Detroit

Bankruptcy In The USSA: Detroit Bondholders About To Be GM’ed In Favor Of Pensioners

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Obama-Communist

– Bankruptcy In The USSA: Detroit Bondholders About To Be GM’ed In Favor Of Pensioners (ZeroHedge, Jan 31, 2014):

First, the Obama administration showed that when it comes to most preferred voter classes in the eyes of the Obama administration, some unsecured creditors – namely labor unions, and the millions of votes they bring – are more equal than other unsecured creditors – namely bondholders, and the zero votes they bring. Five years later we are about to get a stark reminder that under the superpriority rule of a community organizer for whom “fairness” trumps contract law any day, it is now Detroit’s turn to make a mockery of the recovery waterfall. As it turns out, bankrupt Detroit is proposing to favor pension funds at roughly double the rate of bondholders to resolve an estimated $18 billion in long-term obligations, according to a draft of a debt-cutting plan reviewed by The Wall Street Journal.

Read moreBankruptcy In The USSA: Detroit Bondholders About To Be GM’ed In Favor Of Pensioners

Camden, New Jersey: One Of Hundreds Of U.S. Cities That Are Turning Into Rotting, Decaying Hellholes

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– Camden, New Jersey: One Of Hundreds Of U.S. Cities That Are Turning Into Rotting, Decaying Hellholes (Economic Collapse, Dec 15, 2013):

All over America, formerly prosperous communities are being transformed into crime-infested wastelands of poverty and despair.  Of course the most famous example of this is Detroit.  At one time, Detroit was the greatest manufacturing city that the world had ever seen and it had the highest per capita income in the entire country.  But now it has become a rotting, decaying hellhole that the rest of the planet laughs at.  And of course Detroit is far from alone.  There are hundreds of other U.S. cities that are suffering a similar fate.  In this article, the focus is going to be on Camden, New Jersey, but the truth is that there are lots of other “Detroits” and “Camdens” all over the nation.  Jobs and businesses are leaving our cities at a staggering rate, and what is being left behind is poverty, crime and extreme desperation.

Earlier this month, Rolling Stone published an article that took a hard look at the nightmare conditions that exist in Camden.  A city that once made Campbell’s soup and some of this nation’s most famous warships is now a national disgrace.  The following are six of the best quotes out of that article:

Read moreCamden, New Jersey: One Of Hundreds Of U.S. Cities That Are Turning Into Rotting, Decaying Hellholes

It’s Official: Detroit Eligible For Immediate Bankruptcy Protection; Pension Haircuts Allowed

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– Detroit Eligible To File Chapter 9; Pension Haircuts Allowed Bankruptcy Judge Rules (ZeroHedge, Dec 3, 2013):

Update, and it’s official:

  • JUDGE: DETROIT ELIGIBLE FOR IMMEDIATE BANKRUPTCY PROTECTION
  • DETROIT TO REMAIN UNDER BANKRUPTCY COURT PROTECTION, JUDGE SAYS

As somewhat expected – though hoped against by many Detroit union workers – Judge Steven Rhodes appears to have confirmed Detroit is eligible for bankruptcy protection (after pointing out that the city’s accounting was accurate and it is indeed insolvent) making this the largest ever muni bankruptcy.

  • JUDGE RHODES SAYS HE WILL ALLOW PENSION CUTS IN DETROIT’S BANKRUPTCY
  • DETROIT JUDGE: NOTHING SEPARATES PENSIONS FROM OTHER DEBT

Read moreIt’s Official: Detroit Eligible For Immediate Bankruptcy Protection; Pension Haircuts Allowed

Cops In Bankrupt Detroit Forced To Buy Own Uniforms

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– Cops in bankrupt Detroit forced to buy own uniforms (RT, Oct 31, 2013):

Patrolling the streets of bankrupt Detroit, Michigan is no easy feat for the local police department, and budget woes are about to make things ever for difficult for law enforcement officers in the Motor City.

