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Detroit Pensioners Face Miserable 16 Cent On The Dollar Recovery
If there is ever a case study about people who built up their reputation and then squandered it for first being right for all the wrong reasons, and then being wrong for the right ones, then Meredith Whitney certainly heads the list of eligible candidates. After "predicting" the great financial crisis back in 2007 by looking at some deteriorating credit trends at Citigroup, a process that many had engaged beforehand and had come to a far more dire -and just as correct - conclusion, Whitney rose to stardom for merely regurgitating a well-known meme, however since her trumpeted call was the one closest to the Lehman-Day event when it all came crashing down, it afforded her a 5 year very lucrative stint as an advisor. Said stint has now been shuttered.
The main reason for the shuttering, of course, is that in 2010 she also called an imminent "muni" cataclysm, staking her reputation once again not only on what is fundamentally obvious, but locking in a time frame: 2011. Alas, this time her "timing" luck ran out and her call was dead wrong, leading people to question her abilities, and ultimately to give up on her "advisory" services altogether. Which in some ways is a shame because Whitney was and is quite correct about the municipal default tidal wave, as Detroit and ever more municipalities have shown, and the only question is the timing.
However, as Citi's Matt King recent showed, when it comes to stepwise, quantum leap repricings of widely held credits, the revelation is usually a very painful, sudden and very dramatic one. This can be seen nowhere better than in the default of Lehman brothers, where while the firm's equity was slow to admit defeat it was nothing in comparison to the abject case study in denial that the Lehman bonds put in. However, as can be seen in the chart below, when it finally came, and when bondholders realized they are screwed the morning of Monday, Septembr 15 when the Lehman bankruptcy filing was fact, the move from 80 cents on the dollar to under 10 cents took place in a heartbeat.
It is the same kind of violent and anguished repricing that all unsecrued creditors in the coming wave of heretofore "denialed" municipal bankruptcy filings will have to undergo. Starting with Detroit, where as Reuters reports, the recovery to pensioners, retirees and all other unsecured creditors will be.... 16 cents on the dollar!... or less than what Greek bondholders got in the country's latest (and certainly not final) bankruptcy.
From Reuters:
On Friday, city financial consultant Kenneth Buckfire said he did not have to recommend to Orr that pensions for the city's retirees be cut as a way to help Detroit navigate through debts and liabilities that total $18.5 billion.
Buckfire said it was clear that the city did not have the funds to pay the unsecured pension payouts without cutting them.
"It was a function of the mathematics," said Buckfire, who said he did not think it was necessary for him or anyone else to recommend pension cuts to Orr.
"Are you saying it was so self-evident that no one had to say it?" asked Claude Montgomery, attorney for a committee of retirees that was created by Rhodes.
"Yes," Buckfire answered.
Buckfire, a Detroit native and investment banker with restructuring experience, later told the court the city plans to pay unsecured creditors, including the city's pensioners, 16 cents on the dollar. There are about 23,500 city retirees.
One wonders by how many cents on the dollar the recovery to pensioners would increase if the New York-based Miller Buckfire were to cut their advisory fee, but that is not the point of this post (it will be of a subsequent).
What is the point, is that creditors across all products, aided and abetted by the greatest credit bubble of all time blown by Benny and the Inkjets, will find the kind of violent repricings that Lehman showed take place whenever hope dies, increasingly more prevalent. And since retirees and pensioners are ultimately creditors, this is perhaps the fastest, if certainly most brutal way, to make sure that the United Welfare States of America is finally on a path of sustainability.
The only question is how will those same retirees who have just undergone an 84 cent haircut, take it. One hopes: peacefully. Because among those whose incentive to work effectively has just been cut to zero, is also the local police force. In which case if hope once again fails, it is perhaps better not to contemplate the consequences. For both Meredith Whitney, who will eventually be proven right, and for everyone else.
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There should be a max state pension they pay. In other words it doesn't matter how many jobs you worked as a state retiree. The max out of every pension amount combined should be xx, 000/yr.
It would do away with the $200,000, $400,000, $500,000 pensions.
Guess they want to continue the Ponzi scheme until it blows up.
I know of politicians at state level that want to push it back to the local levels. This would mean local property taxes would jump big time.
IRC the State of Illinois has pushed teacher compensation and pensions back onto the local level, my brother has a nice carpenters union pension and is bitching like hell about his property taxes skyrocketing to fund it.
That's funny. Does he see the contradiction?
You know, OO ... I really can't remember his brother coming around to my house twice a year with a badge and a gun and extorting money from me by threat of violence.
"It was a function of the mathematics," said Buckfire
Don't let CNBC hear that. Their collective heads will explode having to do basic add/subtract/multiply/divide operations.
These calculations don't even rise to the level of "math", it's arithmetic.
Yup. I scanned the article and that was they keep line. Basic math. All of this shit is unsustainable.
BUT WAIT THERE'S MORE...
Pensioners might get 16 cents on the dollar (gross), but if the city goes for clawbacks + plus interest on previous over payments, the .gov retirees go from fat-cat to to debt-slave (negative pension) in one step w/o passing go and collecting $200.
http://www.zerohedge.com/news/2013-09-26/detroit%E2%80%99s-bankruptcy-po...
+
http://money.cnn.com/2013/10/24/retirement/pension-overpayments/index.ht...
