Detroit Filing for Bankruptcy

Mr. Deez

Mr. Deez

Beer Prophet
Looks like Detroit is heading for Bankruptcy Court. Washington Post is primarily blaming public employee pension liabilities. Link. Sounds very familiar.

Like an idiot Steven Rattner with the New York Times claims there should be a full bailout of Detroit. Link.

Obviously, this is foolish, not so much because of the cost of this one city but because of the horrifically bad example it sets and the colossal costs if other big cities start to see this as a viable option.

This idiotic quote is particularly disturbing:
In reply to:
Click to expand...
 
There are a lot of things that make living in Detroit difficult. Abandoned homes cause environmental decay. The lawlessness is a fact of life that makes things miserable from a safety standpoint, but it creates economic distress. Auto insurance costs more than car payments for Detroit residents.
 
The focus of detroits bankruptcy should focus on making the city livable for the middle class almost nothing else. The middle class cares about jobs, safety, and schools.

Detroits job market should be helped by incredibly cheap real estate. They should also offer tax incentives to get business going on in the city at almost any cost. Even if the city is not able to immediately capitalize on tax revenue from the business, they are able to benefit from buildings being occupied and an improved job market. The kemp model mentioned in the article is a good idea.

I would create safety in small areas through the police force. Pick a section or two of the city and make sure the response times are great. As those areas improve, slowly add more sections that get top notch police support. All dilapidated buildings all over the city should be demolished this year.

As I always say, schools are a reflection of communities. Make sure that the schools are nice in the areas that are safe and you instantly have a desirable place to live. Slowly add more sections in the areas that are getting adequate police protection.

This is a 50 year project but its possible with solid management. Detroit, even with all its problems, has a lot to offer as a place to live. Pittsburgh faced similar issues and is now a great place to live. One report listed it as the most livable city in the US.
 
Bailing them out is just rewarding them for bad (dem/lib) behavior. Wait until California files.
 
Somehow you would first have to rid the city of corrupted city and union officials. It might be easier than cleaning up Mexico, but not much.

I would consider three options:

1) Sell it to Les Gold of Hardcore Pawn
2) Place a big glass bowl over it ala The Simpson's Movie
3) Put a 25 foot fence around it and turn into a prison
 
Perhaps divesting some of the suburbs so that they can meet citizen's needs including better schools and better crime prevention.
 
I read a story in Look magazine back in the late fifties that talked about what would happen in the long run when redlining and the inability of the cities to annex the areas filling up with white flighters caught up with the infrastructure needs of what we now call inner cities.

Some cities like Houston and Dallas and Austin were able to avoid these problems somewhat by annexing new tax sources in the suburbs to be. Detroit was prevented from doing that and the inevitable has happened.
]
]Creating county governments with the powers of municipalities might work but the legislatures wont let them. Too bad for people who live in inner cities.
 
I respectfully disagree. Look at the cities that have sprawled as opposed to being encased by their satellite cities and you see largely successful cities. Look at the ones that were encapsulated and almost all are strangling.

Detroit's irresponsible spending governments have been a by product of the loss of its upper and middle classes to surrounding municipal taxing entities.

If the responsible voters start taking off, the stroke of the less responsible grows and you get criminals and looters taking over and they spend you to death.
 
Pittsburgh should be Detroit's model. Like Detroit, it's a city that had a one-dimensional economy (steel) that went into decline about 50 years ago and eventually collapsed (probably worse than the auto industry did), causing the city to hemorrhage jobs and people for several decades. However, they diversified their economy, and the city is now gaining population for the first time in decades. If I was in charge of Detroit, I'd look closely at their model.
 
good points all, but Detroit did get surrounded by other urban entities long ago and many of them were low tax havens for people who worked in the city. As Detroit began its trip down the slippery slope, its human capital leaving, it was easy pickings for corrupt or gutless pols who kept postponing retrenchment and who instead offered more goodies. That way lies bankruptcy.

