector--because that's what a large service sector is, a LUXURY built on the backs of the oilers, miners, ranchers and farmers.
But no one understand this in America anymore. Everyone thinks you can just have a nation full of mega-tropolises packed with millions of third worlders on welfare who produce nothing, where everyone has the latest cell phone and everyone stuffs their face with 5,000 calories everyday, just because we're "AMERICA!!!" No one understands how much labor someone, somewhere, has to be doing to provide you with your first world lifestyle. And they'll probably never figure it out, even after all of America looks like Detroit.
What is this production, labor, and tangibles you speak of?
Bernanke has "Ctrl-P" on his keyboard, and Americans have dreams (fantasies?).
Thank business for their contribution and preference for slave labor on top of the government's contribution.
It really is a sign of the "invisible hammer."
Adam Smith said that the outcome of everyone pursuing thier own interests by building, producing and trading was greater than those same could do with a plan--the "invisible hand."
Those in government hide their theft and murder behind a plan full of regulations and controls while they destroy, consume and steal everything and the outcome is destruction--the "invisible hammer." hujel
Who is John Galt?
Not sure who this Rose Wilder Lane woman is, but this quote echoes your thoughts perfectly Trynna cat:
Anyone who says that economic security is a human right, has been too much babied. While he babbles, other men are risking and losing their lives to protect him. They are fighting the sea, fighting the land, fighting disease and insects and weather and space and time, for him, while he chatters that all men have a right to security and that some pagan god – Society, The State, The Government, The Commune – must give it to them. Let the fighting men stop fighting this inhuman earth for one hour, and he will learn how much security there is. —Rose Wilder Lane
We are screwed...
Exactly. There's no such thing as true freedom in this world. We're bound to the land, bound to the soil. Someone has to sweat to provide you with your food, shelter, electricity, etc. Yet we're now dealing with a nation full of fat entitled parasites who think that simply being born entitles them to other people's productivity, to other people's blood and sweat. It's a fantasy, and the government is promoting it 100%.
When the big crash comes, this parasite mentality will finally boil over and they will come to take what they believe is theirs. Be prepared my productive friends.
SHOVEL-READY JOBS: Have the TBTF banks pay welfare people to demolish their excess inventory. They're doing it already, so we might as well make it official and put all the $85B/mo of Fed-cash to work, help the housing recovery, and remove urban blight.
Contestant: "Alex, I'll take 'Cities Run by Blacks' for $100." hujel
Contestant: "Alex, I'll take 'Planets Run by Whites' for $1T."
What - you want GBP or Euro? Dinars?
Contestant: "Alex, I'll take Cities run by African Americans for $200"
Alex: The mayor of this city once said "I am clearly more popular than Reagan. I am in my third term. Where's Reagan? Gone after two! Defeated by George Bush and Michael Dukakis no less."
"Alex, who is Marion Berry of DC and living proof of the veracity of the bell-curve?" hujel
Could I just butt in here a moment,
This is a call to all like minded patriotic folk like my American friends. Seeing as we are such good friends, and I have a special place in my heart for evrything American and the values you lot stand for and abide by, could I ask a favour?
While Cameron is busy sucking barry O's cock, would you arrest him and put him in one of your 'Super Max' prisons?
Cheers friends, a concerned friend from over the pond.
Dont be going sending that cunt back mind, we dont want him.
;-)
Sorry mate, we're still trying to rid ourselves of that unwashed butt-plug Piers Morgan.
Will a guillotine do?! hujel
We'll arrest yours if you arrest ours...
Thats not a fair deal Hulk,
There is 300 million of you lot, we only have 60 million here, on a land mass some 430 times smaller than yours.
Wait..........
Fuck it, send him back
Please, don't make him turn his island around...
Vote UKIP!
Starnesville
At one time I was a card carrying member of D.R.E.A.D.
Detroit
Rockers
Engaged (in the)
Abolition (of)
Disco
Ahh, the causes we fought for in our youth.
With the street lights out; the zombies will rule?
Give a "B! Give me an "A"! Give me an "I"! Give me a "L"! Give me an "O"! Give me a "U"! Give me a "T"! What does it spell? Screw the Tax Payer!
