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First Detroit, Now Flint Warns Bankruptcy "Train Is Headed For The Cliff"
Flint may be Michigan’s second city to plunge into bankruptcy unless retirees accept cuts in health benefits that threaten to unravel a balanced budget. As Crain's Detroit reports, Emergency Manager Darnell Earley (Flint’s third emergency leader since it was placed under state control in 2011) warned "If we have no ability to mitigate the cost of retiree health care, that’s going to make it very difficult for the city to remain financially stable over the next few years." As Eric Scorsone notes, "Flint's at the forefront, but a lot of cities are on the same train, and that train is headed for the cliff."
As Detroit draws worldwide attention for its record $18 billion bankruptcy, Flint demonstrates the plight of U.S. cities where unfunded post-retirement costs rival or exceed pension liabilities. In Michigan alone in 2011, municipalities had nearly $13 billion in health-care liabilities for retirees, compared with about $3 billion for pensions. Flint is among 17 cities and school districts under some form of state control.
More than 80,000 Flint-area residents were employed by GM in 1978. Now, that number is about 7,500, according to a 2011 report by Michigan State University. In the past two years, the municipal workforce has been cut 20 percent and employees have taken a 20 percent pay cut.
Emergency Manager Earley warns...
Like Detroit, which a year ago this week filed the largest U.S. municipal bankruptcy, Flint has struggled with loss of population, jobs and revenue. The birthplace of General Motors Co. has only half its population of 1960.
“If we have no ability to mitigate the cost of retiree health care, that’s going to make it very difficult for the city to remain financially stable over the next few years,” Earley said in an interview at City Hall. Without changes, retiree pension and health expenses would consume 32 percent of the $55 million general fund.
“You can stabilize things by making sure that you’ve got the best systems in place for delivering services,” Earley said. “We haven’t had that in Flint for a number of years. We haven’t had that in Detroit for a number of years.”
The retirees are not happy...
The city’s accumulated deficit is $12.9 million, though its budget is balanced through June 30, 2016. Allowing higher insurance co-pays and deductibles for retirees will save $5 million this year, Earley said. That would make retirees’ coverage equal to that of active employees, he said.
Retirees already have made wage and pension concessions, and now will pay hundreds of dollars a month for prescriptions and co-pays, their attorney, Alec Gibbs, said in an email. He said retirees on fixed incomes will face life-threatening choices.
“Think of the position that they are putting these guys in: Pay for your health-care costs and starve, or use your fixed and paltry income to eke out a painful, shortened life,” Gibbs said.
Blaming retirees is unfair, said U.S. Rep. Dan Kildee, a Flint-area Democrat who founded the Center for Community Progress, a Washington, D.C.-based advocate for urban revitalization. More culpable, he said, are shrinking local revenue and the state’s cumulative $54.9 million reduction in aid to the city since 2003, according to the Michigan Municipal League.
“It’s a conspiracy of bad news,” Kildee said. “The state balanced its budget by unbalancing city budgets.”
This is systemic...
“If Flint were to go to bankruptcy, that would highlight that this legacy-cost problem has to be addressed more globally,” said Eric Scorsone, a Michigan State University economist. “Flint’s at the forefront, but a lot of cities are on the same train, and that train is headed for the cliff.”
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Fuck the unions. .
Why do we need unions when Barry sets salaries now and gives away free health care
Beam me up
We just need some "local" printing presses like Janet and her macro poodle have.
Like everyone wants to a billionare the easy way, print.
Zimbabwe had plenty worthless notes.
Yes...but...Zimbabwe had lots of billionaires. Everyone was rich!
sarc.
The flood of illegals will just make the decline of the US accelerate. Use their new EBT cards, Obama phone, medicaid and welfare.
Maybe a few terrorist just walk in as well.
Cloward-Piven.
They are still afloat in Commifornia. Billions underwater every year. I've given up trying to figure when the reaper will appear.
There'll be a "Black Swan" event and the entire house of cards will fall.
Hint : watch Fuckushima.
Health insurance for people who don't work for you any more? Why are they paying that? Do they send people out to mow your lawn and clean your house, too? Most workers don't get any of that. What makes flint think they can afford to offer it to retirees?
Detroit and Flint had US car company jobs that paid stunning UAW wages and benefits for people who generally had a high school education. Better than degreed professional jobs in some cases. My cousin in the 1970s was one of them.
