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Detroit To Default Today, "Shared-Sacrifice" To Follow

Tyler Durden's picture




 

And so the next casualty of the inevitable municipal collapse appears, which is, as expected, that one-time symbol of all that was right with a (once upon a time) manufacturing America, having since been replaced with the anti-symbol of all that is broken: Detroit.

  • DETROIT BEGINS MORATORIUM ON ALL DEBT SERVICE PAYMENTS FOR UNSECURED FUNDED DEBT
  • DETROIT TO DEFAULT ON CERTIFICATES OF PARTICIPATION DUE TODAY

And, true to from in the New Normal America, where the "fairness doctrine" rules supreme under Big Brother's watchful eye, the premise of the upcoming glorious recovery is a well-known one: "the shared-sacrifice." To wit: "The City currently faces approximately $17 billion in total liabilities. Detroit is insolvent and cannot meet its financial obligations without a significant restructuring.  Mr. Orr's plan provides for shared sacrifice among all creditor groups – from Wall Street and Main Street consistent with their legal rights – in order to return Detroit to a sustainable financial foundation and to permit much-needed reinvestment in the City." The punchline: "Detroit's road to recovery begins today"... By defaulting.

Full release:

Emergency Manager Presents Plan to Secure a Viable, Strong Detroit

Focus is to Improve Delivery of Basic Services to 700,000 Detroit Residents
Detroit will Honor Pay, Medical and Vacation Obligations to Current Employees
Plan Provides for Shared Sacrifice Among All Creditor Groups to Return Detroit to Sustainable Financial Foundation and Permit Reinvestment in City
Negotiations Starting Now - Emergency Manager and His Advisers Are Moving Forward with Discipline, Speed and Efficiency of a Corporate Restructuring

Kevyn Orr, the Emergency Manager for the City of Detroit, today presented to the City's creditors a plan that outlines the required steps to secure a viable, strong Detroit.  The focus of the proposal is to ensure that the City improves the delivery of basic services -- fire and police protection, functioning street lights, regular and reliable garbage collection, blight removal and enhanced emergency medical services -- to the 700,000 people who live in Detroit.

The City currently faces approximately $17 billion in total liabilities. Detroit is insolvent and cannot meet its financial obligations without a significant restructuring.  Mr. Orr's plan provides for shared sacrifice among all creditor groups – from Wall Street and Main Street consistent with their legal rights – in order to return Detroit to a sustainable financial foundation and to permit much-needed reinvestment in the City.

"Detroit's road to recovery begins today," said Mr. Orr.  "Financial mismanagement, a shrinking population, a dwindling tax base and other  actors over the past 45 years have brought Detroit to the brink of financial and operational ruin.  We cannot repeat the mistakes of the past -- the City, its region and the country deserve better.  Our plan is bold because aggressive action is required to get Detroit back on its feet and improve the quality of life for the people who call Detroit home.  

"Today is a new day and we have presented a plan that outlines a comprehensive roadmap for ensuring basic services are delivered to our citizens while aligning our obligations with the reality the City confronts.  My team and I hope Detroit's creditors and constituents recognize that compromise and shared sacrifice are required for a better, more sustainable future for Detroit and its citizens."

As part of its plan, Detroit is in the beginning of a moratorium on all debt service payments for unsecured funded debt, which will begin with the next payment to holders of Certificates of Participation due June 14, 2013.  The City has made this decision in order to conserve cash so that it can continue to provide essential services to its citizens.  Detroit also will continue to honor its pay, medical and vacation obligations to its current employees and maintain its current vendor contracts for essential goods and services.

Mr. Orr and his advisers have started discussing the plan with Detroit's creditors, and they will move forward with the discipline, speed and
efficiency of a corporate restructuring.  They are committed to negotiating in good faith with all constituent groups to pursue consensual agreements.  The team also is focused on pursuing a restructuring that protects and promotes the long-term viability of Detroit and the basic well-being of its citizens. 

Mr. Orr and his advisers will work to maximize recoveries for creditors within the City's means, while providing pension and health insurance benefits that are reasonable and fair.  These changes will allow essential reinvestment in the City to improve the lives of its citizens for decades to come.

The plan presented today can be accessed in the Emergency Manager section of Detroit's website at http://www.detroitmi.gov/.  It identifies the sacrifices the City is seeking to ensure its future viability.  The plan proposes the following with respect to certain creditor groups:

  • The Emergency Manager is proposing to treat the City's obligations of similar priority in roughly the same manner so as to provide relative equality of treatment as the Emergency Manager addresses the City's staggering legacy liabilities.
  • Holders of secured debt will receive treatment commensurate with the value of their collateral.  The City's largest secured bond debt would be restructured with new bonds that respect the valid security interests of the bondholders, or otherwise as agreed by the parties.
  • The City's unsecured bonds and other unsecured obligations (including unsecured General Obligation bond debt, pension certificates, the pensions' underfunding claims and retiree healthcare claims) will receive their pro rata portion of $2 billion face amount nonrecourse participation notes, payable as the City's financial circumstances improve.  Principal paydowns will occur at certain intervals and will be based upon the City's
    receipt of currently unbudgeted sums related to asset values and improved City revenues.
  • The plan proposes to modify pension benefits consistent with available funding.
  • The plan also proposes to modify retiree health insurance, with many retirees obtaining benefits from Medicare or the healthcare exchanges under the Patient Protection and Affordable Care Act.
  • A follow-up meeting with the City's unions and retirees will be scheduled in the near term to explain the details of revised pension and  healthcare benefits.

