# Detroit declares bankruptcy



## a_majoor (19 Jul 2013)

I just recently was in Detroit (my Daughter was taking a course at Wayne State University) and was never so discombobulated. The neighbourhood around Wayne State was emphatically NOT what you expect to see around a university campus, and signs of the rot were visible exerywhere. This article demonstrates how even this bankruptcy is going to be squandered by stupid politicians. Why this is important to us (besides being an object lesson and perhaps an experiment in how to deal with even larger scale insolvencies in Ontario and Quebec) is Detroit is the site of the busiest Canada/US border crossing, so important that Canada effectively loaned Michigan about a half billion dollars to build another bridge connecting it to Windsor. With Detroit effectively reverting to wilderness in some sections, what is the long term effect on Windsor and cross border traffic in that part of Ontario (and the Canadian economy?)

http://washingtonexaminer.com/without-big-changes-detroit-wont-have-a-second-act/article/2533247



> *Without big changes, Detroit won't have a second act*
> BY SHIKHA DALMIA | JULY 18, 2013 AT 6:00 PM
> 
> "I once thought that there were no second acts in American lives, but there was certainly to be a second act to New York's boom days," F. Scott Fitzgerald once wrote. It's a good thing he wasn't talking about Detroit.
> ...


----------



## JorgSlice (19 Jul 2013)

Let's also note that the reason people are abandoning the city and not doing business with, within, or near Detroit is it's extremely high crime rates and the danger that has skyrocketed over the years. 

Now I'm not a crime analyst or an expert by any means, but from my work on the front line it is my observation that the poorest cities will tend to have the most crime.


----------



## Robert0288 (19 Jul 2013)

I thought the loan for the bridge was because of the extreme length the owner of the current ambassador bridge is going to stall the project.  Also  as a toll bridge, Canada will be receiving all profits from it until the bridge is paid off.  I would also say the effect on trade will be negligible, just because most of the cargo passes through and doesn't stop at Detroit.  When 200,000+ people leave the town in less than a year, you have issues.


----------



## cupper (19 Jul 2013)

The could always market it to Hollywood as a post apocalyptic world for the crop of movies that seem to be churning out these days.

But seriously, there is opportunity for smart redevelopment, if it weren't for the cost of demolishing the existing deteriorated structures.


----------



## Teager (19 Jul 2013)

I just had a look at real estate in Detroit you can buy a place for as low as $39. I highly doubt its habitable and the neighbourhood is probably pretty rough but still you might profit more on any copper wire or scrap metal..if it hasn't been taken yet.


----------



## Jed (19 Jul 2013)

Turn it into the latest FIBUA training site.  ;D

It could replace Meaford.


----------



## GnyHwy (19 Jul 2013)

cupper said:
			
		

> The could always market it to Hollywood as a post apocalyptic world for the crop of movies that seem to be churning out these days.



They already milked that one.  "Robocop"

Maybe the world's largest paintball site?

It was already mentioned about salvaging buildings, and I am guessing that all the good stuff is probably already gone.  Heck, the sewer covers have been stolen, I'm pretty sure the copper in the houses is gone.  They probably don't have a homeless problem though.  3 houses for every squatter.

It would be quite the endeavor though, to hire the citizens to tear the city's bad buildings down, salvage what they could, and potentially use it to build some new housing and/or office space.


----------



## Fishbone Jones (19 Jul 2013)

PrairieThunder said:
			
		

> Let's also note that the reason people are abandoning the city and not doing business with, within, or near Detroit is it's extremely high crime rates and the danger that has skyrocketed over the years.
> 
> Now I'm not a crime analyst or an expert by any means, but from my work on the front line it is my observation that the poorest cities will tend to have the most crime.



The crime is no worse than most large US cities and actually less than some.





			
				Robert0288 said:
			
		

> I thought the loan for the bridge was because of the extreme length the owner of the current ambassador bridge is going to stall the project.  Also  as a toll bridge, Canada will be receiving all profits from it until the bridge is paid off.  I would also say the effect on trade will be negligible, just because most of the cargo passes through and doesn't stop at Detroit.  When 200,000+ people leave the town in less than a year, you have issues.