The US auto industry, as it started to make poorer and poorer quality cars after the golden era of the 50s and 60s, didn't fall apart overnight. It took decades.
So couldn't many of those affected take what they had learned and start small businesses, work out new ideas, invent new things, fail, try again, provide useful services, grab some more education, and take some measure of control?
That takes some energy.
No. It's much easier to go full batshit Jesse and Al on society, demand more free stuff, hate the people who give it to you, elect a never-ending stream of crooks and grifters, and operate in total crime-infested nihilism.
The people of Detroit and Flint have been shittin' where they live for decades, and they have reached the end of their line of bullshit. Their endgame will make Rodney look like a picnic.
Why did they start making poorer quality cars?
Because inflation made them. When real inflation is running at 7% and wage inflation at 2%, producers have to cut the cost of production to the bone to continue selling product. Every corner that could possibly be cut has to be cut.
How did these failed cities like Detroit and Flint avoid bankruptcy for so long? To me, that's the bigger story. Is it because of the endless sea of free money stolen from savers by the Fed?
Yes.
We should put some QE training wheels on the train before it goes off the cliff.
As ISIS have said yesterday
"Convert, pay tax, or die" to Christains. The Flint Admin will just say DIE.gubbamant with unions bankrupting the system again - took a while, but they got the job done
The powers that be want the Great Lakes. This corprate control of the state is the begining.
plunge into bankruptcy unless retirees accept cuts in health benefits that threaten to unravel a balanced budget
Find it rather amusing since when was there a balanced budget? Never! Imagine you collect some amount of money, if you did not spend it then the money would still be there for those who are entitled to it. If they left they don't get any so should be more per person surely? SOMEBODY IS TELLING PORKIES!
Taking the money whilst promising a future, pissing it all up the wall to now say we lied about the future and we do not have the money to give it you back.
This is the same kind of policy currently being adopted by the UK government as it tears up all promises it ever made to justify taking the level of money it did then and with all the cuts and no money left. To be blunt all western nations are in the same boat, no money, horrendous debts and renaging on promises made to their own populations and it is all the major political parties everywhere.
First of all, I'm a little suprised it's not Pontiac.
Secondly, Flint's retirees are toast. There is no municipally owned treasure like the Detroit Institute of Arts to hold hostage here. There is really no compelling reason outside of Flint to give a rat's ass what happens in Flint one way or the other.
Fuck em, wil be the prevelant attitude throughout the state of Michigan. And so, Flint is fucked. I'll be staying off 475. I would recommend that you do as well.
The communist attack against America is going very well and the stupid fuckers - for the most part - don't know they're under attack.
Most of the idiots are actually helping by voting for them.
I guess that educational system dumbing-down the plebes is starting to pay off.
Speaking of thoings going over cliffs, the NYT has FINALLY picked up on the idea that there is something wrong with the auto sub-prime loan business....
EXCLUSIVE Sunday, July 20, 2014 8:13 AM EDT In Subprime Auto Bubble, Borrowers Pay Sky-High RatesAuto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime — people with credit scores at or below 640. The explosive growth is being driven by some of the same dynamics that were at work in subprime mortgages. A wave of money is pouring into subprime autos, as the high rates and steady profits of the loans attract investors. Just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private equity firms are feeding the growth in subprime auto loans by investing in lenders and making money available for loans. The New York Times examined more than 100 bankruptcy court cases, dozens of civil lawsuits against lenders and hundreds of loan documents and found that subprime auto loans can come with interest rates that can exceed 23 percent. The loans were typically at least twice the size of the value of the used cars purchased, including dozens of battered vehicles with mechanical defects hidden from borrowers. Such loans can thrust already vulnerable borrowers further into debt, even propelling some into bankruptcy, according to the court records, as well as interviews with borrowers and lawyers in 19 states.
I have lived in Michigan and the Detroit area all my life. I saw firsthand how socialist government and unions strangled the auto industry, public education, public workers and demanded crony capitalism. Now they have killed the goose that laid the gold eggs (auto industry) it is time to pay the piper in Michigan.
But don’t think this won’t happen in your backyard. Obama is now singing the same tune Michigan and Detroit socialist politicians have sung for the last 50 years. And I expect the same result. This goose will be the American middle class…
Pensions are a Ponzi.