Mr. Orr and his advisers also want to make sure that the restructuring achieved by Detroit is sustainable and leads to a permanent revitalization of the City.  Many of the planned revitalization efforts will take years to complete.  In exchange for the painful sacrifices from creditors, Mr. Orr and his team will insist that structures are put in place to ensure that the restructuring initiatives are continued and that fundamental changes are not undermined.  Toward this end, the Emergency Manager expects to adopt oversight structures that have been used successfully in other cities, including New York City, to ensure that reforms are sustainable and long-lasting.

"The City and its creditors and constituents will have worked too hard and sacrificed too much for the gains of the restructuring to go for naught," said Mr. Orr.  "We will need an oversight structure to ensure that the tough decisions and the compromises we make today are sustainable and allow Detroit to become a vibrant and growing American city once again.  We look forward to our continued discussions with the City's creditors and to a brighter future for Detroit and all of its citizens."

Miller Buckfire & Co., Jones Day, Ernst & Young LLP and Conway MacKenzie Inc. are advising the City of Detroit in its restructuring.

 

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Fri, 06/14/2013 - 11:59 | 3658253 arm50
arm50's picture

Bullish

Fri, 06/14/2013 - 12:04 | 3658272 Clueless Economist
Clueless Economist's picture
  • "The plan also proposes to modify retiree health insurance, with many retirees obtaining benefits from Medicare or the healthcare exchanges under the Patient Protection and Affordable Care Act."
  • ERRR....do you mean the taxpayers will be paying for thE retiree's health insurance Mr Orr??? 
  • Fri, 06/14/2013 - 12:11 | 3658315 Herd Redirectio...
    Herd Redirection Committee's picture

    Shocked!

    Fri, 06/14/2013 - 12:14 | 3658340 Herd Redirectio...
    Herd Redirection Committee's picture

    Is it because you do not have money, or else?  (referencing obscure video posted above)

    Fri, 06/14/2013 - 12:34 | 3658429 fourchan
    fourchan's picture

    i live here and this place is fucked.

    Fri, 06/14/2013 - 12:38 | 3658451 Blano
    Blano's picture

    I bailed last year and never looked back.  

    I hit the Ohio line about 7:30AM and said "good riddance."

    Fri, 06/14/2013 - 12:51 | 3658546 Devils Advocate
    Devils Advocate's picture

    I also live in the area...The city is f'd and it brings a smile to my face that this is happening....Now the countdown till we get the headline.  America Defaults!!!!

    Fri, 06/14/2013 - 13:18 | 3658659 Dead Canary
    Dead Canary's picture

    Hey gang, we don't need to default. We can put on a show!

    Fri, 06/14/2013 - 20:26 | 3659912 StychoKiller
    StychoKiller's picture

    Meh, the "gang" is most of the problem.  The city "promised" unrealistic pensions and benefits to public employees, based on an assumption of continued population/tax revenue growth.  Guess what, the population delta is 800,000 - 1.5Million = -700,000 (ouch!)

    Fri, 06/14/2013 - 13:53 | 3658813 smlbizman
    smlbizman's picture

    i see an absolute perfect plan that nobody will challange. they can probably furlough most of the court system that would handle the challanges to this perfect plan. .now i have to get back to running the titanic....

    Fri, 06/14/2013 - 14:44 | 3659012 Panafrican Funk...
    Panafrican Funktron Robot's picture

    Lets all remember realized vs. unrealized losses re: bank/fund balance sheets.  Creditors are going to reject this plan, Detroit will go BK, and creditors will continue to pretend a zero haircut scenario for a while longer.  

    Fri, 06/14/2013 - 15:35 | 3659191 marathonman
    marathonman's picture

    I'm just wondering how much of the MBS' the Fed is buying every month are sub-primes in places like Detroit, Cleveland, Chicago's south side, and various and sundry other post-industrial hell holes.  Good thing the Fed is keeping those TBTF banks whole for worthless real estate bonds and letting us eat the inflation and pay higher taxes.  Oh oh say can you see by the dawn's early light?  It gets me feeling all patriotic.

    Fri, 06/14/2013 - 13:15 | 3658648 g'kar
    g'kar's picture

    Decades of left wing Union controlled Democrat welfare spending fools and the fools that kept voting them in. Give'm a bucket and let them bail themselves out.

    Fri, 06/14/2013 - 13:18 | 3658660 Taffy Lewis
    Taffy Lewis's picture

    Where's Trav777 when you need him?

    Fri, 06/14/2013 - 14:01 | 3658847 silverserfer
    silverserfer's picture

    hes been busy playing with fire extinguishers

    http://www.youtube.com/watch?v=tnvjXY4SG4M

    Fri, 06/14/2013 - 14:02 | 3658852 MachoMan
    MachoMan's picture

    busy burning crosses and wearing pointy sheets...

    Fri, 06/14/2013 - 13:56 | 3658830 smlbizman
    smlbizman's picture

    how could such an esteem group fail....i cant pu tmy finger on it but it seems the same theme runs through way to much of our govt. in charge...with the same results...

    http://www.detroitmi.gov/CityCouncil/tabid/2509/Default.aspx

    Fri, 06/14/2013 - 19:13 | 3659737 Mentaliusanything
    Mentaliusanything's picture

    Simply put, All Governments must live within MY MEANS.:........ even those outdoor farm helper types.

    (just know im banned)

    Fri, 06/14/2013 - 12:37 | 3658449 imbtween
    imbtween's picture

    Villiams!