You've got the bridge thing about right, but your exodus numbers and timelines are off. 200,000 people didn't just PUFO overnight, it's been happening since the '67 riots. They've gone from about 1.5 million back then to about 700,000 today. A lot didn't go far, just past 8 mile early on and now out past 14 mile. It's really the core that's rotten. Outside, like Dearborn, have healthy populations.


			
				Teager said:
			
		

> I just had a look at real estate in Detroit you can buy a place for as low as $39. I highly doubt its habitable and the neighbourhood is probably pretty rough but still you might profit more on any copper wire or scrap metal..if it hasn't been taken yet.


Investors are buying whole city blocks for $100,000.


----------



## GnyHwy (20 Jul 2013)

Another piece of info that is being left out is that the metro area has over 3.5 million people.  The city itself is around 700K.  There are still many people doing quite well in the area.  Anyone who has ever been through Detroit will see that it is an old, rundown and beat up city.  Believe it or not, some people actually appreciate that.


----------



## cupper (20 Jul 2013)

recceguy said:
			
		

> The crime is no worse than most large US cities and actually less than some.



Problem is the 58 minute average response time of the underfunded and under manned police force.

There was a 25% drop in population in the past 10 years which severely hurt the tax base. But the problem was brewing for years.



			
				GnyHwy said:
			
		

> Another piece of info that is being left out is that the metro area has over 3.5 million people.  The city itself is around 700K.  There are still many people doing quite well in the area.  Anyone who has ever been through Detroit will see that it is an old, rundown and beat up city.  Believe it or not, some people actually appreciate that.



Was listening to an interview today with an economic analyst who pointed out that the communities around Detroit may be doing well economically, but with the bankruptcy looming (yes looming, I'll get to that in a moment) their own credit / bond ratings will take a hit regardless.


----------



## cupper (20 Jul 2013)

It seems that the bankruptcy proceedings could be held up based on a judge's ruling today that it violates the state constitution to cut government workers pensions.

*Judge challenges Detroit bankruptcy process*

http://www.cbc.ca/news/business/story/2013/07/19/business-detroit-bankrupt.html



> A Michigan court judge has challenged Detroit's bankruptcy filing, saying it contravenes the state's constitution.
> 
> The ruling by Circuit Judge Rosemarie Aquilina in the Michigan capital of Lansing orders Detroit Emergency Manager Kevyn Orr to withdraw the bankruptcy petition, and says the state governor lacks the power to "diminish or impair pension benefits," a key demand on Detroit city unions as the city works out its financial problems.
> 
> ...



Also has a good map showing how the population drop is distributed within the metropolitan area.


----------



## GnyHwy (20 Jul 2013)

Time for the Michigan Militia!!!

I think this must be Obama's fault... somehow.  Sickem boys!


For all dimwits and sensationalists, this is  :sarcasm:


----------



## cupper (20 Jul 2013)

GnyHwy said:
			
		

> For all dimwits and sensationalists, this is  :sarcasm:



Nooooo! Really? ;D


----------



## Fishbone Jones (20 Jul 2013)

cupper said:
			
		

> Problem is the 58 minute average response time of the underfunded and under manned police force.
> 
> There was a 25% drop in population in the past 10 years which severely hurt the tax base. But the problem was brewing for years.
> 
> Was listening to an interview today with an economic analyst who pointed out that the communities around Detroit may be doing well economically, but with the bankruptcy looming (yes looming, I'll get to that in a moment) their own credit / bond ratings will take a hit regardless.



That response time, again, is not unique to Detroit.

It's not just a drop in population. People are still there. They just quit paying their taxes. Just like you're not counted as unemployed unless you're collecting benefits.

Places like Dearborn, Taylor, etc will do just fine despite what happens in Detroit. They always do.


----------



## GnyHwy (20 Jul 2013)

recceguy said:
			
		

> Places like Dearborn, Taylor, etc will do just fine despite what happens in Detroit. They always do.