The president of the Detroit Police Officers Association told a local CBS affiliate that city cops are going to have to empty out their own wallets if they want to remain fully equipped while on the job. The financially-devastated city is cutting back on spending left and right, and new slashes to the budget mean officers are going to soon be responsible for buying their own uniforms and ammunition.

Read moreCops In Bankrupt Detroit Forced To Buy Own Uniforms

The 10 U.S. Cities With Less Than Ten Days Of Cash On Hand

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– The Ten US Cities With Less Than Ten Days Of Cash On Hand (Zerohedge, Oct 29, 2013):

As the Detroit bankruptcy hearing heats up following news that the city’s unsecured creditors, among them pensioners, are set to recover pennies on the dollar, 16 to be precise, the question of which are the next cities to follow in the footsteps of bankrupt Motown, becomes relevant once again. Courtesy of the WSJ, and the second part of its series on “U.S. Cities Grapple With Finances“, here is a list of the US cities that when push comes to shove metaphorically, and when the money runs out literally, will have no choice but to knock on the door of the local regional bankruptcy court and submit that long-prepared bankruptcy petition. Specifically, here are the cities that have 10 days or less in cash on hand available. Because, unless one is the Fed, cash and lack thereof is all that matters.

The list below ranks the top 10 cities in terms of days cash on hand. Needless to say, a city with a low number in this category (such as 0.0) may have trouble paying bills, bribes, lap dances and other core municipal outlays.

Shifting away from the stock, and looking at the flow, as Detroit showed the world the very hard way, cities mired in pension costs will ultimately default and lead to massive haircuts to the retirees. The following 10 cities have the greatest percentage of pension costs as a percentage of the city’s general fund.

Read moreThe 10 U.S. Cities With Less Than Ten Days Of Cash On Hand

Detroit Pensioners Face Miserable 16 Cent On The Dollar Recovery

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– Detroit Pensioners Face Miserable 16 Cent On The Dollar Recovery (ZeroHedge, Oct 27, 2013):

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.

Read moreDetroit Pensioners Face Miserable 16 Cent On The Dollar Recovery

140-Acre Forest About To Materialize In The Middle Of Detroit

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– A 140-Acre Forest Is About to Materialize in the Middle of Detroit (The Atlantic, Oct 25, 2013):

After nearly five years of planning, a large-scale attempt to turn a big chunk of Detroit into an urban forest is now underway. The purchase of more than 1,500 vacant city-owned lots on the city’s lower east side – a total of more than 140 acres – got final approval from Detroit Emergency Manager Kevyn Orr and Michigan Governor Rick Snyder last week.

The buyer is Hantz Farms, and it’s a venture of financier John Hantz, who lives in the nearby Indian Village neighborhood. Indian Village is an affluent enclave of manor-scale historic homes, but much of the surrounding area is blighted. Hantz Farms will pay more than $500,000 for the land, which consists of non-contiguous parcels in an area where occupied homes are increasingly surrounding by abandoned properties.

Read more140-Acre Forest About To Materialize In The Middle Of Detroit

Detroit Faces Crucial Trial 3 Months After Bankruptcy Filing

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H/t reader M. G.:

“… here is a very interesting story about Detroit and it’s pending bankruptcy.
The greedy guts want it all, and they don’t care who gets hurt or destroyed.”


Detroit isn’t eligible for a makeover unless a judge finds that key steps have been met, especially good-faith talks with creditors earlier this year. Photo: Jason Reed/Reuters

– Detroit faces crucial trial three months after bankruptcy filing (Guardian, Oct 22, 2013):

An unusual trial starting Wednesday to determine whether Detroit may scrub its books in the largest public bankruptcy in US history

Thousands of Detroit streetlights are dark. Many more residents have fled. Donors are replacing ambulances that limped around for 200,000 miles. Millions in debt payments have been skipped.

Is there really any doubt the city is broke?