=
TOTAL NIGHTMARE
They should get a 30-06 retirement, to speed things up.
Oh, and if you think this is bad, wait 10 years for CA to implode, and stop providing basic services like police & fire. That'll be fun.
Then we'll all get to pick up that tab, courtesy of Detroit public sector unions.
"Police" and "Fire" will be provided by the Peoples' Liberation Army.
DHS already pays a large portion of the police budgets. This will continue to get bigger until the local police agencies are completely owned by the Feds.
No HOPE and 16 cents of CHANGE ;-)
too much, 8 cents on the dollar for state and 4 cents on the doallr for Federal Workers. Congress and Whorehosue 1 cent on the dollar.
Good.
They should pay in at least .16 instead of receiving that grossly overinflated amount.
Fuck you Detroit
For a decade, people have been talking about how future generations will bear the burden of this Centrally Planned cluster fuck. They are wrong. It is the Boomers that will live in poverty as all the unrealistic promises they made to themselves (along with their savings) are blown away like leaves in the fall.
I wish that were true. It’s not, unfortunately.
Detroit should be made an object lesson for socialists/Democrats everywhere: you vote to steal other people’s money, you get fucked. Then you die.
These people should all die penniless and painfully.
The generation immediately following the asshole boomers (mine) will end up paying for their arrogant and fatuous ideas.
Great idea. Then we'll only have the Republican thieves left.
How can the proles be sov fucking stupid to believe this shit, that the Democrats steal but the Republicans don't?
News item: THEY BOTH STEAL AS MUCH AS THEY CAN GET AWAY WITH, sometimes even more than they can get away with (like Detroit, e.g.)! Details at 11:00.
Let me simplify this for you: The problem is government.
With Republican theft, you retain civilization.
Guess where we’re headed now?
That's the funniest thing I've read all day. Do you mean "civilization" as promoted by that first republican president, "Honest Abe" Lincoln?
No, I mean civilization as in access to critical medicine for less than $100/prescription, among other things.
That’s all gone now. This shit only gets a lot worse from here.
When did the Republicans (or Democrats for that matter) ever support or promote access to critical medicine for less than $100/? They're owned by Big Pharma and they always do their best to see that Big Pharma gets their giant piece of The Pie.
Does Bush's (he claimed to be a Republican) Medicare Part D and its requirement to pay FULL RETAIL for all prescriptions ring a bell?
Those who make money on the back of future debts need to lose. Thats all there is to it.
What about bondholders?
No one knows the hour, but everyone meets the end. NJ's Christie has balanced his budgets by avoiding pension contributions. Christie gets credit for saying no to Union pension contributions and the Union-loving Democrats in the legislature blame their compromise on Christie. http://www.politifact.com/new-jersey/article/2012/jul/31/chris-christies... Both hope to be out of office before TSHTF.
Christie is not alone. Across the river, Prince Andrew expects to be anointed King Andrew before TSHTF in NY.
Good for them. I'm sure it's more than enough to live on. Not one Detroit government worker, and not one pensioner ever say: "Hey! Perhaps we should not strangle the Golden Goose."
And now they no longer have Golden Eggs. Breakfast time in Detroit assholes, you sowed greed, now reap your harvest!
"In order to help satisfy our debt to China, I have sold them Detroit, Chicago, and California. All residents will now work for your new Chinese Owners. China has promised, in return, to give back Hawaii, so that I may retire to my palatial estate."
next on the block is the beautiful grand canyon, mt.ranier and yosemity national park ... do i hear 500?
@putaipan Yeah, you hear 500...500 drones headed for Hawaii!
no no...its the supervolcano under yellowstone...krugman has worked out a plan, we exchange it for fukushima city, somalia and paraguay..we then invent some wonderful gdp adjustment for our overseas assets...and yellowstone blows up...will be zero cost to america cos we own somalia, fukushima and paraguay..and we boost gdp by 100% over five years revuilding that part of america that is laid waste by the eruption AND we get yellowstone back (or the huge hole it has become).
This is EXACTLY what other African leaders have done in Africa. China gives them some money and China owns the people in those countries. Same as old colonialism.
It's not just the Chinese buying up Africa. The Ethiopian government is selling land to Indians and Saudis that people have been farming for thousands of years. Seems that, a while back, Ethiopia had a communist government that officially nationalized all the land. Now the new owners in Addis Ababa are selling what the government "owns" to foreigners. It's "development," don'tcha know.
It'll happen here. UN Agenda 21.
The Obamanation will bail out all government pensions and pensioners because they are 95% democrats, many are black, and they all need to know he has their back. Once this becomes clear, the real deluge in muni and state bankruptcies will commence. Within 1 year we will be in the midst of a multi-trillion dollar state and muni pension bailout. After all - don't all our "first responders" and "teachers" <sarc> deserve their huge pensions?
Also - if you are a bondholder you're screwed ala GM bondholders.
(paraphrased)
"We are a parliamentary party because we have to be a parliamentary party under the constitution. But a parliamentary party is not an end in itself. Only a means to an end. Once we have full control of the parliament, Germany will no longer have need of one. We alone (The NAZI Party) shall become the State."
(paraphrased)
"It's a club and we aren't in it."
What do you mean 16 cents on the dollar!
But, but ,but, you promised.
Its the same boat for all of us.