I for one welcome our new AI overlords...
Osama is dead and GM lives, right? I don't see the problem.
A microcosm of the U.S. itself.
Of course, Detroit doesn't have a FED to print funny money into the stratosphere.
That's it!
Any city short of Pensions or funds, establish a mini-FED, and just create money on their computer systems.
I mean, what is money anyway? It's not like those dollars are tied to Gold or Silver or Oil; they are just binary digits in a spreadsheet.
Add some zeros!!! Done!!!
"I'll buy that for a Dollar!"
Just replace the police with ED-209s. Omni Consumer Products!
Unfortunately it'll malfunction and take out Snyder & Walker. Whether that's a bad thing is up to you.
Get up! Everybody's gonna move their feet.
Get down! Everybody's gonna leave their seat.
Detroit, Rock City!
http://www.youtube.com/watch?v=iZq3i94mSsQ
It's Cleveland and Buffalo and Gary, Indiana and Stockton CA next. Other than that, everyting is fine in these United States - for this week.
You missed Harrisburg. Or did that already happen ?
A lot of white urban and suburban areas are taking on the shabbies as well. Nothing like black areas--they take pride in living in filth--but not what they used to be. hujel
I thought Stockton already went bankrupt?
As for the emergency financial manager, Kevyn Orr (no, definitely not the son of Bobby Orr) a few factoids:
A bankruptcy expert with experience in business restructuring, financial institution regulation, and commercial litigation, Orr previously practiced law in Washington, D.C. as a partner in the international law firm Jones Day.[9] Orr had been picked to lead Jones Day's new Miami office before he resigned his partnership to move to Detroit.[10]
While at Jones Day, Orr represented Chrysler in connection with its 2009 bankruptcy and restructuring.
Between 2009 and 2012 the state of Maryland’s Office of Unemployment Insurance filed four liens against Orr's $1 million Chevy Chase, Maryland, home, for unpaid taxes on child care for his two children. Two liens totaling $15,797.68 from 2011 and 2012 were listed as unpaid at the time of Orr's appointment as Detroit emergency manager. Upon learning of what he described as an "embarrassing" oversight, Orr stated that he promptly paid off the liens the same day.
http://en.wikipedia.org/wiki/Kevyn_Orr
Bankruptcy expert. Use your talents, Kevyn. (BTW: I never trust people who spell their names funny.)
Oh great - a deadbeat trying to restructure the affairs of other deadbeats. Well, at least he understands deadbeats better than non-deadbeats.
Spelling names funny? That means about 90% of blacks... blacks children should be named based on a lottery; no more LaTundra Washingtons. Congratulations on the birth of your daughter Mr. Soltero; her name is Karen.
That just means that he is staving off bkr. until all of the important interests are secured. Detroit will be in bankruptcy court. Maybe not tomorrow. Fait accompli.
Sounds like they wanted someone that wouldn't raise any alarms amongst Detroiters but also could be brought to heel if he didn't do his master's(Mr. Snyder's) bidding.
Offer tax credits and incentives to any Japaneses that wants to abandon the poisoned island and help rebuild Detroit.
The problem may be it might take longer then the 1/2 life of cesium anyway........./
Everyonez, Everyonez...
I grew up there. Used to be a great town. Lots of great paying jobs, people were happy, families were intact, the products were high quality and ice cream trucks did not have to have armor installed.
Bob Seger and Journey concerts at Cobo Hall and Pine Knob, ethnic festivals on the Detroit River, Super Fly showing at the Fox Theater, fried pierogies in Hamtramck, etc.
Now it reminds me of Monrovia, Liberia, the lesser Ward's around New Orleans or any other 3rd world sh*thole.
The ultimate cause: LIBERALS AND GREEDY UNIONS.
A bad combination.
So let me get this straight: Detroit now reminds you of Liberia, the poor areas of New Orleans, or some other third world s-hole, and you attribute this to--"liberals and greedy unions"?
Talk about missing the elephant in the room.