A judge starts exploring that question Wednesday in an unusual trial to determine whether Detroit indeed is eligible to scrub its books in the largest public bankruptcy in US history. Unions and pension funds are claiming the city failed to negotiate in good faith before filing for chapter 9 protection in July.

Read moreDetroit Faces Crucial Trial 3 Months After Bankruptcy Filing

Puerto Rico Muni Bonds Collapse (About 77% Of U.S. Mutual Funds Hold Puerto Rico Debt)

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– Detroit ‘Contagion’ Spreads; Widely-Held Puerto Rico Muni Bonds Collapse (ZeroHedge Sep 10, 2013):

“It’s getting concerning,” notes one fixed-income banker, Puerto Rico muni bond yields “never got near 10% [yields] even in the crisis.” Some of the 27-year maturity Puerto Rico bonds just traded at a dismal 67 cents on the dollar (10.082% yield) and the most recently issued 2036 Electric Power bonds have collapsed from par a month ago to just above 82 cents on the dollar today. As the WSJ reports, the fall in prices also is a sign of investor risk aversion in the wake of Detroit’s record municipal-bankruptcy filing in July; but it seems the anxiety and outflows from ETFs is having just as big an impact as Puerto Rico bonds now trade cheaper than Detroit’s. “It’s out of whack,” one analysts warns, though the island’s double-digit unemployment and recent weakness in economic indicators somewhat support the concerns – and while the “yields are attractive” it is possible that the island’s borrowing costs could go higher as supply is extremely heavy in coming months. With 77% of managers holding Puerto Rico bonds, this is a problem…

Via WSJ,

Puerto Rico debt is a flash point in the municipal-bond market, because the island is a prolific debt issuer and its bonds are widely held. About 77% of U.S. mutual funds hold some sort of Puerto Rico debt, according to Morningstar. The island’s bonds are attractive to investors because they offer relatively high yields, and unlike most other municipal debt, interest on them is exempt from federal, state and local taxes.

Read morePuerto Rico Muni Bonds Collapse (About 77% Of U.S. Mutual Funds Hold Puerto Rico Debt)

Dr. Paul Craig Roberts: The ‘New Economy’ Is The No Jobs Economy – ‘You Have Been Sold Out By “Your” Government’

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I wish I could say the same about donations here at Infinite Unknown.

The last donation has been in March 2013. And there have only been 3 donations this year so far.

But one thing’s for sure, Dr. Paul Craig Roberts deserves every dollar of these donations and a lot more for his work.

See also:

– Dr. Paul Craig Roberts: The American People Have Suffered A Coup D’Etat

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.

– The “New Economy” Is The No Jobs Economy (Paul Craig Roberts, Aug 5, 2013):

Dear Readers,

I am flattered by the traffic on this site, and by the generosity of donors from across the United States–large cities and small villages–and the world. We have donations from Indonesia, Russia, Taiwan, Hong Kong, Mexico, most countries in Europe and from Canada, Australia, and New Zealand. It is exciting to me that people from around the world realize the stakes and seek better information than the media, public officials, and corporations provide.

It is encouraging that people around the world ask my permission to translate my columns into their languages and post them on their websites. My columns even appear in Azerbaijan.

Read moreDr. Paul Craig Roberts: The ‘New Economy’ Is The No Jobs Economy – ‘You Have Been Sold Out By “Your” Government’

Ron Paul On Gold And Why ‘We’ll See More Detroits’ (CNBC Video)

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– Ron Paul On Gold And Why “We’ll See More Detroits” (ZeroHedge, July 25, 2013):

In a brief but perfectly succinct interview on CNBC yesterday, Ron Paul shared his opinion on the need to own gold (and the physical demand for the manipulated metal) and the Detroit bankruptcy (“we’re going to see more Detroits”). He concludes that “long term, you can expect governments not to change” and that they’ll keep taking on more debt and printing more money until people lose confidence in both the U.S. dollar and the U.S. military, both of which will be shake the foundation of a fiat/dollar system.