Public, private, SS the whole bit is going to fail in real terms its only a matter of timing and degree.
Try to prepare with real productive assets, PM's,and lead.
Good luck ZH'ers.
May the force be with you!
The FED, Jamie Dimon and Loyd Blankfein are no friends of Police or Firemen.
Go get em boys.
Is'nt hero status be enough for you MFers ?
Maybe that's enough to pay for the oBUMMERcare they also voted for.
Claw back the rest !!!!!
The GM bondholders that the Dicktator hosed probably have a few thoughts on the subject.
yes, that was communism at its best.
at least Hitler let them keep their money as long as they made what he demanded. Mostly tanks and airplanes.
The value everyone in the US *thinks* they are entitled to is really only backed by productive efforts capable of paying 80% less than what they are *thinking*?
Sounds about right.
I'm going to run for office based on the promise of each person in the USA getting a $10k check. Who's with me?
<--- TEAt Party
<--- TEA Party
They will vote for me!
I am offering a 1-trillion-dollar platinum coin to everyone!
But I am sexy.
How much platinum is in the coin?
1 atom.
The rest is tin.
But it is a really big coin! And it says "1Trillion Dollars" on it!
Tin is about $23,000 per tonne. It might not be such a bad deal. Watch out for the tin foil covered wood chip coins, though.
does not matter the amount of platinum. backed by the full faith and credit of the federal reserve bank. and in god we trust. even if his name is bennie bernake. oops, i meant jehovah.
If you do the calculation, we are each owed $3 million tax-free dollars from the FED.
4e12 (4 trillion dollars of qe) divided by 3e8 (300 million people) = 1.333e4 or 13,333 dollars? or am i missing the maths somewhere?
Screw that.
The bidding starts at $50k with the Republicans, and the Dims raise you to $300k.
There are manymore Detroits out there. Detroiters wills imply have to fall back on their personal savings (0.01%) and their other skills...like the private sector and small busines sowners have be forced to do the last 8 years.
Shouldn't this be a reason for banning defined pension plans:
1. The employer / taxpayer is put under the threat of a strike to implement a compensation plan that is subject to many unrealistic assumptions about returns, etc.;
2. The employee has a false sense of security and doesn't make alternative arrangements.
3. When it fails, the government / taxpayer is put under pressure to do a "bail out".
Get rid of defined benefit plans, implement a defined contribution plan and pay people a bit more instead.
To the two downvoters - would be interested in why you disagree with the concept of banning defined benefit plans - they are a ponzi scheme by another name. I assume you are boomers getting ready to take yours?
if you follow the logic...there is no difference between the objectives of DB schemes and 401k's. The differences lie in the tax breaks and the willingness to fund the objective. 401k savers might promise themselves an inflation proofed pension and not invest it properly to achieve that goal or save enough to meet it. of course it will be fees that will reduce their final pot by half and that pot will be reduced by a further half becuase of fraudulent annuity rates that dont pay the capital out before you die.
at least DB schemes have the power of a company and collective economies of scale on their side. the liability lies with the company or the state or the government. it is here where corruption and ignorance surfaces.
done blame the vehicle, blame the guy firing the bullets at pigeons and saying he will eventually shoot down more manna from heaven than anybody could possible use.
A defined contribution plan held hostage by the banks and Wall Street used for gambling and bonuses?
The problem is not the pensions, it's Wall Street and their bought politicians.
I'm not espousing the virtues of anything connected to banks, Wall Street, etc. We are on the same page there. But a least with a DC 1 +1 = 2 while with a DB, most of these have huge actuarial deficits which are ignored until it's too late.
Now we all know why that Dutch retirement fund was so adamant in investing its members contributions in gold.
Must be nice having a pension
I wonder what that's like...
hmmmm...trading axioms that apply...
even a stopped clock is right twice a day..
don't tell me what if you don't know when...
lt
They're getting 16%? When?
"Under our great socialist democrat-led plan, you will get 16 cents back on every dollar you invest!"
"Sign me up, shop steward!"
Looks like the return rate has been set for anybody with a 401k.
It would only be fair.
I can hear Obozo now.
Outside the box thinking in order to "preserve" Detroit that just came to me so it's certainly a rough draft:
First build tolls or gates at different entry points in order to control entrance and charge a set fee based on time spent. Then erect different types of very large type enclosures based on demographics where the different species are unaware. Then create trails and provide guided tours along with narration on the history of the inhabitants of Detroit and the city itself.
Detroit could become the first fully operational "human zoo" for lack of a better term and folks from all around could safely marvel at the way of life of the human species that live in the different areas of the now defunct city. The admission price is negotiable based on some market analysys.
"IF YOU BUILD IT, THEY WILL COME"
This may not work but I was always taught to come with solutions to problems, not just complain about them without adding value.
Why bother visiting the Detroit human zoo when your own city is bound to turn into one as well.
I was hoping that taking such an educational tour would serve as a template of what not to do and perhaps other cities would take a lesson learned approach.
You might do better to charge for people to get OUT rather than in, hehehehehehe....
Are Public Unions right-wing?
The thing is that people get hanged up on other issues such as abortion, gay rights etc when they think about left-right dialog and rarely if ever they just look at things from only the monetary point of view like the elites do.
