Detroit files for bankruptcy

[WildCat]

What, they snook (Snuck isn't a word?) in through the sewer system and screwed things up under cover of darkness, when no one was looking?

A little bit ago jj started a thread where he blamed the Michigan GOP for Detroit's impending bankruptcy, but he gave it such a non-descriptive name it's hard to find.

 

[geni]

In practice managing that level of population loss was always going to be tricky particularly since modern political idiology doesn't seem to let you abandon cities.

 

[WildCat]

What, they snook (Snuck isn't a word?) in through the sewer system and screwed things up under cover of darkness, when no one was looking?

Snuck is perfectly cromulent.

 

[fuelair]

They can't pay their bills.

ftfy.........

 

[fuelair]

Detroit hasn't had a Republican mayor in 50 years. I don't know who to blame this on.

There have been no real Republicans in thirty years, so that makes no difference. Just republickera - not at all the same breed.

 

[Mike!]

Snuck is perfectly cromulent.

I feel positively embiggened by that.

 

[fuelair]

What, they snook (Snuck isn't a word?) in through the sewer system and screwed things up under cover of darkness, when no one was looking?

Snuck and sneaked are words, Sneaked used to be the proper use, they are now sort of equal and,,,,,

more and better on this: http://www.writersdigest.com/online-editor/snuck-vs-sneaked

 

[Mike!]

Snuck snd sneaked are words, Sneaked used to be the proper use, they are now sort of equal and,,,,,

more and better on this: http://www.writersdigest.com/online-editor/snuck-vs-sneaked

Once again putting the "E" in JREF to use!
Thank you!

 

[Fizil]

I'm surprised Detroit went bankrupt before Flint. I remember Flint always being in way worse shape than Detroit growing up.

 

[anglolawyer]

They borrow money to pay their operating costs or invest in capital improvements., and don't gather enough revenue to pay back the loans. They declare bankruptcy as a way of voiding those debts and subjecting their creditors to some sort of mitigated, equitable repayment solution.

ETA: Which part amazes you? Does the UK not have a similar bankruptcy provision in law? Do UK municipalities never borrow funds? Do UK municipalities never risk gathering less revenue than needed to pay off their debts? Do UK municipalities enjoy an exemption in law from paying off their debts?

America amazes me. Period (as you say over there). I read The Meltdown Tour by Michael Lewis and he explains it is possible for American towns to go bust. In the UK that's not really possible. If they really got into trouble then central government would step in. In the US, where the law of the jungle applies, the city government is left to rot.

 

[WildCat]

America amazes me. Period (as you say over there). I read The Meltdown Tour by Michael Lewis and he explains it is possible for American towns to go bust. In the UK that's not really possible. If they really got into trouble then central government would step in. In the US, where the law of the jungle applies, the city government is left to rot.

The "central government" did step in, in this case the State of Michigan which now administers Detroit.

 

[bynmdsue]

Well, state and federal governments often do step in but that just slows the bleeding for a short while. There are long term problems that can't be fixed with an injection of money.

Detroit sent 4 of it's Pension Fund Trustees to Hawai'i earlier this year for a conference. Sure it only cost $22,000 and that's a mere drop in the bucket when you're 15 Billion in the hole but maybe, just maybe, teleconferencing might've been a bit cheaper.

 

[anglolawyer]

The "central government" did step in, in this case the State of Michigan which now administers Detroit.

So, is the city bankrupt or not? Are creditors taking a haircut?

 

[ravdin]

So, is the city bankrupt or not? Are creditors taking a haircut?

It remains to be seen, but yes, it's very likely that creditors will take a haircut. What would you have otherwise- a full bailout from Washington?

 

[anglolawyer]

Well, state and federal governments often do step in but that just slows the bleeding for a short while. There are long term problems that can't be fixed with an injection of money.

Detroit sent 4 of it's Pension Fund Trustees to Hawai'i earlier this year for a conference. Sure it only cost $22,000 and that's a mere drop in the bucket when you're 15 Billion in the hole but maybe, just maybe, teleconferencing might've been a bit cheaper.

This has cropped up before - city officials flying first class etc. When will we ever solve the problems that result from spending other peoples' money?

 

[The Central Scrutinizer]

Like Greece. What I meant was, are there no fire trucks, ambulances...

Yes. Those are assets and are subject to being sold. Though it's highly unlikely. Unless they have too many.

...pensions for state workers etc?

Yes. Pensions for city workers. How much of them they get, if any, is what will be decided.

 

[Zelenius]

I am shocked, shocked!

Is it true that some parts of Detroit are becoming naturally reforested due to abandonment? I guess that's one of the silver(or green) linings to this mess.

 

[theprestige]

So, is the city bankrupt or not? Are creditors taking a haircut?

The city is bankrupt. The creditors are probably going to take a haircut.

When you say that in the UK, "the central government would step in", what do you mean, exactly?

Would the central government undertake to pay off the city's systemic budget shortfall in perpetuity?

Would it pay off the city's budget shortfall one time only, and compel the city to rationalize its budget to prevent further shortfalls?

Would it put the city into bankruptcy, pay off all the creditors in full, and then compel the city to fix its finances?

Or would it do something else that I haven't imagined?

I mean, I can see how maybe in the UK, being a relatively small, relatively densely-populated island, where everything has been tightly interconnected for centuries, and trouble in Sheffield or Liverpool may require swift and intrusive action from the central government to prevent the entire system from crashing down, such a thing as a city declaring bankruptcy might seem amazing.

In the US, such issues are usually left to the regional government. In this case the state government of Michigan, which has actually been involved in managing Detroit's deepening crisis for some time now.

One thing to be aware of is that the government of Detroit has actually resisted the intrusion of the "central government" into its affairs. Instead, they have insisted on trying to manage their budget systemic budget shortfalls on their own. It's not for lack of trying that the state government didn't step in until recently.

At the end of the day, the city still owes debts it can't pay. The true law of the jungle would be a creditor free-for-all, with each one stripping the city of as much value as they could get their hands on, and devil take the hindmost.

Bankruptcy law is actually a much more civilized and moderate solution. You may want to consider not putting much stock in sensationalized accounts of foreign countries.

 

[The Central Scrutinizer]

I recently watched a video about Detroit. Produced by Detroiters. The average response time of the Detroit Police is 58 minutes. On any given day two-thirds of the city's ambulances are out-of-service. On a recent day a fire engine responding to a fire had it's fuel tank fall off.

As the Mayor himself said, Detroit's problem is very simple. The city spends more money than it takes in. And it has for a long time. Much of the spending is mandated. They've cut just about everything they can cut.

There's nothing left to cut. Detroit can't say, close the schools. Announce no more hospitals. Disband the police department.

As I saw on the video (if I can find it I'll link it), a north side Detroit woman was asked, did the city declaring bankruptcy scare her? She laughed and said, "Detroit's already bankrupt!"

Yep. This really isn't much of a surprise.

 

[Fizil]

One thing to be aware of is that the government of Detroit has actually resisted the intrusion of the "central government" into its affairs. Instead, they have insisted on trying to manage their budget systemic budget shortfalls on their own. It's not for lack of trying that the state government didn't step in until recently.

I've never understood how the city can resist intrusion by the state government. The municipalities in Michigan exist purely with the permission of the State don't they? Are there articles in the state constitution that prevent the state government from arbitrarily interfering with a municipality once it has been chartered? I understand the people in a municipality not wanting the interference to happen, but I always assumed that the state had the authority to take over management of the city but simply didn't use it till recently.