Detroit: Federal Judge Halts Legal Challenges To Bankruptcy Filing

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Before:

– Report: Michigan Judge Orders Detroit Bankruptcy Filing Withdrawn:

State Circuit Court Judge Rosemarie Aquilina ruled that the law allowing Gov. Rick Snyder (R) to authorize the bankruptcy filing was unconstitutional, according to Reuters. Aquilina ruled in favor of Detroit retirees and workers who argued the Michigan Constitution protected the retirement benefits in their city pension funds.

– Detroit Plans To Cut Pensions … Cries Of Betrayal

– After Detroit Bankruptcy Filing, City Retirees On Edge As They Face Pension Cuts (Washington Post)

“They want your f$$$ing retirement money!”
– George Carlin (2005)

– Detroit: federal judge halts legal challenges to bankruptcy filing (Guardian, July 24, 2013):

Ruling is major victory for city which had been sued by pension funds claiming bankruptcy threatened 22,000 employees

A federal judge agreed with Detroit on Wednesday and stopped any lawsuits challenging the city’s bankruptcy, declaring his courtroom the exclusive venue for legal action in the largest filing by a local government in US history.

The decision by US bankruptcy judge Steven Rhodes was a major victory for Detroit, especially after an Ingham County judge last week said that Governor Rick Snyder ignored the Michigan constitution and acted illegally in approving the Chapter 9 filing. That ruling and others had threatened to derail the case.

Retirees had sued, claiming the bankruptcy threatened their pensions that are protected by the constitution.

Read moreDetroit: Federal Judge Halts Legal Challenges To Bankruptcy Filing

Detroit By The Numbers

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– Detroit By The Numbers (ZeroHedge, July 23, 2013):

With the Detroit bankruptcy hearing under way (constitutional crises notwithstanding), we thought it useful to cut through the rhetoric, break-down the mutally-assured-destruction barriers, and peer into the cold-hard facts as the city looks to restructure its $18 billion in debt.

$18 billion Detroit’s estimated debt obligations.

$11.9 billion City’s unsecured obligations to lenders and retirees.

$6.4 billion City’s obligations backed by enterprise revenues (Revenue Bonds).

38 cents Of every tax dollar that the city collects goes to service legacy debt and other obligations rather than providing services for the city’s residents and businesses.

$115.5 million Detroit’s negative cash flows in fiscal year 2012.

Read moreDetroit By The Numbers

The Tip Of The Iceberg Of The Coming Retirement Crisis That Will Shake America To The Core

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– The Tip Of The Iceberg Of The Coming Retirement Crisis That Will Shake America To The Core (Economic Collapse, July 22, 2013):

he pension nightmare that is at the heart of the horrific financial crisis in Detroit is just the tip of the iceberg of the coming retirement crisis that will shake America to the core.  Right now, more than 10,000 Baby Boomers are hitting the age of 65 every single day, and this will continue to happen every single day until the year 2030.  As a society, we have made trillions of dollars of financial promises to these Baby Boomers, and there is no way that we are going to be able to keep those promises.  The money simply is not there.  Yes, I suppose that we could eventually see a “super devaluation” of the U.S. dollar and keep our promises to the Baby Boomers using currency that is not worth much more than Monopoly money, but as it stands right now we simply do not have the resources to do what we said that we were going to do.  The number of senior citizens in the United States is projected to more than double by the middle of the century, and it would have been nearly impossible to support them all even if we weren’t in the midst of a long-term economic decline.  Tens of millions of Americans that are eagerly looking forward to retirement are going to be in for a very rude awakening in the years ahead.  There is going to be a lot of heartache and a lot of broken promises.

Read moreThe Tip Of The Iceberg Of The Coming Retirement Crisis That Will Shake America To The Core

Detroit Plans To Cut Pensions … Cries Of Betrayal

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“They want your f$$$ing retirement money!”
– George Carlin (2005)

– Cries of Betrayal as Detroit Plans to Cut Pensions (New York Times, July 22, 2013):

Now there is a new worry: Detroit wants to cut the pensions it pays retirees like Ms. Killebrew, who now receives about $1,900 a month.