Dearborn?  Dearborn has a lot of Muslims. 41% http://en.wikipedia.org/wiki/Dearborn,_Michigan#Demographics They must be saving their cash instead of spending it on fruitless ventures.  Friggin non-capitalists. 

Frickin Obama!


----------



## Fishbone Jones (20 Jul 2013)

GnyHwy said:
			
		

> Dearborn?  Dearborn has a lot of Muslims. 41% http://en.wikipedia.org/wiki/Dearborn,_Michigan#Demographics They must be saving their cash instead of spending it on fruitless ventures.  Friggin non-capitalists.
> 
> Frickin Obama!



So what? It's vibrant, clean, and solvent.


----------



## GnyHwy (20 Jul 2013)

Sorry, forgot the  :sarcasm: emoticon.


----------



## a_majoor (20 Jul 2013)

cupper said:
			
		

> It seems that the bankruptcy proceedings could be held up based on a judge's ruling today that it violates the state constitution to cut government workers pensions.
> 
> *Judge challenges Detroit bankruptcy process*
> 
> ...



The Judge is economically illiterate and appalingly stupid to boot. How does he think Detroit went bankrupt in the first pace? The same farcical process is going on in California, where CalPERS is trying to intervene in the bankruptcy process of a number of bankrupt California communities, even though the extremely generous pensions and benefits awarded to civil service unions, combined with the iunwillingness or inability to fully fund these pension and benefit plans have been a major cause leading to the bankruptcies of these cities and Detroit.

With bankruptcy, there may be a partial payout and restructuring of the pension plans. Without, the city could default and any attempt to collect pensions will be locked up in endless lawsuits (that drain whatever financial resources any future Detroit city government could muster).


----------



## a_majoor (20 Jul 2013)

And fair warning, Detroit might actually be the lead domino knocking down large American cities as investors realize they may never see their money back. Many of the same factors have been in operation there for decades, leading to the same results. Remember it is thought that the funding shortfall for State and Municipal pensions in the US is $2 _trillion_ dollars. 

http://blogs.the-american-interest.com/wrm/2013/07/19/chicago-blues-tenured-teachers-laid-off/



> *Chicago Blues: Tenured Teachers Laid Off*
> 
> Having closed 11 percent of the city’s public schools in May, Chicago Public Schools (CPS) has now been forced to fire 2,000 employees, including 1,000 teachers—half of whom were tenured. The Chicago Tribune reports:
> 
> ...


----------



## Edward Campbell (20 Jul 2013)

Millions of American voted themselves the _American dream_: well paying jobs, many in the public sector, early retirement and guaranteed (maybe) defined benefit pension plans.

Few private sector companies still offer defined benefit pension plans - the sort we, retired CF members, have - any more. In fact pension liabilities are amongst the biggest threats facing industrial enterprises, companies like _Ford_ or _General Motors_. Defined benefit pensions were the "jewel in the crown" for most trade unions, and industrial works bargained, struck and picketed for them, trading off pay raises in the bargaining process. Public sector workers got them, too ... usually without any bargaining, much less strikes and tradeoffs at all. Defined benefit pensions were part and parcel of the old, pre-union civil service "iron rice bowl," along with great job security and, relatively, low salaries. It seemed, to taxpayers and workers alike, a fair bargain: civil servants worked hard, for modest (but adequate) salaries and they got a level of job security about which unionized, industrial workers could only dream and then they received a guaranteed pension. 