    Fri, 06/14/2013 - 12:16 | 3658355 auntiesocial
    auntiesocial's picture

    job creators my left testicle. if our government wanted to create good jobs in Detroit, they would lower the standards on making vehicles and allow the US to produce these 40 mpg cars we can export. what a crock. 

    Fri, 06/14/2013 - 12:19 | 3658364 SimMaker
    SimMaker's picture

    ......or ED-209s

    Fri, 06/14/2013 - 13:18 | 3658663 maskone909
    maskone909's picture

    i really just dont get how a city can default.  its really disturbing.  how is it possible to missmanage money to the extent that they have.  insane

    Fri, 06/14/2013 - 13:48 | 3658800 Citxmech
    Citxmech's picture

    Well, when you finance projects you can't afford through bonds at ridiculous interest rates, promise insane pensions for mundane low-level positions, and then experience mass-flight, unemployment, and economic devastation through outsourcing - it has a way of fucking with your balance sheet.  This is why voting for projects without funding in-hand is recipe for disaster (California, are you listening?).

    What I find completely hysterical is that last week CNB$ has a piece on it now being the time to get into muni bonds for fks sake.

     

     

    Fri, 06/14/2013 - 14:11 | 3658886 MachoMan
    MachoMan's picture

    mass-flight.

    BINGO.  This is the issue...  there are only so many beasts of burden in the barnyard...  if you overwork (tax) them, then they lay down or run away...  So long as you can keep attracting mules to the farm, then you can keep up the nonsense...  once you fail to attract new mules, it's over...  the city and everyone around the city has leveraged expected tax collections to the gills...  they've already spent years in advance...  once it becomes apparent these won't be collected, the whole thing falls in on itself.

    Fri, 06/14/2013 - 15:44 | 3659215 RockyRacoon
    RockyRacoon's picture

    Meredith Whitney is right... just early.

    Fri, 06/14/2013 - 16:56 | 3659375 Don Diego
    Don Diego's picture

    Since diversity is America's greatest strength, I cannot understand why Detroit is so deep in trouble.

    Fri, 06/14/2013 - 20:31 | 3659918 StychoKiller
    StychoKiller's picture

    Hmm, apparently you can't just "swipe yo EBT" card to pay yer taxes, whocouldanode?

    Fri, 06/14/2013 - 21:37 | 3660047 Colonel Walter ...
    Colonel Walter E Kurtz's picture

    Very slowly, then all at once! (kudo to the originator)

    Fri, 06/14/2013 - 12:34 | 3658412 max2205
    max2205's picture

    Well, at least we know now how far the CAN can be kicked before it can't

     

    1960 to 2013 .... 53 years...lol

    Fri, 06/14/2013 - 12:53 | 3658555 mofreedom
    mofreedom's picture

    40 mpg?  how about cool fast cars that are affordable.

    Fri, 06/14/2013 - 13:22 | 3658688 Dead Canary
    Dead Canary's picture

    I grew up in the 50's.

    WHERE ARE MY AIR CARS!

    WHERE ARE MY 5 COURSE MEALS IN PILL FORM!

    WHERE ARE MY ANDROID SEX SLAVES!

    Fri, 06/14/2013 - 16:02 | 3659257 Umh
    Umh's picture

    It's to crowded, no one really wants it and I can't afford them.

    Fri, 06/14/2013 - 13:23 | 3658690 CPL
    CPL's picture

    You can have both...and 40 mpg is a starting point.  Want to see what guys with too much garage space do with their time.  I believe a couple of guys managed to get a project up and over 100 mpg on an old POS chevy firefly for a guy that delivers pizza to the point that when he drives the car for work the car pays him in savings.  Any case check it out, think performance + elbow grease = efficiency and lower TCO.

     

    http://www.ecomodder.com

    Fri, 06/14/2013 - 19:13 | 3659744 Parrotile
    Parrotile's picture

    Better look to the Far East. Hyundai and KIA both produce popular (i.e. trendy) very quick family cars that easily beat 40 MPG.

    Sod it - the Diesel Kia Carnival ("Sedona" in the US) easily manages 46-48 MPG in an EIGHT seater MPV! Not exactly slow either (as I found out when I hired one!)

    That's a very hard game of "catch-up" to be playing, especially when these Manufacturers are wiping the board with the competition (see who'se getting the greatest increase in European market share - it's not the likes of Peugeot / Renault / Mercedes / BMW!)

    Fri, 06/14/2013 - 12:18 | 3658360 King Nothing
    King Nothing's picture

    What difference, at this point does it make?

    Fri, 06/14/2013 - 20:21 | 3659895 Chuck Walla
    Chuck Walla's picture

    DETRIOT! The poster child for Progressive Ideas and Politics!

    FORWARD SOVIET!

    Sat, 06/15/2013 - 20:13 | 3661657 Promethus
    Promethus's picture

    Such talk is an Obamanation.

    Sat, 06/15/2013 - 20:15 | 3661658 Promethus
    Promethus's picture

    This will be recovery summer for the motor city.

    Fri, 06/14/2013 - 12:06 | 3658286 drchris
    drchris's picture

    There was a lot of talk about QE Muni a few years back. Maybe it will be back on the table.

    Fri, 06/14/2013 - 12:08 | 3658298 Jumbotron
    Jumbotron's picture

    YES WE CAN !!!!!

    Fri, 06/14/2013 - 12:13 | 3658333 Meat Hammer
    Meat Hammer's picture

    I love it!  The all Americans must share in the sacrfice assholes truly meant the productive class would have to sacrfice for the non-productive class...aka the takers.  But it's actually they themselves that will have to sacrifice in order to pay off the politicians' (who promised them all the goodies paid for by the other guy in the first place) banker friends.  