It makes little difference if a Teachers' Union supports Hugo Chavez, if it also supports raising property taxes on an impoverished municipality just so it can maintain its own livelihood--its right wing.
you win the Tortured Logic of the Day Award! Congrats!
Facist.
Fascist.
Fastestshit
No pension, no food stamps.
http://www.huffingtonpost.com/bob-greenstein/eric-cantor-is-misreprese_b_3935892.html
unless you can get your hands on Coleman Young's South African gold coins -- they just might be worth more than 16 cents
That was a beautiful piece of work, Tyler!
The problem with socialism is that eventually, you run out of other people's money. What else did they expect to happen?
An infinite supply of other people's money.
First, let me say that Detroit deserves EVERYTHING rhat is being heaped on the city, its politicians, and the residents. Second , selling the Art in the DIA has to be on the table.
That said , i stll feel a bit sorry for the pensioners who are taking such a massive cut. If anyone wants to start a fund to supplement their benefits, i would contribute a few thousand provided that it is expressly understood that contributions are totally voluntary and that this private bailout is necessary because of the failure of government and politicians and NOT capitalism. OK i am getting in a bit of amessage but as someone once said "Why let a crisis go to waste?"
So far i have not seen ANY Democrats or union lovers propose such a private bailout. Notably MIA is Michael Moore.
The "bail-out" / "bail-in" fund that you are proposing to set up already exists - it's called your bank accounts and it will be "fair game" whether you like it or not. No point in setting up the extra account if you just leave your money in the bank.
Selling the art in the DIA ... .
Oh, yeah. Right. Selling Howdy Doody is sure gonna make a dent in that City's, State's, Country's problems.
Don't get me wrong. There never should have been a DIA in the first place, and that crap should be sold.
Remember that little girl, though, in Aliens? "It won't make any difference."
actually DIA owns original pieces by Van Gogh, Matisse, Rembrandt, Bruegel and thousands of others. the value is estimated to be several BILLON dollars. the DIA receives $22 miilion in tax dollars annually. while selling the art would not wipe out detroit's debt , the sale could make a big dent. however there is much opposition to such a sale - most of it irrational and hysterical
What's that Mr. Pensioner?
The Goose which lays the golden eggs is the most delicious bird you've ever tasted?
Noted. Enjoy your Thanksgiving sir.
Unasked by anyone in the media, is why Detroit pensions were not covered by ERISA which would have provided pensioners with protection of up to $50k, which is enough to live on in this area?
Sovereign Immunity.
ERISA only covers non-sovereign/corporates.
....without reading any comments yet, does this mean amongst the regular public servants getting squashed, are also police who will feel the fucking this time, instead of, ya know, always doing the Fucking?
Maybe with the right environment, those same militarized police who enjoy kicking the shit out of ordinary, and rather innocent peasants, will actually turn around and bite the hand that's fed them for so long after its quite apparent they, the "protectors", are getting fucked.ho hum....just dreaming I guess.
....
Wishful thinking.
Will not happen.
Ever been to Mogadishu?
The California state pension plans are the most genrious and ridiculas! No wonder they were going broke as a state. The state pension plans are much more genrious are also than Fed Govt plans plus some allow for rehiring retired workers at high wages then allowing them to continue to accrue pension benefits. Just out of touch, but I do feel the Detroit pensioners. It is not right to get wacked that much. At least in private plans PBGC the government insurance would probably pay 60-70% of that benefit. The city workers are just screwed here. At lot of reform needs to be made at the local state government level for pensions.
SELL THE ART!
Privatization, baby! Public is evil. Sell it all, make the rich richer! Here's another $1B asset on the auction block:
http://www.alternet.org/economy/libertarian-developers-ayn-rand-fantasy-...
Great potential!
These urban sharecroppers need to be taught a vital lesson.
That's just silly, rich-assed industrialists the world over are free to open factories in Detroit now, none of them are that stupid. Building some "enclave" separate from Detroit doesn't fix Detroit's problems, and no one is going to build factories in Detroit until they start fixing their problems.
Yes, Bill Clinton laid the groundwork for the NWO with repeal of Glass-Steagall, NAFTA and the changes to WTO that put corporations above soverign states in commercial disputes. Janet Yellen was being groomed for this role for 20 years. She may end up being the very last Fed chair when her head is chopped off when the people realize they've been turned into moron zombies like rats in a box alternately punished and rewarded to condition behavior. The URL below has a video of her speaking.
http://www.huffingtonpost.com/2013/09/17/janet-yellen-glass-steagall_n_3940730.html
This is the print preview: Back to normal view »Zach Carter
zach.carter@huffingtonpost.com
Janet Yellen Urged Glass-Steagall Repeal And Social Security Cuts, Supported NAFTAPosted: 09/17/2013 11:18 am EDT | Updated: 09/17/2013 1:03 pm EDT
WASHINGTON -- Following President Barack Obama's failed effort to install his former economic adviser Larry Summers as Federal Reserve chairman, Janet Yellen, the central bank's vice chair, has emerged as the frontrunner to succeed Ben Bernanke in the Fed's top spot. Sen. Elizabeth Warren (D-Mass.) and dozens of other Democrats in both the House and Senate have endorsed Yellen to be the next Fed Chair.