Turn out the lights one night in the outer 2 mile ring and simply start burning it. Wait til Hell Night the night before Halloween as no one will notice. Redistrict the burnt outer rings as another city (good bank, bad bank). With half the area to manage, fire half the unions. Go bankrupt anyway and allow conservator to rework pensions and health contracts. Could do this by New Years and Detroit will be the new Iceland.
"Without a significant restructuring of its debt, the city will be unable to break the cycle of damaging cutbacks in essential municipal services and investments,” according to Orr’s report. He also cited the need for concessions from unions, and revamping the police and fire departments to protect residents beset by crime and arson-inviting blight."
Not that I think that Government is the answer, but emergency financial manager Kevyn Orr might want to consider having a talk with Wisconsin Gov. Scott Walker.
I'm sure that Mr. Snyder has enough arrogance to give for his Detroit right-hand man to not need outside help.
On the other hand, Mr. Orr might want to take a page from Kasich's SB5 post-referendum concession speech and learn some humility.
I hear you seth.
Robocops? Not unless you want to deploy drones.
Omnicorp? Yes, just that it can be called ALEC or the Mackinac Foundation.
We should start the "Great Detroit Land Rush." Say, on October first, anyone who wants to stake a 5 acre claim in Detroit gathers at a starting line on the Canadian Border. At 8 AM, some one shoots a gun (igonore all gun shots before 8 AM) and everyone rushes to stake their claim. At this point, you should not ignore gun shots, but rather return fire.
Ownership carries to the person or persons able to grab and hold their claim. . . Oh, whait a minute, that's pretty much what's going on there now.
Unlike RoboCop, the current Detroit isn't building Delta City anytime soon.
They came close with one of the islands.
Detroit reminds me of 'Atlas Shrugged'.
The vast majority of those who haven't left are there for the stipend.
'Who is John Galt'
The 100% fully funded police pension isn't.
When you can no longer buy protection, you go bankrupt, the jig is up
Hey, you people in Detroit. I have Gold and Silver. Would you like me to move to your city?
It will be summer. They can sleep outside.
That's mighty white of ya'
Why don't we sell it to Vietnam?
Trade it for the name of a particular handler. And we probably won't even have to fluff the canine population since it is unlikely there are any dog catchers on the Detroit payroll now anyway.
Vietnam is not that stupid.
Vietnam is not that stupid.
No offense, but that's making it worse.
For the people that are getting 2-3 pensions..cut them back to one...and the pension should be based on the last 5 years of salary or wages..not the last year where they stuffed it with overtime and a last minute raise....then cut them all 30%.....we could be getting close then...
that will happen, but not by choice
In line at the supermarket a customer was paying with EBT/SNAP/FoodstampCard and had a hot food package from the deli dept. The cashier said we can't accept stamps for hot food anymore; this was implemented recently it would seem. The cashier then said that the customer could do it this one last time and finished the purchase. She then went on to say that she also is on SNAP/EBT/Foodstamps and it had dropped from $300/mo or so to a now $120/month or something. Here is the kicker, she has one child, she asked indignantly "How am I going to be able to afford my new baby that is on the way for only an additional $120? I don't think they will give me more than that." So clearly having one kid that she can't afford to feed wasn't enough but a second new mouth to feed is a problem. I have determined the only solution to this is for everyone to go on SNAP and have more children.
Can we ask which state? Is SNAP/EBT partially funded by the Feds? I am suprised that anything is being cut back. Illegals, O Voters, drug addicts all get SNAP/EBT.
The only ones I have never seen on EBT/SNAP are old white people. They walk around the grocery store trying to pick out 5 things they can afford to eat that week. This is no joke - I have seen it.
I just bought USPS postage stamps at the electronic kiosk and it prompted me whether I wanted to pay with debit, credit or EBT. You just can't make this stuff up.
Just to be clear, SNAP is a benefits program, EBT is a delivery methodology and infrastructure. Other benefit programs are adopting EBT delivery. JPM is a big player in EBT and the vig it generates.
Two advantages touted by EBT evangelists are lower overhead of benefits distribution and lower fraud. Both are misleading at best. It's a soup/bread line without the line.