    Poetic justice, bitchez.

    Fri, 06/14/2013 - 12:21 | 3658370 SpiceMustFlow
    SpiceMustFlow's picture

    I just wanted to let you know I've renamed my cock Meat Hammer thanks to you

    Fri, 06/14/2013 - 12:26 | 3658395 Meat Hammer
    Meat Hammer's picture

    Good for you, Spice.  Bitches love meat hammers.   

    Fri, 06/14/2013 - 13:49 | 3658804 vulcanraven
    vulcanraven's picture

    I call mine the Blood Bat

    Fri, 06/14/2013 - 13:57 | 3658833 Son of Loki
    Son of Loki's picture

    I thought it was called, "The Monkey"... always getting into trouble.

    Also, as in, "Spank the Monkey."

    Sat, 06/15/2013 - 15:36 | 3661233 dojufitz
    dojufitz's picture

    I call mine "Nano' - 1 billionth of an inch!

    Fri, 06/14/2013 - 12:54 | 3658561 mofreedom
    mofreedom's picture

    hey, you didn't default that.

    Fri, 06/14/2013 - 12:52 | 3658552 Andy_Jackson_Jihad
    Andy_Jackson_Jihad's picture

    "There was a lot of talk about QE Muni a few years back. Maybe it will be back on the table."

    For Detroit they need to find an official acronym for VE.  So the unofficial one can be Very Ebony.

    Fri, 06/14/2013 - 14:03 | 3658857 silverserfer
    silverserfer's picture

    not in Duhtroit. They get DHS regiments and crowd control cannons.

    Fri, 06/14/2013 - 12:33 | 3658350 Gringo Viejo
    Gringo Viejo's picture

    okay with me...........

    Fri, 06/14/2013 - 12:21 | 3658373 GolfHatesMe
    GolfHatesMe's picture

    Detroit needs to build a Data Center

    Fri, 06/14/2013 - 12:26 | 3658390 MarkD
    MarkD's picture

    And build drones

    Fri, 06/14/2013 - 12:30 | 3658411 machineh
    machineh's picture

    And 'bail in' bank depositors within the city -- mucho moolah!

    Fri, 06/14/2013 - 15:26 | 3659155 Vince Clortho
    Vince Clortho's picture

    I think its important that the drones work correctly.

    Fri, 06/14/2013 - 13:01 | 3658586 CPL
    CPL's picture

    Infrastructure is too old for anything more than N+none and it's city recommendations on consolidating everyone into a smaller patch is a better idea.

    The size and the big areas of deriliction of the city hinders it's ability to properly function and in an energy poor world, their best options are to move it all closer to water and start examining the planning done at the turn of the century.

    It's not a wealthy area by any means, but neither is a city like St John's in Newfoundland with a similar population size (and it's not a flat or easy area to build in).  Detroit currently has the issue of thinking on expansion and added services in a world where lean, tight and sensible (socially and financially) options are expressed.

     

    http://upload.wikimedia.org/wikipedia/commons/thumb/4/47/Old_map_1807_plan.jpg/200px-Old_map_1807_plan.jpg

     

    See the layout of the original detroit, the mandela, the star and triangle all laid out on top of one another.  While most would attribute this to Mason's (which it is, all good civic engineering once was), it also creates a couple of things because city and civic engineering is all about mapping good models to a business requirement.

    In the case of old detriot, it was developed with business and distribution of goods, until in the 1960's it shifted to class distribution and distinction (white flight to suburbs).  Since that paradigm of 'class' distinction doesn't exist anymore because everyone is broke it opens up all sorts of GOOD options to redevelop it.

    1)  A city you can walk in and quickly get from area to area.  Detroit can't afford the roads it has now, nor the traffic.  The PEOPLE of Detriot can't afford the roads or the energy or the cars that use that energy.  To be blunt, 95% of 'modern' cities can't afford the crap they build.

    2)  Lower TCO and faster ROI, tighter and lighter infrastructure.  All that junk under ground doing nothing in the empty areas should be repurposed.  Detriot can't afford the current prices of infrastructure, but since it's been around for a loooooong time, it's 'bank' is sitting under the streets in old dead neighbourhoods to help offset capital costs.

    When the plumbing was put in those now empty suburbs, it was 30 years ago.  The cost of iron, copper, zinc, silver was around a price level of what we call "sweet fuck all".  In the same region they have smelters, casters, journeymen, tradespeople...all the stuff they need to get back on track is in the area.

    But the first thing that needs to happen is they need to resolve if they really want Washington to dictate terms to them for something as worthless as a block grant or grow a pair and get some smart kids in their area to help design the city they are going to use.

     

    As far as data centers are concerned...

    Data centers and the consolidation efforts are all dead end developments in IT.  I've watched them play the DC&C game five times in my career.  

    They are the sole result of cheap energy...and looking at WTI, in another 10 dollars on the Pbb, every data center on the planet is going to be bleeding out, in 15 the layoff have to happen and at 20 above for a couple of month, they shutter the doors.  

    What is a better option is distributed computing.  Basically super computing leveraging anyone that subscribes to a 'project'.  Currently there are tonnes of projects, namely BitCoin when people collectively farm BtC's in huge farms all over the world.

    http://distributedcomputing.info/projects.html

    This is how we get to keep computers as tools over the long term until we all sort our shit out energy wise

    Fri, 06/14/2013 - 16:37 | 3659340 Brit_Abroad
    Brit_Abroad's picture

    Thanks CPL

    Interesting read, some nice ideas there.

    But probably far too sensible to be applied.