While supporting Yellen has become a cause célèbre for progressives opposed to Summers' regulatory hostilities, Yellen supported a host of economic policies during the Clinton era that have since become broadly unpopular. She backed the repeal of the landmark Glass-Steagall bank reform and she supported the 1993 North American Free Trade Agreement. She also pressured the government to develop a new statistical metric intended to lower payments to senior citizens on Social Security.
These policies all enjoyed substantial support among economists during the 1990s, although many of those who endorsed them at the time have since recanted or criticized their implementation.
Yellen's reputation as a more consumer-friendly economist than Summers rests largely on her tenure as president of the San Francisco Federal Reserve during the Bush years, when she identified the emerging housing bubble and called for deploying stronger regulation to limit its damage.
But in the 1990s, Yellen and Summers both served in the Clinton administration, and pursued many of the same policies. Yellen began serving as Chair of President Bill Clinton's Council of Economic Advisers in 1997, and publicly endorsed repealing Glass-Steagall's separation between traditional bank lending and riskier securities trading during her Senate confirmation hearing. Yellen referred to deregulating banking as a way to "modernize" the financial system, and indicated that breaking down Glass-Steagall could be the beginning of a process allowing banks to merge with other commercial and industrial firms.
"I do believe it's important to modernize the financial system at this time," Yellen said in response to a question from then-Sen. Lauch Faircloth (R-N.C.). "And on the issue of commerce and banking, I would begin by saying that I am not philosophically opposed to mixing banking and commerce. On the other hand, it seems to me that we have a lot more experience and knowledge about financial activities, and that most of the synergies are probably between banking and other lines of business that are financial in nature. I would think that that's an appropriate first step."
The Senate passed the repeal of Glass-Steagall in November 1999 by an overwhelming 90 - 8 margin. By allowing traditional banks to link up with securities firms and insurance companies, the legislation has been blamed for bringing on the too-big-to-fail era. Citibank lobbied aggressively for the repeal, and merged with the Travelers insurance giant soon after the bill passed. The resulting behemoth, Citigroup, received billions in bailout funds during 2008 and 2009.
In the years since 1997, the barrier between banking and commerce has been repeatedly perforated. This year, beer brewers have accused Goldman Sachs of deliberately manipulating the physical supply of aluminum in order to rig profitable bets on securities tied to its price. In the 1990s, banks were barred from owning physical commodities.
A full transcript of Yellen's Feb. 5, 1997 confirmation hearing is available here. At the same event, Yellen endorsed establishing a new statistical metric that would allow the federal government to reduce Social Security payments over time, by revising the consumer price index, or CPI, the government's standard measurement for inflation.
"I agree with the principle that Social Security and the tax system should be appropriately indexed to take account of movements in the cost of living. I believe we need as accurate a measure as we can possibly have of the cost of living," Yellen said. "I believe that we are now obtaining broad agreement among professionals that the CPI does overstate the actual increase, properly measured, in the cost of living."
Once in office, Yellen put that belief into action, writing a letter to the Bureau of Labor Statistics encouraging it to devise a cheaper inflation metric. BLS Commissioner Katharine Abraham responded that the agency had been testing the new measure in an experimental mode, and planned to deploy it in 1998.
At the time, this new metric, known as chained CPI, was being aggressively pursued by House Speaker Newt Gingrich (R-Ga.), following then-Fed Chair Alan Greenspan's criticism of the existing cost-of-living calculations. Greenspan and other economists had argued that the consumer price index overstated cost-of-living changes by failing to calculate the way that households substitute different goods for each other when prices rise. While BLS developed the statistic, it has not been applied to Social Security. Some economists argue that a more appropriate inflation measure for Social Security would look at price changes for elderly people, and the BLS does track an experimental metric addressing inflation for older Americans. Such a metric is not useful for politicians looking to cut Social Security spending, however, as it shows that living expenses tend to go up more for older people, driven in part by health care spending.
Chained CPI has been a major point of contention in budget negotiations between Obama and congressional Republicans, with both camps alternating between supporting the measure and decrying it. Adopting Chained CPI to cut Social Security is extremely unpopular with both the general public and senior citizens.
Before Yellen joined the Clinton administration, she was a respected economist at the University of California at Berkeley. In 1993, she joined dozens of other academics in signing a letter to Clinton advocating for the North American Free Trade Agreement. The letter was signed by prominent conservative economists including Milton Friedman, but also by many economists who are now considered progressive, including Paul Krugman and former Obama adviser Christina Romer. Krugman has since expressed disappointment with some of the trade pact's effects.
"The agreement will be a net positive for the United States, both in terms of employment creation and overall economic growth," the letter reads. "Specifically, the assertions that NAFTA will spur an exodus of U.S. jobs to Mexico are without basis. Mexican trade has resulted in net job creation in the U.S. in the past, and there is no evidence that this trend will not continue when NAFTA is enacted. Moreover, beyond employment gains, and open trade relationship directly benefits all consumers."
NAFTA became the template for all U.S. trade agreements inked outside the World Trade Organization. It has been criticized for its weak labor, consumer and environmental protections, which encourage companies to move jobs and operations to countries with lower regulatory standards. NAFTA also gave corporations the political power to directly challenge a nation's laws and regulations before an international tribunal. This marked a departure from WTO treaties, where only sovereign nations -- not corporations -- were permitted to challenge each other's regulatory regimes.