“It’s been life on a roller coaster,” Ms. Killebrew said, explaining that even if she could find a new job at her age, there would be no one to take care of her husband. “You don’t sleep well. You think about whether you’re going to be able to make it. Right now, you don’t really know.”

Detroit’s pension shortfall accounts for about $3.5 billion of the $18 billion in debts that led the city to file for bankruptcy last week. How it handles this problem — of not enough money set aside to pay the pensions it has promised its workers — is being closely watched by other cities with fiscal troubles.

Read moreDetroit Plans To Cut Pensions … Cries Of Betrayal

25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head

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– 25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head (Economic Collapse, July 20, 2013):

It is so sad to watch one of America’s greatest cities die a horrible death. Once upon a time, the city of Detroit was a teeming metropolis of 1.8 million people and it had the highest per capita income in the United States.  Now it is a rotting, decaying hellhole of about 700,000 people that the rest of the world makes jokes about.  On Thursday, we learned that the decision had been made for the city of Detroit to formally file for Chapter 9 bankruptcy.  It was going to be the largest municipal bankruptcy in the history of the United States by far, but on Friday it was stopped at least temporarily by an Ingham County judge.  She ruled that Detroit’s bankruptcy filing violates the Michigan Constitution because it would result in reduced pension payments for retired workers.  She also stated that Detroit’s bankruptcy filing was “also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy“, and she ordered that a copy of her judgment be sent to Barack Obama.  How “honoring the president” has anything to do with the bankruptcy of Detroit is a bit of a mystery, but what that judge has done is ensured that there will be months of legal wrangling ahead over Detroit’s money woes.  It will be very interesting to see how all of this plays out.  But one thing is for sure – the city of Detroit is flat broke.  One of the greatest cities in the history of the world is just a shell of its former self.

The following are 25 facts about the fall of Detroit that will leave you shaking your head…

Read more25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head

Report: Michigan Judge Orders Detroit Bankruptcy Filing Withdrawn

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– Report: Michigan Judge Orders Detroit Bankruptcy Filing Withdrawn (TPM, July 19, 2013):

A Michigan judge on Friday ordered Detroit’s emergency manager to withdraw a federal bankruptcy petition filed on behalf of the city, Reuters reported.

State Circuit Court Judge Rosemarie Aquilina ruled that the law allowing Gov. Rick Snyder (R) to authorize the bankruptcy filing was unconstitutional, according to Reuters. Aquilina ruled in favor of Detroit retirees and workers who argued the Michigan Constitution protected the retirement benefits in their city pension funds.

The Death Of A City: Detroit’s Eulogy As Delivered By Kevyn Orr

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– The Death Of A City: Detroit’s Eulogy As Delivered By Kevyn Orr (ZeroHedge, July 19, 2013:

From the bankruptcy court declaration filed by Kevyn D. Orr in support of the Detroit Chapter 9 Petition.

After decades of fiscal mismanagement, plummeting population, employment and revenues, decaying City infrastructure, deteriorating City services and excessive borrowing that provided short term band-aids at the cost of deepening insolvency, the City of Detroit today is a shadow of the thriving metropolis that it once was. The City does not provide basic and essential services to the residents who remain in the City. Crime is endemic. The City is infested with urban blight, which: (a) depresses property values; (b) provides a fertile breeding ground for crime and tinder for fires (with the attendant disproportionate devotion of police and firefighting resources to abandoned lots); and (c) compels the City to devote precious resources to demolition.