    Fri, 06/14/2013 - 12:24 | 3658385 slaughterer
    slaughterer's picture

    When does New York go bankrupt?  Next week?

    Fri, 06/14/2013 - 13:19 | 3658668 Hippocratic Oaf
    Hippocratic Oaf's picture

    You should see all the people walking around in the middle of the afternoon NOT WORKING.

    Obama phone to their head.

    Not giving a fuck.

    Waiting for the lottery to hit or someone to sue.

    Fri, 06/14/2013 - 12:28 | 3658403 SheepDog-One
    SheepDog-One's picture

    How do they have Bernie Mack announcing Detroit default??

    Fri, 06/14/2013 - 13:17 | 3658658 Jdog
    Jdog's picture

    Obama can't wait to send money to Syria while our cities are going bankrupt one by one! lol this is crazy!

     

    Fri, 06/14/2013 - 15:34 | 3659188 insanelysane
    insanelysane's picture

    He'll throw D-town a bone when he gets back from his $60 million dollar vacation to Africa this summer.

    Fri, 06/14/2013 - 14:36 | 3658974 Dr. Kenneth Noi...
    Dr. Kenneth Noisewater's picture

    So, does this trigger Detroit CDS?

    Fri, 06/14/2013 - 15:00 | 3659067 Dingleberry
    Dingleberry's picture

    Ah yes....scenic Detroit....let' do some figuring, shall we?

    1. Exclusive Domcratic political machine for the last 4 decades: check

    2. Liberal "entitlements" breeding generations of criminals and destroyed the family unit: check

    3. Liberal public and private unions which have destroyed personal accountability: check

    Endemic corruption and excuse making (see 1-3 above): check

    This is what happens when you try to turn a city into a socialist paradise. Instead of Sweden...you get Somalia.

     

    Ladies and gentlemen, I give to you this petri dish of liberalism gone parabolic:    DETROIT!

     

    Fri, 06/14/2013 - 12:00 | 3658258 EscapeKey
    EscapeKey's picture

    A sad end to a once mighty city.

    Fri, 06/14/2013 - 12:02 | 3658268 RSloane
    RSloane's picture

    Doc posted some vids of Detroit now compared to just ten or twelve years ago. Its heartbreaking.

    Fri, 06/14/2013 - 12:05 | 3658280 Bay of Pigs
    Bay of Pigs's picture

    Raze the city? It is not going to make it anyway.

     

    Fri, 06/14/2013 - 12:07 | 3658289 King_of_simpletons
    King_of_simpletons's picture

    It's just bankruptcy. It is not end of existence.

    Fri, 06/14/2013 - 12:10 | 3658309 fonzannoon
    fonzannoon's picture

    Yeah I am going to take the optomistic side of this. At least they have a chance to start over. I posted this a while back but I went to the budget meeting for my old high school (which will end up being closed). The first slide they showed illustrated that 82% of this years budget went to pay pensions and healthcare of retired teachers/admin. In a few years it will be 100%. My taxes are absurd. But we probably have several more years and substantially higher taxes before we end up in the same boat, and it's going to getting from here to there.

    Fri, 06/14/2013 - 12:15 | 3658346 EscapeKey
    EscapeKey's picture

    In the land of the socialist, every problem can be solved through taxing the rich.

    Fri, 06/14/2013 - 12:24 | 3658384 AynRandFan
    AynRandFan's picture

    Bingo.  That's the proposed solution here in the new California, formerly known as Colorado.

    http://www.denverpost.com/breakingnews/ci_22101268/report-colorados-public-worker-pension-fund-not-fiscally

    Fri, 06/14/2013 - 12:32 | 3658421 Meat Hammer
    Meat Hammer's picture

    Until the rich liberals start secretly voting Republican because they're only philanthropic with your money, not theirs.  

    Fri, 06/14/2013 - 14:28 | 3658947 Snoopy the Economist
    Snoopy the Economist's picture

    There are not enough 'rich' (read working) to tilt the wagon anymore.

    Fri, 06/14/2013 - 12:33 | 3658426 onewayticket2
    onewayticket2's picture

    not a "sad ending".....a predictable ending.  it was "sad" when they undertook these policies.....

    Fri, 06/14/2013 - 12:36 | 3658441 fourchan
    fourchan's picture

    the black lead experiment has failed miserably as it has across the globe.

    Fri, 06/14/2013 - 19:00 | 3659717 rivoniaboy
    rivoniaboy's picture

    You can the man out of Africa - but you can't take Africa out of the man.

    Fri, 06/14/2013 - 12:49 | 3658535 NotApplicable
    NotApplicable's picture

    I'm eagerly awaiting the article that notes that ALL public pensions are under-funded, thanks to living in ZIRP world (among other things).

    Got Loot?

    Fri, 06/14/2013 - 13:37 | 3658763 disabledvet
    disabledvet's picture

    "ten cents on the dollar of 2.5 billion." that's what marketwatch said. "chump change for Wall Street." i've driven in and around Detroit...beautifully designed City still. "just happened to be surrounded by Michigan." roll up the windows...keep moving.

    Fri, 06/14/2013 - 14:04 | 3658861 Son of Loki
    Son of Loki's picture
    SacBee: California teachers pension fund faces $64 billion deficit

     

    Capitol Alert
    The latest on California politics and government
    February 4, 2013

    The trust fund that provides pensions to retired teachers has a $64 billion deficit and would need a $4.5 billion per year infusion of revenue to become fully solvent, according to a new internal study.

     

    http://inlandpolitics.com/blog/2013/02/05/sacbee-california-teachers-pen...