What was the alternative when the tax base started leaving?

Or put another way, what caused the decline that led to the corrupt governments. Where was the middle class or ownership class that usually takes care of their hometown?
 
I'm fascinated by the desire by America to "save" cities that really should be abandoned. New Orleans was the first to come to mind but I see Detroit as another example of a once great city that needs to right-size itself. Rather than treat it like the megatropolis it used to be it needs to be treated that it will eventually be just another large city. Aren't the suburbs of Detroit doing well? I understand white flight from Detroit has resulted in bustling suburbs.

The feds absolutely should NOT bail out Detroit. That would be a horrible message to send to poorly managed cities.

The only way out of this is for Detroit to start selling off city assets. Museum pieces would be first on the list. Retiree benefits must also be addressed. 2/3rds of city resources are being spent on retirement benefits. That's a challenge for a city that's seen it's tax base drop by >50%.
 
I agree (amazingly) with Husker on this
Detroit should do whatever they can including selling anything they can.

The problem of course is the debt and no means with which to pay it.
The unfunded portion of the city employee retirees is a problem. One talking head suggested the outcome might be different for the police and firemen retirees versus the 'regular' retirees which would suck
as it will likely suck for the muni bondholders

but sell it all, demolish the rest and start over
with a new mayor
 
Go read the Wiki page on Kwame Kilpatrick if you want to know the types of people running the City of Detroit.

No bailout . . .no, sir. The state was right to take the power of the purse away.
 
Apparently, the Detroit Institute of the Arts (DIA) is actually owned by the city, but I highly doubt in their charter that the city council has a say in liquidating assets. I also think the vast majority of operating revenues come from donations, shows/exhibitions, and their endowment.

Additionally, selling parts of your permanent collection is only really kosher if the money is used to expand the collection with better examples. In the case of an art museum, selling off paintings for working capital or to pay off debt is the quickest route to losing your affiliation with the AAM and would be a cultural death knell for Detroit.

Get your house in order, but don't sell your city's most important art and cultural treasures (they have some pretty amazing Van Goghs). They need to recover with some pride.
 
Little over a year ago, I had the opportunity to visit with Dave Bing, who was trying to get us interested in building a plant in Detroit, which would create about 200-225 jobs. Aside from the unbelievable devastation created at the hands of greedy wannabes - Ray Nagin could take lessons from those guys, two things that I did not know before:

1) I was told to keep the payroll under 300 employees and the unions would leave us alone.

2) They had a small "church bus" with some 15-16 Chinese on it touring the city. They would drive through a blighted or abandoned neighborhood, and one of the Chinese would say something, which translated to a bid for the entire neighborhood or development. Once proud mansions (million plus dollar homes), were selling for under $100,000.

NOLA is important because of the energy industry and the River is the life blood of this country. Detroit should be given to the Chinese if they agree to take it back to China.
 
"That is a must. One of the reasons law enforcement has such a difficult time is that you still have big city area but a police force sized and structured for a medium-sized city.
"

The city proposed this a few years ago, i.e. we have half the population, we need to make the city half as big.

Everyone freaked saying they wouldn't move so they kicked the can down the road and you now have this.

It's hard to feel sorry for people who refused to do anything to rectify or prevent the situation they are in.

They will be bailed out. So will california. They have the votes.

Texas can take it or secede, and by taking it I mean be everyone's piggy bank

And of course secession is not a viable option. Prepare your anus.
 
I am shocked that this happened because Obama promised he would not let Detroit go bankrupt. There must be some mistake because Obama actually saved Detroit years ago with the auto bailout. There must be some mistake. I will withhold judgement until the NYT chimes in.
 
If Detroit is successful in reducing their liabilities in debt(pensions and health care for retirees( and even bonds how many other cities will do likewise?


There are at least 11 other cities on Moody's watch list.
 
Are any cities in the State of
texasflag.gif
facing bankruptcy?
 
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