Except that she didn't really do that. Peter Schiff covered that pretty well:
https://www.youtube.com/watch?v=rfLlF1vtit8
Detroit is a template for USA.
i used to think that redeploying a land/rentier tax was an integral part of fixing things (i.e - repudiation of 'odious debt', prosecution of control fraud and other financial crimes,clawbacks -then a jubalee and reinstituting the 'rule of law'and a land/rentier tax) now i'm starting to think that it is our only hope- they'll own it all but we could live off the taxes they'll have to pay.
Congratulations, you figured it out. The majority will never figure it....too far gone. The only people in the financial sphere worth listening to are Michael Hudson, William Black and Steve Keen.
good new interview from hudson- he's getting so irrate these days he is even losing his erratic erh ah uh's ....
http://www.extraenvironmentalist.com/2013/10/16/episode-67-bubble/
If banks went to South Dakota to get legislation favorable to themselves on credit cards, then they can take their complaints to South Dakota.
Detroit is the poster child and model for large cities destroyed by liberal pols whose only interest was to turn the city's finances into a personal pocketbook for themselves and their cronies. What once was Amerika's wealthiest city in 1960, it was turned into a hellhole by Coleman & Kwame. These two black asshats tried to make Detroit into a black isolationist enclave for the exclusive purpose of passing out money to low income residents and their political cronies. Hey Detroit, how'd that work out?
Because these two were black, and liberal, the raping and crumbling of the city doesn't matter. Everybody is suppossed to overlook that and pretend it didn't exist. Oh yea, we'll blame it on "white flight" and evil Repubs who only care about money. Well, Kwame is in prison for 30 years because he cared precisely for the money; only problem was it wasn't his. It's only a matter of time before other large liberal run Amerikan cities suffer the same fate; it's OK as long as the perps are liberal [it helps if you are black], the unions are paid off, and your cronies get wealthy. The MSM will never report it because it doesn't fit the narrative.
http://vegasxau.blogspot.com
Those people were criminals. Second rate, but still.
Was off-shoring industrial production--what actually killed working class America--either of those cocksucking black asshats' responsibility? Did they really reap the lion's share of money that was sucked from the system in comparison to financiers?
Neo-liberals killed Americans across the board. Unless they were in the top 10%.
The rich are now American in name only.
They're represented by the POTUS and most state governors nowadays. By Rick Snyder in Michigan.
The common people are supposed to get screwed, it would seem. The colorful stories of sordid personal corruption are entertaining, but they don't explain a truly significant part of Billions in debt.
Only financiers can make $Billions work. Investment banks.
They HELPED create the environment that ALLOWED the off shoring of work. Why pay a guy in Detroit 50 dollars when they can pay a guy in China .25 cents.
American "UNIONIZED" workers just want to get paid, minimum work, maximum pay. All the while they are cutting their own throats. I seem to remember a story here on ZH in regards to UNION GREED.- it was about HOSTESS. That is just ONE example.
These UNIONs run by fat cat unionists are just as much at fault as the fat cat CEO's.
Tyler, how about we get some illumination on what these FAT CAT unions leaders make...I am sure that we ALL would be surprised!
Zerohedge doesn't care about black people.
But a question. How come the Fed will buy 40 billion a month in mortgage backed securities from the bank, but they won't buy 20 billion worth of shit munis from detroit and clean sweep the whole BK with only two weeks of easing money?
Seems kind of unfair if you ask me.
Or...is it possible that the FOMC does not care about black people?
I doubt that.... maybe they just haven't thought to help out yet. I will write them a missive.
Well, the FOMC doesn't care about black people, or any type of people except those who hold a valid banking licence (i.e. their shareholders, which is the basic function of a corporation).
But it's not racism that denies Detroit financing, it's the lack of capacity of the City to raise future revenue from its debt serfs.
There actually is a way to save Detroit (at least .60-.75 on the dollar), at basically no direct cost to the US taxpayer, but it's not politically implementable or palatable in the US, and given the timelines involved it would require the President handing out a huge tax-break to a big business and screwing over both the tree-huggers in his base and Warren Buffet (among others), and using eminent domain on a scale not seen in a while.
Urban game preserve? What's the bag limit on Skinnys?
No, you need something on the scale of 10-15 billion in immediate private investment to justify intermediate term loans to the city while doing major bulldozing and construction. The only thing big enough and seriously on the drawing board, that also could be relocated to Detroit, would be expanded refining capacity - e.g. kill Keystone and reroute a shorter pipeline (environmental impact study unseen) to Motown - not politically feasible, but once you build it - it generates jobs and cash and can't be moved. The other problem is that the solution isn't reproducible when Chicago goes bankrupt a year down the road, and they're just breaking ground on the refinery itself. On the plus side, refineries are built in real war zones all the time, so the primary risk factor in such an undertaking would be political risk. Unfortunately, Barry is fresh out of political capital and oil men aren't going to buy his brand of BS. But the numbers should work, and stabilize the situation until the next round of truthiness smacks the legacy and ongoing accounting fraud back into the focus, as I would assume Detroit's 16 cents on the dollar figure still uses an absurdly unrealistic ROI for pension obligations.
What does Zerohedge have to do with Fed action and how do they know the race of any single person? When did Fed action consider color other than green. Finally I didn't realize that Detroit was inhabited by only black people.
Funny how for decades all I heard was that things would be different if a black man were president. Hmmm...