Read moreThe Death Of A City: Detroit’s Eulogy As Delivered By Kevyn Orr

Obama To Detroit: ‘No Bailout For You’

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Related info:

– ‘I Refused To Let Detroit Go Bankrupt’ – Barack Obama, October 2012 (Video)

– Obama To Detroit: “No Bailout For You” (ZeroHedge, July 19, 2013):

While in the past President Obama has been more that willing to throw good money after bad and “refuse to let Detroit go bankrupt,” it seems when push comes to shove – under the intense scrutiny of a nation awash in scandal, a drastically bifurcated congress – that despite the imploring from local congressmen for “moar” already – that the savior of the city will not this time ride to the rescue on his white horse. In a statement, the White House said they “are monitoring the situation in Detroit closely,” with no hint – just as they have made clear for months – of any sort of Federal bailout. As USA Today notes, the federal government provided federal loans to prevent New York City from declaring bankruptcy during the 1970s. But times have changed; the federal government has debt and financial problems of its own, and a Detroit bailout could run into significant opposition in Congress and cause serious damage in the Muni market.

While the GM debacle put pensioners ahead of creditors, it would be unprecedentedly bad for the massive Muni bond market should Obama acquiesce and change the law once again to put pensioners ahead of GOs…

The White House statement on Detroit.

The president and members of the president’s senior team continue to closely monitor the situation in Detroit.

While leaders on the ground in Michigan and the city’s creditors understand that they must find a solution to Detroit’s serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalize and maintain its status as one of America’s great cities.”

Translation: “sorry guys, you’re on your own on this one!”

‘I Refused To Let Detroit Go Bankrupt’ – Barack Obama, October 2012 (Video)

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– “I Refused To Let Detroit Go Bankrupt” – Barack Obama, October 2012 (ZeroHedge, July 18, 2013):

Just nine short months after proclaiming victory on his plan to save Detroit by throwing taxpayer money at the ‘problem’ of over-levered, over-unioned, and under-demanded auto manufacturers, it seems the ball is back in President Obama’s court once again. He “refused to throw in the towel and do nothing. We refused to let Detroit go bankrupt. We bet on American workers and American ingenuity, and three years later, that bet is paying off in a big way.”

Of course, what the rest of the unsuspecting US citizenry is likely unaware of yet is that once again the municipal workers’ pension plans (that face 90% losses) will be bailed-out via the Pension Benefits Guaranty Corporation (PBGC) – A US Government (ponzi) Agency. But of course, that’s for the good of the whole nation…

RECOVERY: Detroit Becomes Largest US City To File For Bankruptcy

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H/t reader M.G.:

“Detroit latest city to file bankruptcy.
I thought you would like to see this story.
This is a growing trend. The city officials will be fired, corporations will send in their bureaucratic bean counters and take over. Any remaining assets or treasures this historic city might have will be sold off at auction to the Greedy Guts at pennies on the dollar. Then, after they have taken everything that is left, pensions and benefits for the workers all canceled, they will go on, leaving Detroit destitute. It is like a Mafia bust out.”

“They want your f$$$ing retirement money!”
– George Carlin (2005)

Emergency manager Kevyn Orr takes decision after failing to broker deal between city’s bondholders and pension funds


Kevyn Orr. Detroit’s cost of borrowing will soar and the city will struggle to raise cash, analysts predicted. Photograph: Rebecca Cook/Reuters

– Detroit becomes largest US city to file for bankruptcy (Guardian, July 18, 2013):

Sinking under huge debts and decades of mismanagement, Detroit formally filed for bankruptcy on Thursday, becoming the biggest US city ever to take such a drastic measure.

Kevyn Orr, Detroit’s emergency manager, took the decision after failing to broker a deal between the city’s bondholders and its pension funds.

The filing sets a new record for municipal bankruptcies and dwarfs the previous record filings by Jefferson County, Alabama, and Stockton, California. No other city of Detroit’s size has ever gone bust.

Orr and the city’s creditors and pensioners will now begin a fraught legal consultation period while a court determines whether the city is eligible for “chapter 9” bankruptcy protection for its $18.5bn debts and liabilities.

Read moreRECOVERY: Detroit Becomes Largest US City To File For Bankruptcy