But that's no longer the case; we (Americans, Brits, Canadians  Danes, etc, etc, etc) all voted for the _American dream_ on credit ... for some of us. But the same we, although this time "we" are shareholders in corporations (either directly, or indirectly through our pension plans and RRSPs and mutual funds), voted to take the "jewel in the crown" away from industrial workers ... at least away from the relatively few who still work in _industry_ in Western Europe  and North America. But we kept our old bargain with the public sector even after it unionized and negotiated higher and higher wage packages and gave us examples of "featherbedding" that would shame an old CNR unionized fireman in the diesel age. We - Americans and Canadians (and a lot of others) alike - now have large (many would say too large), well paid (broadly and generally better paid than private sector workers with similar jobs) public sectors with guaranteed pensions ... in some cases, like Michigan, with pension "rights" that are may be enshrined in the state's constitution. But, as Detroit shows those pension guarantees may be all smoke and mirrors. What happens to Detroit's firefighters or city workers when there is, quite simply, no more money to pay anyone's pensions? Will the State of Michigan pay up? For how long? Does it have an infinite supply of money? And what about California and, indeed, what about Quebec and Ontario?

Treasury Board President Tony Clement is, already, albeit slowly, taking steps to safeguard the pension rights of Canadian federal civil servants by changing the rules. The best protection, maybe the only protection, for public sector workers is smaller, more efficient and effective public sectors: governments that do less, that do only what is absolutely necessary, and that require Canadians, like you and me, to pay more for the services we _want_ and to pay for them to private contractors.

It isn't just Detroit, it isn't just Ontario, it is also Brazil and Turkey and Greece and Spain, and, and, and ... it is every single too large, too _careless_ (of the people's money) government. And of course, _Pogo_ was right ...
.
.
.
.
.
.
.
.
.
...


----------



## Nemo888 (20 Jul 2013)

Not in Canada though. We regulated our banks and to a much greater degree our pension funds. Banksters were not allowed to sell questionable financial products to local government bureaucrats. We also went all the way for a public health option. Making our health care costs less than half what Americans pay. America's experiment of relaxing regulations looks like an utter failure.


----------



## GAP (20 Jul 2013)

Nemo888 said:
			
		

> Not in Canada though. We regulated our banks and to a much greater degree our pension funds.
> 
> What? Have you any clue what the pension fund requirements are sitting on the books of cities, provinces and the federal government plus some pretty major businesses? We are sitting on a powder keg!
> 
> ...


----------



## Edward Campbell (20 Jul 2013)

Our health care costs are not totally unreasonable ~ they are too high, but nothing like the American model. What's wrong with health care is that the "outcomes" are poor; we pay too much and we get too little. And that, too, is part of the "dream" which we voted for ourselves. But it's really a nightmare, isn't it, when as GAP says, healthcare spending goes up and up and up, crowding out education and infrastructure and public safety and good sewers, and all for worse and worse outcomes?


----------



## Edward Campbell (20 Jul 2013)

Here, reproduced under the Fair Dealing provisions of the Copyright Act from _Bloomberg_ is the *right* answer:

http://www.bloomberg.com/news/2013-07-19/detroit-goes-from-motor-city-to-junkyard.html


> Detroit Goes From Motor City to Junkyard
> 
> By Megan McArdle
> 
> ...




The key bits are: "Detroit still has the size and government benefits structure of a much larger, more prosperous city. Something has to shrink," and "what is really needed is to shrink the city itself, and its workforce, into a size more appropriate to today’s economic realities."


----------



## Towards_the_gap (20 Jul 2013)

E.R. Campbell said:
			
		

> Our health care costs are not totally unreasonable ~ they are too high, but nothing like the American model. What's wrong with health care is that the "outcomes" are poor; we pay too much and we get too little. And that, too, is part of the "dream" which we voted for ourselves. But it's really a nightmare, isn't it, when as GAP says, healthcare spending goes up and up and up, crowding out education and infrastructure and public safety and good sewers, and all for worse and worse outcomes?



This may be a simplistic view but isn't the ballooning healthcare costs temporary in nature? In that the baby-boom generation is aging and therefore eating up more healthcare resources with the 'worse outcomes' being due to the fact that they are old and have a lower survivability rate? So once this tidal wave of elderly persons dies off it'll balance out?

I stand-by to be corrected of course.


----------



## dapaterson (20 Jul 2013)

Towards_the_gap said:
			
		

> This may be a simplistic view but isn't the ballooning healthcare costs temporary in nature? In that the baby-boom generation is aging and therefore eating up more healthcare resources with the 'worse outcomes' being due to the fact that they are old and have a lower survivability rate? So once this tidal wave of elderly persons dies off it'll balance out?
> 
> I stand-by to be corrected of course.