How many more times does Detroit need money. Detroit mayor Kilpatrick, how much did he care about black people? No problems with him I suppose. Finally I didn't realize only black people suffered, lost houses, jobs and everything else in this financial crisis. Perhaps people should quit hoping governemnt and institutions can help them and realize only you and your own choices are the determinents of individual outcomes. If I used your logic then I could make the arguement that the push in the 90's to make it easier for less than financially worthy folks to get into home ownership by any means necessary was the governments effort to open home ownership to black people who had been shut out for far too long. How'd that work out for them and the rest of the country.
Don't you find it the least bit ironic that the government has wanted people to quit considering the color of ones skin and just realize that people are people are people regardless (which I agree with) however every single form filled out from the day you are born wants to quantify and categorize based on race and gender. No mixed messages here. As with all government action, clarity is king. NOT.
Muni bonds have one signficant flaw, a substantial portion of their revenue source is mobile.
Bingo. The taxpayers eventually vote with their feet. They did in Detroit.
Here's the problem - between a tax policy that falls hardest on the middle class, and an increasingly insulated plutocrat class that out-earns their workers at a 500-1 ratio instead of the 50-1 ratio that it used to be (in other words, the profits of industry are NOT flowing back to the producing class - they get sequestered by the managing class), we are killing the bus driver and construction worker class - we are turning them into burger flippers.
Follow the flow. To get profits, industry needs consumption - they need folks to buy iPhones and clothes and car seats. Folks need money to do that. They can get that money from one of two places: wages, or govt check. Now, if it's wages, well, those would be dollars that the CEO doesn't see in his bonus, because they went out the door. But, if they come from a govt check, then the CEO gets a big old bonus, because he kept all those potential additional wages in the company's pockets. So, the CEO class LOVES the concept of govt checks fueling our consumption-driven economy.
But wait...we need to get the money to put into those govt checks. Where will we get it? Easy. From 1) taxing the middle class, and 2) borrowing money that future taxpayers will have to pay back. Easy peasy.
Taxes on middle class/borrowed money ---> given to "the poors" (i.e., the consumer class) ----> used to buy iPhones and car seats and nikes ----> money goes to companies that produces those products ----> money goes to CEO class that runs/owns company.
Look at where it starts. And look at where it ends. Everything in the middle is just a conduit to transfer money from the first step to the last step.
Hmmm. How do you change that? Tear down the modern paradigm. The dollars that consumers spend should come from where they USED to come from - wages. As industry grew, wages grew. But that hasn't happened for over 30 years...wages have stagnated. But industry grew....and those dollars got sequestered at the top end, and never made it down to the workers. So maybe we pull out the leg of govt checks. A LOT of folks will suffer....and eventually, so will the elite. But are we willing to starve a generation? To create unrest that could lead to violent revolt? Or is there another way? There might be, if American business ever wakes up and realizes that this new model that they have created is unsustainable.
I have little hope of any correction. Those with power never give it up willingly.
congratulations, you have just restated Karl Marx's Das Capital in modern English. Welcome to communism... now if you can survive a hundred years of plutocrats demonizing you at every turn, you may survive to become a bloated inept socialist.
full circle, commie bitchez.
16 cents is more than worldcommers, enronners, and gm bond holders received. I would tell Detroit pensioners - ITS NOT OVER YET.
It's also more than all those poor saps who have been forced to pay for all this crap are going to receive. Ever.
Thats a lot of money..
The average Detroit pensioner/city worker made out like a bandit regardless. No sympathy from me, most of these people don't have the skills to keep a job at Walmart but probably took in hundreds of thousands over their retirement as a "reward" for a job doing nothing all day.
Depending on the kindness of strangers is not a very prudent retirement policy...
http://www.youtube.com/watch?v=ImXWiTwn0Vk
It's cold in the D
Still could be worse, I mean 15c/dollar
I'm watching NFL Det Dal game and the announcer on TV says if you see an Armed Forces vet in line at McD's you should pay for their meal. Pay it forward. Is your country for real? Is this a joke?
No, it's a commercial entertainment medium owned by corporation-shielded thieves who depend upon deep respect for our military "heroes" to keep the recruits coming, wars raging, and "profits" booming.
Welcome to the Fourth Reich, American style.
Put out a flag on your porch!
U-S-A!
TV and Hollywood are full on propaganda and brainwashing watched by retards.
The police state always falls back on praising the first responders and soldiers to tug at heart strongs to distract the masses being screwed. It gets the masses emotional and wave the flag to get them to forget how they are being robbed and that the whole system is totally f**ked. F TV, Hollywood and the NFL.
Hey! I resemble that remark.
Yeah, I was enjoying the World Series game yesterday, when instead of "Take Me Out to the Ballgame" for the seventh inning stretch, they presented a member of the Global Force for Destruction (Navy) singing "God Bless America". I turned the channel so I didn't see if a fleet of B2 bombers flew overhead.
whenever you hear "i'll pay you later" phrase (and pensions fall into that category) it always ends the same way - later you get nothing
"One hopes: peacefully."
Sheep quietly to the slaughter.
It would be better if there were some meaningful pushback against the authorities and bankers who created the mess - as a way of encouraging other employers, and their advisors, to be more careful.
Naked protest with angry downtwinkles ought to do it.
"angry downtwinkles." Almost as good as "much angries."