If you think you're going to get anything back from the contributions you're putting in today you're wrong, because they simply spend them. There is no saving or investing going on.
Too many frackers in Flint.
The bankruptcy of cities due to retiree liabilties is but a metaphor for the country itself whose retirement "security" is anything but beneficently social.
I thought Ohopium saved the auto industry? And all the tentacles are showing signs of distress....... It's almost as if someone has been lying about the state of Ohopium.
Didn't Obamacare fix all those health care & prescription problems?
That's right! Obama did promise they could keep their healthcare plan!
The socialist strikes again.
To all voters that are affected by these fiscal issues like the ones in FLint, Detroit, etc....Here is why there is NO sympathy for any of you.
I watched this shit growing up, and still do (from afar, thank God).
YOU voted for people that promised you free shit in return for votes.
YOU voted for those that kept horrible workers (and they were numerous) on the job, just so the union could collect its dues.
YOU voted for people that promised compassion, i.e. welfare, and then bitched when a Section 8 housing complex came in and destroyed your neighborhood full of single women trying to raise a bunch of young thugs.
YOU lobbied to get out of live-where-you-work laws once the liberal shit that YOU voted for came to YOUR school or made YOUR car insurance go up. Thanks for the solid, bro!
YOU voted for a party that turned a once highly-ranked educational system into a feral cesspool of politial correctness, sexual escapades, etc. to the point now that even the half that graduate are often functionally illiterate. Thank your fellow union of teachers.
And to top it all off....despite the mathematical reality of what is happening, YOU idiots are still doubling down on the nonsense that got you here in the first place.
I would profer advice, but YOU will never learn.
I think you covered most of it... with the addition of them voting for Obama and his dream of "The Worker's Paradise".
Philadelphia will be bankrupt within 3 years
I read and cannot recall where that GM currently has 1.3 million pensioners and 300K give or take employees. So in reality they are paying 5 workers wages/pensions and health insurance until death for one workers production. Would this be called a reverse Ponzi or reverse Cowboy? I belive most government worker programs at all levels are set up the same way except they don't produce a saleable product so I might label that a double reverse ponzi and twin reverse cowboy????
Just wondering out loud,,,,,, black swan ? Not sure but cities are paying interest on al those bonds they sold as are states and counties. It is kind of like deer hunting public land on opening day of Michigan's gun deer season but wearing all brown with a brown stocking cap with a white cotton ball puff on top. Don't laugh. I acutally saw an old boy running beagles on rabbits dressed exactly like that. I am still wondering to this day how he got to live to be that old?
Good day to all.
Imagine in about 75 years children asking grandpap to tell them a bedtime story about what it was like when he was a boy.
"Tell us about how dollars were made of paper and there were coins called money you could actually hold in your hand."
"Tell us about how you could get in your own vehicle called a car and drive werever you wanted to without permission and...no check-stops every 100 kilometers with strip-searches at each one."
"Tell us what it was like when you could buy chocolate bars and the price was the same each year because we were on the gold-standard and had almost no inflation."
"Tell us about what it was like when you could actually trust a police officer because they obeyed the law."
"Tell us what it was like when politicians kept their promises." (answer "Sorry, your great, great grandfather might have been able to tell you but he's been dead for years.")
Is that after the 50,000 a year illegals get Shnack, Snip. Whip, Hump Chump dump govy programs, food stamps, house vouchers, Medicaid, and
of course dat good ole, auto matic no pic Motor Voter Regis ID Card, with the vote demo chip in it; to put discounted Illegal Alien Gas in their subprime lended cars from Govvy Motors, (da keychains loaded with fobs, cards and scam id no are free)
Well Ill be..... dats 50,000 a year plus all their extended family brought in, with the CHILDRENE UNDER ACCA.
anyone wanna work or invest at $ 15 dollar an hour mim wage hiring full timers???
Suckas, you been scammed by the POLS and the Vast Medica Main Streem flim flammed the low info voter, to vote dos benefits....
If I dont get mine for free, Ill sue....Lol.
Suckas...
Michigan is the end of the world.
The picture is funny. Now they're praying for God's help after generations of mismanagement and union dominance. HAHAHAHAHAHAHAHAHA!