There are other ways to address the problem...


----------



## a_majoor (21 Jul 2013)

The tail end of the Boomer generation will be around into the 2040s, so "temporary" means that a young person just entering the work force will spend their productive earning years paying for health care, pensions and accumulated debt racked up by this generation.


----------



## Edward Campbell (21 Jul 2013)

Towards_the_gap said:
			
		

> This may be a simplistic view but isn't the ballooning healthcare costs temporary in nature? In that the baby-boom generation is aging and therefore eating up more healthcare resources with the 'worse outcomes' being due to the fact that they are old and have a lower survivability rate? So once this tidal wave of elderly persons dies off it'll balance out?
> 
> I stand-by to be corrected of course.




The "boomers" have an impact, as they do on most _consumption_ issues, but the costs _appear_ to not be driven solely (or even mainly?) by by gross _demand_. Cost have soared, especially in the USA, on the _supply_ side of the equation. There is an inherent _conservatism_ in medicine, I think, driven, in part, by doctors' desire to "do no harm" and, also partly, by their desire to keep the costs of medical malpractice insurance within bounds. Test after test piled upon test is now the norm for every annual check-up. All those tests are, certainly, "comforting" (if not always "comfortable") for the patient and the physician but they all cost money.

In the domain of unintended consequences, governments, in their efforts to control costs, attacked the _supply_ of doctors, nurses and hospital beds, rather than _demand_, and, thereby, actually seem to have raised rather than lowered overall delivery costs.


----------



## Robert0288 (21 Jul 2013)

Thucydides said:
			
		

> The tail end of the Boomer generation will be around into the 2040s, so "temporary" means that a young person just entering the work force will spend their productive earning years paying for health care, pensions and accumulated debt racked up by this generation.



To add:  All of whom are well past working age and no longer contribute into the system.  Leading to a large overall drain, and leaving less for the current generation for when they retire.

Japan is probably one of the worst off in the world with its rapidly aging population, where the average age is upwards of 46.  By 2030; 25% of the population will be over the age of 65.


----------



## mariomike (21 Jul 2013)

> The tail end of the Boomer generation will be around into the 2040s, so "temporary" means that a young person just entering the work force will spend their productive earning years paying for health care, pensions and accumulated debt racked up by this generation.





> To add:  All of whom are well past working age and no longer contribute into the system.  Leading to a large overall drain, and leaving less for the current generation for when they retire.



We had a 2% pension accrual rate with the city I worked for. It has since been negotiated up to 2.33%. This will benefit candidates now coming on the job by allowing them to "max out" five years faster than we did.


----------



## Fishbone Jones (21 Jul 2013)

Robert0288 said:
			
		

> To add:  All of whom are well past working age and no longer contribute into the system.  Leading to a large overall drain, and leaving less for the current generation for when they retire.
> 
> Japan is probably one of the worst off in the world with its rapidly aging population, where the average age is upwards of 46.  By 2030; 25% of the population will be over the age of 65.



Tell you what, pay me back all the money I've paid (and am still paying) into the system and I won't ask the government for anything.

That's all the UI premiums I've paid and never used. All my CPP contributions and everything else they take that is supposed to weather me through old age.

Give it all back now and I'll go away. You won't have to worry about supporting me when I retire.


----------



## a_majoor (21 Jul 2013)

mariomike said:
			
		

> We had a 2% pension accrual rate with the city I worked for. It has since been negotiated up to 2.33%. This will benefit candidates now coming on the job by allowing them to "max out" five years faster than we did.



The problem is that Detroit (like many other bankrupt and near bankrupt US cities) made very generous pension promises, but had no viable plan to  actually accumulate the money to pay these promises out. The unfunded liabilities for US State and Municipal pensions and benefits for government workers is estimated to be $_2 Trillion dollars_. The violent reaction of Wisconsin public service union workers to being asked to contribute more to fund their pensions shows what US politicians are up against, and there is a certain amount of vitriol on this board to the increasing pension contributions we are being asked to make.