    Fri, 06/14/2013 - 12:20 | 3658368 Dr. Engali
    Dr. Engali's picture

    Fonz take a look at this and tell me they can ever start over. Nothing short of razing the whole city will give them a fresh start:

     

    https://www.youtube.com/watch?v=Kem2ceHCtGQ

    Fri, 06/14/2013 - 12:22 | 3658376 SpiceMustFlow
    SpiceMustFlow's picture

    Agreed, the renovation costs on some of the larger abandoned buildings are probably to high for anyone to fuck with em, burn that mother down

    Fri, 06/14/2013 - 12:27 | 3658398 fonzannoon
    fonzannoon's picture

    I hear you Doc. All I am saying is it's not like yesterday things were awesome and today they are terrible. I would just hope that they are let go from their debt obligation and some sane individuals somehow manage to lead them in the right direction.

    I know I know.

     

    Fri, 06/14/2013 - 12:32 | 3658420 Dr. Engali
    Dr. Engali's picture

    I agree bankruptcy is a positive step. The problem is they should have declared bankruptcy long long ago before the city became an ash heap. Now there is no amount of investment that can save it.

    Fri, 06/14/2013 - 12:33 | 3658428 Meat Hammer
    Meat Hammer's picture

    Doc, you're going to have to knock it off with all of this logic and reason bullshit.  

    Fri, 06/14/2013 - 12:38 | 3658456 fonzannoon
    Fri, 06/14/2013 - 12:49 | 3658528 Meat Hammer
    Meat Hammer's picture

    True, but the change in thinking is going to be painful.

    Great video, thanks for sharing, fonz.

    Growing your own food is like printing your own money.

    Fri, 06/14/2013 - 12:58 | 3658578 Buckaroo Banzai
    Buckaroo Banzai's picture

    There are some great black leaders in this country. Too bad they don't get the kind of recognition or support that racist fucksticks like Obama, Jackson, Sharpton, or Farrakhan get.

    Fri, 06/14/2013 - 15:17 | 3659122 marathonman
    marathonman's picture

    Not to be a hater or anything, but got any references Buck?

    Fri, 06/14/2013 - 13:22 | 3658683 Blano
    Blano's picture

    The amount of denial running rampant in that city (the entire area in fact) has been and is mind boggling.

    Fri, 06/14/2013 - 12:59 | 3658584 mofreedom
    mofreedom's picture

    looks like a fun place for a kid to play...abandoned buildings are a gold mine for a childs imagination.

    Fri, 06/14/2013 - 14:42 | 3659005 Bastiat
    Bastiat's picture

    . .  . and for a predator's

    Fri, 06/14/2013 - 12:30 | 3658410 SheepDog-One
    SheepDog-One's picture

    'Start over' based on what though....pawn shops?

    Detroit was once the hub of auto and steel manufacturing and we just don't do that anymore....what's Detroit going to rebuild on, storage unit auctions?

    Fri, 06/14/2013 - 12:36 | 3658439 fonzannoon
    fonzannoon's picture

    Maybe they become the first real functioning black market economy. Who knows.  I just can't allow myself to believe everything is hopeless. I won't.

    http://www.youtube.com/watch?v=lWZU3pPZWig

    Fri, 06/14/2013 - 12:57 | 3658576 Andy_Jackson_Jihad
    Andy_Jackson_Jihad's picture

    Black people can't even run a black market economy.  Detroit was fucked after the 1960s race riots.  Politicians blinded by our modern "enlightened" thinking have been saying Detroit is ready to turn around ever since then.  It's not. 

    In future generations someone is going to write a book that identifies what the maximum percentage of the population can be black before it starts sliding down hill.

    Fri, 06/14/2013 - 13:32 | 3658739 Anusocracy
    Anusocracy's picture

    Color of the skin is not the deciding factor.

    The type of mindset is.

    Fri, 06/14/2013 - 15:02 | 3659073 Dingleberry
    Dingleberry's picture

    the word you are looking for is "culture".

    Fri, 06/14/2013 - 13:00 | 3658592 MichiganMilitiaMan
    MichiganMilitiaMan's picture

    Grand Rapids, Michigan, was once the hub of furniture production untill that industry collapsed in the 1920s, but they survived that crash, rebuilt, and are doing very well.  But!  Grand Rapids is run by a bunch of homophobic, racist, bitter, xenophobic gun clingers.

    Fri, 06/14/2013 - 14:12 | 3658891 Citxmech
    Citxmech's picture

    If that's all it takes, explain West Virginia.

    Fri, 06/14/2013 - 15:25 | 3659150 sunnyside
    sunnyside's picture

    Diversity in the gene pool is the one true diversity that helps.

    Fri, 06/14/2013 - 13:24 | 3658700 tarsubil
    tarsubil's picture

    We do still make cars in America. The issue is the union/pension model for manufacturing is not sustainable. I'm not sure if Ford ever managed to get out from under the pensions but if they do maybe they can build cars again like they used to.

    Fri, 06/14/2013 - 14:15 | 3658901 Rustysilver
    Rustysilver's picture

    Fonz,

    In my town (70k) in CT the school budget is 62%.  I bid the bullet and got out last month.

    Fri, 06/14/2013 - 12:13 | 3658331 reload
    reload's picture

    "The plan proposes to modify pension benefits consistent with available funding.
    The plan also proposes to modify retiree health insurance, with many retirees obtaining benefits from Medicare or the healthcare exchanges under the Patient Protection and Affordable Care Act."

    The subjects of these modifications may see it differently to you. I wonder how pissed off the police will be? enough to side with protestors - or at least refrain from beating them? we can hope.