You do make the case, though, that there are limitations to what can be accomplished here via The Hedge.
So the equity market leads the bond market. Yes of course, which is quite different than Zerohedges previous assertions.
When the stock market and debt both collapse in a deflationary collapse, does gold go up with a flight to quality or down because of a contraction in the money supply ?
We'll see.
There are no market fundamentals, not anymore. Whatever the Eye of Sauron (Obama regime, media, banks) gazes upon will be manipulated to their will.
Technical analysis, too, appears to be moot in the face of constant, massive manipulation.
"Hello, Emergency Services"
"Day kickin' mah do in ! "
"Better run."
"Yo, Send someone now !"
"We will...eventually."
*Click*
"Any donuts left Jimmy?"
Go Red Wings Go!!!!
Explain to me how you make a contract with those-as-yet-unborn.
To quote Nelson "HAHA!"
Bowie: Panic in ..
http://youtu.be/Rf0fmqWS-kI
Bowie: 5 Years
http://www.youtube.com/watch?v=5-ceR9az3dk
This is what you get when you let ALEC run your state and city. They wouldn't take a cut but would rather make sure that their target does.
I hope that they forcibly send the EM packing back to his masters in Lansing and reverse his actions. Perhaps enlist the help of some folks from out of state to ensure that Lansing doesn't try to send in a replacement.
Just one more signpost of a contracting real economy that will ultimately necessitate a re-evaluation of every promise made everywhere to anyone. I think Stoneleigh's phrase "excess claims on existing resources" is going to be a theme of the next stage down and although Detroit isn't the first, it certainly is the largest city to break its promises to pensioners. Yea, Meredith got the timing wrong, possibly because after she called it, they pulled out all sorts of extraordinary measures to hide the rot. They got a few years.
But at some point, retirees are going to have to be made aware that the kids can no longer pay for their house on wheels that gets 4 miles per gallon. (They are EVERYWHERE in the Pacific Northwest) These are people who live in the largess of a different age, the age of economic growth. That age is over and all the assumptions that go along with it need to be re-evaluated.
You speak the truth. I spent the weekend at deer camp with a few older guys from that generation (pre-Boomer to mid-Boomer). To them, this is what they are "owed". Consequences be damned. When I challenged them on the sustainability of this ponzi scheme, one of them told me that he hopes he dies before his benefits get cut. Logically, they know it can't continue, emotionally, they will fight to the bitter end.
My mother said the same thing. Actually, it was a bit worse than that. She said "As long as I'm gone before [TSHTF], that's all I care about"
In Toronto, Canada they hired the guy who used to run Detroit's public housing to run Toronto's public housing.
his name is Gene Jones
so what does he do when like just about every other city, Toronto runs huge deficts and their public housing is in a shambles?
he decides to spend two million dollars to renovate his office. That's right Detroit's former public housing boss was hired by Toronto and right on cue he does the right thing and puts in for an upgrade to his offices. But there is more, Where are the current unrenovated (actually they were renovated in 2004) offices located? They are located in Canada's wealthiest hood, Rosedale on what would be the equivalent of New York City's Park Avenue.
http://www.torontosun.com/2013/10/24/tchc-ceo-gene-jones-says-he-needs-b...
While everyone else has to worry about getting pennies on the dollar for money promised to them by "The System", Banksters get +$1.00 on the dollar through the whole mess they created with their elected political lackeys.
On top of that, they keep everyone hating government employees at any level, like so many posts above show, instead of focusing their attention on the ring leaders. So far, so good for the assholes on top.
But that's what breaks the system. They can get away with stealing (skimming off the top) during conditions of economic growth. During economic contraction, it becomes obvious that they're stealing, because it's worse than a zero-sum game, it's a negative-sum game.
Banksters got more than 100%. They got inflated bonuses, they got inflated salaries while selling the crap and riding the wave....
Anything and everything but justice....
I'm certain that the vast majority of public sector employees are good, well-intentioned people. However, they will receive no sympathy from me regarding pension/retirement benefits haircuts. They are willing participants to the fraud perpetrated on the remainder of the tax payers because they will not do anything to jeopardize their jobs or benefits. If you doubt this, just look at the outcry from the furloughed government employees in the recent shutdown, and the National Park Service employees "just doing their job", by shutting down national parks. That is no excuse. The SS were just doing their jobs too when they were exterminating Jews.
The system can't crash soon enough.
You are correct in that the banksters are partially to blame. So are the welfare / disability recipients. But the central government made this mess with political promises, and can't, or rather won't do the right thing and reduce spending to sustainable levels because that would cost them votes. Whether public sector employees are willing to admit that they are actually part of the problem remains to be seen.
"Whether public sector employees are willing to admit that they are actually part of the problem remains to be seen."
Are you kidding me? Surely you jest.
In real terms it's more than the Chinese are going to get....
There is exactly zero chance that Obama will allow this to happen. Take it to the bank, the Detroit unions will be taken care of, as they were lucky enough to be first in the long line of huge municipal bankruptcies. The bond holders, on the other hand, are a bunch of rich people who are out of luck - more than that, those rich bastards DESERVE IT!
Between the bank bailouts, Obamacare, and now apparantly he's really pushing for immigration reform which will put an additional 16-20MM people on the social security and medicare doles, Obama might just surpass W. as being the most catastrophic president in history.