Today Detriot...... Tomorrow, Stockton, Vallejo, Fresno, Poukeepsie Newark, Philadelphia, ect..ect.....
The whole fucking mess is unsustainable. Amazing how, 40years ago, we didn't see that cheap energy would come to an end eventually. Planned, sustainable communities would be nice right about now...
Fuck that Agenda 21 bullshit. This problem will self-regulate if allowed to.
I believe I speak for everyone when I say F##K Detroit.
No problem, the state will bail it out. Obama will bail out the states like his home state, IL.
Benanke and the Fed are printing out billions to give to bankrupt states.
Right... indeed. But it's a-normal, isn't it? Maybe you could use the phrase de-normal as well... or anti-normal. But not abnormal. Just sayin'.
So what is the hourly rate that the bankruptcy lawyers are going to charge? $750 per hour?
I was in Detroit 20+ years ago to see Celtics and Piston game. The city look like shit; With all this elapse time I am sure that things have gotten so much better.
What's wrong with Detroit?
Let's look at their City Council.
http://www.michigan.gov/images/DetroitCouncilGroupWEB_161931_7.jpg
Oh how about that. Must be mere coincidence.
Looks like short people are over-represented.
Damn, and the Red Wings just beat the Ducks too
Add an entry to your i-reminder-app to revisit this story June 1st.
Either we will learn that this guy is another TBTF stooge or we will be HIGHLY entertained.
(Sound Video not properly synchronized)
http://www.dailymotion.com/embed/video/xjz2kv?autoPlay=1&start=610
Detroit may not be Greece
Well, it certainly doesn't smell like Greece.
Does anybody expect anything different in a nation of welfare blacks run by Jewish bankers?
United States Federal State and Local Government Spending
Fiscal Year 2013 in $ billion
[+] Pensions 866.3 0.0 190.5 43.5 1,100.3
[+] Health Care 882.2 -365.4 497.6 133.8 1,148.1
[+] Education 98.0 -104.2 270.4 517.0 781.2
[+] Defense 856.5 <<Military pensions and health care for active and retired troops cost the government about $100 billion a year
[+] Welfare 430.4 -54.3 179.7 98.7 654.5
[+] Protection 60.6 0.0 90.8 188.6 340.0
[+] Transportation 94.5 -60.8 111.4 143.7 288.8
[+] General Government 32.3 -0.8 31.6 54.5 117.7
[+] Other Spending 141.4 -49.1 86.0 354.7 532.9
[+] Interest 222.8
[+] Balance 0.0 -0.0 0.0 -0.0 0.0
[+] Total Spending 3,685.0 -634.6 1,508.9 1,599.3 6,158.5
[+] Federal Deficit 972.9 0.0 0.0 0.0 972.9
[+] Gross Public Debt 17,249.3 0.0 1,151.6 1,845.5 20,246.4
Fighting for Israel is expensive :S
I was sure this had already happened, I guess they were faking,
Someone somewhere is getting very excited about all that debt.
Detroit, MI voted for Obama in the 2012 Presidential election... now they can have Obama (and their fiscal default).
Good Luck with that Detroit!
Ch. 11 worked for GM! Do it for Detrot too. Please. So they can get rid of (most of) the cockroaches and parasites.
Then start with a 'Tabla Raza' (blank slate). Hire ppl for skill and work ethic, not entitlement or for points for "disadvantaged demographics": Your skin color entitles you to "nothing". NO exceptions.
1. Martial Law rules & punishment (ka-boom!) for possession of drugs
2. Offer hard-working illegals to move in, to work and pay rent.
I didn't think that Detriot was as strong as lasting another month implies...!!
Detriot still has cash?
Money Beez wayciss an sheeit
what is difference between detroit and the rest of usa? in financial state? what does it mean for the future, are we going to zimbabwe resolution? I think so.
Mugabe and Gideon Gono to be employed as a consultants.
Reporter: "Robocop, what would you tell the children of Detroit?"
Robocop: "Stay out of trouble."
I remember when George Harrison did a concert for Bangladesh. Maybe some of these black "entertainers" can do a concert for Detroit. Would anyone show up?