    Fri, 06/14/2013 - 12:55 | 3658564 NotApplicable
    NotApplicable's picture

    Meh, union "leaders" will act tough, but will be forced to accept political bribes once they see there is no other solution.

    Crazy thing about collectives is that they're filled with individuals who are filled with self-interest.

    Fri, 06/14/2013 - 17:20 | 3659432 MisterMousePotato
    MisterMousePotato's picture

    Yeah. Hugo Chavez, for instance. How many billion did he manage to squirrel away on an administrator's salary? (And, by the way, I can actually think of a couple nice things to say about him, which is more than I can say about the likes of Nancy Pelosi, et al.)

    Fri, 06/14/2013 - 12:14 | 3658339 RSloane
    RSloane's picture

    They already are. They already have been.

    Fri, 06/14/2013 - 12:09 | 3658301 Clueless Economist
    Clueless Economist's picture

    What do these urban hellholes all have in common?

    Decades of Liberal Democrat rule.

    Fri, 06/14/2013 - 12:24 | 3658382 greatbeard
    greatbeard's picture

    >> Decades of Liberal Democrat rule.

    Well there's an aptly simplistic explanation for a complicated problem.  The other team did it.  I think you make the mistake of confusing  politics with a natural, if brutal, progression of the greed of capitalism.

    Fri, 06/14/2013 - 12:36 | 3658440 Meat Hammer
    Meat Hammer's picture

    You're confusing capitalism, which is a wonderful and beautiful thing, with corporatism.  

    Fri, 06/14/2013 - 12:39 | 3658458 onewayticket2
    onewayticket2's picture

    no.  the "greed" of capitalism isnt the cause.  capitalism would have solved problems had "politics" not sought to eliminate the capital part of capitalism with inefficient alllocation of scare resources, equalized outcomes and the "greed" and grift of crony govt.  

    there's no free lunch....yet detroit sought to ignore their problems (that capitalism identified) for decades and smooth over the outcome....until they can no longer afford it. 

     

     

    Fri, 06/14/2013 - 12:59 | 3658583 maskone909
    maskone909's picture

    Greed only exist when you have the option to TAKE more than your share.  In true capitalism, you EARN your share, there is no TAKING.  TAKING and "GREED" only exist in a system that exploits and does not meet the true definition of CAPITALISM.  For there to be a system where participants are alotted "SHARES" denotates socialism- where every one gets their "Fair share"

     

     

    Fri, 06/14/2013 - 13:17 | 3658654 Ness.
    Ness.'s picture

    Honest capitalism made Detroit - Crony capitlaism combined with the Unions buying Democrat Politicans destroyed Detroit.

    Next up... Chicago.

    Fri, 06/14/2013 - 15:04 | 3659075 Dingleberry
    Dingleberry's picture

    correct Ness. Don't forget wlefare breeding criminals and destroying the family. For generations. No fixing that one.

    Fri, 06/14/2013 - 12:39 | 3658459 onewayticket2
    onewayticket2's picture

     

     

     

    Fri, 06/14/2013 - 12:53 | 3658539 i-dog
    i-dog's picture

    Well, that just makes two "aptly simplistic explanations"!

    The real issue is a complete lack of vision on behalf of the western leaders, both political and corporate, to address what comes next after the industrial revolution moves on to the developing world. The former industrial giant[s] were required to think about how to reformat society in an information age ... and they decided to ... just fucking print (and simultaneously stifle entrepreneurial creativity)!

    The fucking morons dropped the fucking ball through sheer fucking hubris.

    Fri, 06/14/2013 - 12:55 | 3658568 Dr. Engali
    Dr. Engali's picture

    I'm glad to see that somebody gets it.

    Fri, 06/14/2013 - 13:21 | 3658678 fonzannoon
    fonzannoon's picture

    I guess halftime is over eh doc?

    https://www.youtube.com/watch?v=_PE5V4Uzobc

    Fri, 06/14/2013 - 13:02 | 3658598 Andy_Jackson_Jihad
    Andy_Jackson_Jihad's picture

    "

    What do these urban hellholes all have in common?

    Decades of Liberal Democrat rule."

     

    What about liberal democrat cities that aren't hell holes?  You're missing an X factor here.

     

    Hint:  It's blacks.  No city can survive a large increase in blacks per capita.  There are functional cities all over the world with various types of governments, natural resources and religions.  But NONE that are full of and run by shit-skins that haven't gone down the shitter.

    Fri, 06/14/2013 - 15:05 | 3659078 Dingleberry
    Dingleberry's picture

    The only liberal cities that are not hell holes are those with big name colleges and are small. They are recession proof. Madison, Ann Arbor, Austin,etc.

    Fri, 06/14/2013 - 12:02 | 3658269 Midasking
    Midasking's picture

    It is curtains for this whole country.. produce more than you consume for a better future... http://tinyurl.com/mem7o7x

    Fri, 06/14/2013 - 13:33 | 3658743 Terminus C
    Terminus C's picture

    So, if everyone produced more than they consumed we would have... what?  Since the advent of industrialization we have need to have production sinks in society, unfortunately we have not found any that are not detrimental to said society (war, waste, debt etc.).  Neither capitalism, nor socialism (nor the mix of the two for that matter) has solved the issue of the requirements of production sinks.  The idea behind the mixed economy was to provide government control over the process of "sinking" excess or "creating" surplus because they would be the most... neutral.  We are living now with the consequences of this social experiment.

    Fri, 06/14/2013 - 15:30 | 3659174 sunnyside
    sunnyside's picture

    <<<<So, if everyone produced more than they consumed we would have... what? >>>

    Savings?

    Fri, 06/14/2013 - 12:02 | 3658266 mrdenis
    mrdenis's picture

    So this means all the pension will continue to be paid in full right .....whew ..I was getting worried .....

    Fri, 06/14/2013 - 12:02 | 3658271 JonNadler
    JonNadler's picture

    first GM, then Dtroit, then,...just fill in the blank

    Fri, 06/14/2013 - 12:21 | 3658374 moonman
    moonman's picture

    e

    Fri, 06/14/2013 - 13:34 | 3658750 Terminus C
    Terminus C's picture

    IC wut U did thar.

    Fri, 06/14/2013 - 12:33 | 3658425 KidHorn
    KidHorn's picture

    I guess Michigan would be next.

    Fri, 06/14/2013 - 12:04 | 3658274 Dr. Engali
    Dr. Engali's picture

    I thought the motor city was back? At least that's what Chryler told me:

     

    https://www.youtube.com/watch?v=zmNzZZUmW9E

    Fri, 06/14/2013 - 12:06 | 3658285 Clueless Economist
    Clueless Economist's picture

    you were apparantly lied to, my friend

    Fri, 06/14/2013 - 12:44 | 3658500 jerry_theking_lawler
    jerry_theking_lawler's picture

    IT IS!! It just isn't Detroit, MI now....I heard it moved to the south.

    Fri, 06/14/2013 - 13:24 | 3658696 Blano
    Blano's picture

    Detroit (and real basketball in fact) hasn't been the same since the Bad Boys went away.

    Fri, 06/14/2013 - 12:04 | 3658275 rtalcott
    rtalcott's picture

    Surprise! Surprise! Surprise!

     

    Gomer Pyle

    Fri, 06/14/2013 - 12:10 | 3658310 Jumbotron
    Jumbotron's picture

    Surprise! Surprise! Surprise!

     The NSA knew they were going bankrupt.

    Fri, 06/14/2013 - 12:13 | 3658334 Agent P
    Agent P's picture

    I think even Hellen Keller saw this one coming.

    Fri, 06/14/2013 - 12:26 | 3658392 greatbeard
    greatbeard's picture

    >> even Hellen Keller saw this one

    She told me she heard it.

    Fri, 06/14/2013 - 12:36 | 3658444 jughead
    jughead's picture

    what's red and white and screams AHHHHHHHHHH!!!

     

    Helen Keller answering the iron. 

    Fri, 06/14/2013 - 12:05 | 3658278 BliptoP3
    BliptoP3's picture

    This is where the new border fence goes - right?

    Fri, 06/14/2013 - 12:07 | 3658287 QQQBall
    QQQBall's picture

    Yes. It will be connected to the one in South Dakota

    Fri, 06/14/2013 - 12:05 | 3658279 fonzannoon
    fonzannoon's picture

    "A follow-up meeting with the City's unions and retirees will be scheduled in the near term to explain the details of revised pension and healthcare benefits."

    Coming to a neighborhood near you.

    Fri, 06/14/2013 - 12:38 | 3658454 Meat Hammer
    Meat Hammer's picture

    "Revised"

    Aaaaaaand....it's gone.

    Fri, 06/14/2013 - 12:06 | 3658281 screw face
    screw face's picture

    Default Nation

    Fri, 06/14/2013 - 12:11 | 3658316 Tsar Pointless
    Tsar Pointless's picture

    Default Nation

    Red Wings Nation

    Which entity has more rabid fanatics?

    Fri, 06/14/2013 - 12:25 | 3658387 Agent P
    Agent P's picture

    I hope someone throws an octopus at the next city council meeting.

    Fri, 06/14/2013 - 14:16 | 3658905 Blano
    Blano's picture

    Wings fans have prematurely gone into hibernation for the summer.

    Fri, 06/14/2013 - 12:06 | 3658283 Rainman
    Rainman's picture

    Certificates of Participation are those under-the-radar liabilities not so safely hidden from taxpayer review. Cali municipalities are stuffed full of them. Paging Ms. Whitney...Ms. Merideth Whitney ! 

    Fri, 06/14/2013 - 12:12 | 3658317 ekm
    ekm's picture

    Most of People do not know that literally money can be destroyed into nothing.

     

    This is a perfect example

    Fri, 06/14/2013 - 12:12 | 3658330 fonzannoon
    fonzannoon's picture

    WTI $106. It's endless.

    Fri, 06/14/2013 - 12:14 | 3658341 ekm
    ekm's picture

    That is due to Hilsenramp and a little bit of Syria, but mostly Hilsenramp

    Fri, 06/14/2013 - 12:23 | 3658379 Rainman
    Rainman's picture

    Wall St boyz designed the CP and lease-purchase agreements to circumvent the pesky municipal process of getting voter approval for bonds < especially when there is an inconvenient debt ceiling >. Those greedy municipal hayseed politicians just love em !!

    Fri, 06/14/2013 - 14:51 | 3659038 Bastiat
    Bastiat's picture

    The key to COPs is that they are essentially a sale/leaseback where the payments are subject to annual appropriation.  The City can simply abandon the facility and walk away.  A consideration for investors is how a essential the facility is to the City.

    Fri, 06/14/2013 - 12:06 | 3658284 EscapeKey
    EscapeKey's picture

    Detroit only 2nd on "most dangerous cities in America". They can't seem to get a break, and be best at anything!

    http://247wallst.com/2013/06/13/the-most-dangerous-cities-in-america-3/3/

    40.9% poverty rate! Ugh!

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