Before we get too smug, Canada has an unfunded liability for Federal pensions of $500 billion (in the same order of magnitude as the national debt). I have been trying to see what the figures might be for the Provinces and Municipalities, but so far have not been able to come up with any sort of comprehensive or even comprehensible set of figures.

So unless there is a pretty dramatic pension overhaul or drastic changes to the tax and regulatory structure to boost economic growth to Indian or Chinese levels, we might be seeing this conversation being repeated about Canadian institutions as well.


----------



## GAP (21 Jul 2013)

there was an article in the Wpg Free Press a couple of weeks ago decrying the unfunded liabilities the city owes for it's police/fire pensions....it would be a fair guess this is not the only city/municipality cringing at the future payouts....


----------



## dapaterson (21 Jul 2013)

GAP said:
			
		

> there was an article in the Wpg Free Press a couple of weeks ago decrying the unfunded liabilities the city owes for it's police/fire pensions....it would be a fair guess this is not the only city/municipality cringing at the future payouts....



Winnipeg owes $130M to the police pension plan: http://www.winnipegsun.com/2013/02/27/live-from-city-council and http://winnipeg.ca/cao/media/news/nr_2013/nr_20130219.stm


----------



## a_majoor (21 Jul 2013)

Walter Russel Mead on how Detroit is caught between a rock and a hard place. I somehow doubt that there is any sort of viable solution without a hard reboot (essentially tossing the administration, the bureaucracy and ripping up every contract and agreement and starting from zero). Not mentioned is the further fallout for Windsor and the rest of Michigan...

http://blogs.the-american-interest.com/wrm/2013/07/20/detroit-court-case-presents-an-impossible-choice/



> *Detroit Court Case Presents an Impossible Choice*
> 
> Detroit’s bankruptcy has just teed up one of the most consequential court cases in recent memory. As part of the plan to help the city exit bankruptcy, the government will likely cut pensions promised to city workers, a move allowed under federal law. But there’s a catch: the state constitution of Michigan forbids it. Citing this fact, a state judge ruled the bankruptcy unconstitutional (she also rather bizarrely argued that the bankruptcy doesn’t ”honor the (United States) president, who took (Detroit’s auto companies) out of bankruptcy”). The WSJ has more:
> 
> ...


----------



## Robert0288 (22 Jul 2013)

recceguy said:
			
		

> Tell you what, pay me back all the money I've paid (and am still paying) into the system and I won't ask the government for anything.
> 
> That's all the UI premiums I've paid and never used. All my CPP contributions and everything else they take that is supposed to weather me through old age.
> 
> Give it all back now and I'll go away. You won't have to worry about supporting me when I retire.



I'm not calling you out on this.  Simply stating the facts.  As a generation; You (if your of that age) had to support a much smaller group infront of you, who generally lived shorter lives, and still managed to eat up a lot of your collective UI and CPP contributions.

Now as the babyboomers are leaving the work force and no longer providing as many goods and services (in terms of production of goods or sale of labour) to the community.  There is a much smaller group supporting a much larger group with less resources and who are statistically living longer lives (supported longer).

Whats going to end up happening, is that somewhere along the line the system will break.  Because it wont change, the classic failure of a democratic system will kick in, a 'tyrany of the majority'.  Where the system can't be changed, because the majority of the country will not allow their own benefits to disappear and be voted away.

Other than doubling our fertility rate or importing immigrants by the million to keep the economics stable.  You tell me what the answer is.  Because in the next 20 years japan will collapse under its own weight, and we wont be far behind.


----------



## Nemo888 (22 Jul 2013)

If you factor out infant mortality, childhood mortality and deaths of women during childbirth people live to the same age now as they always did. Your average number of years left if you hit 65 is essentially unchanged. Making most of the talk about cutting pensions rather dubious.

Add Mike Harris's "megacity" amalgamations to cheaper healthcare, banking and pension regulations. I don't see Detroit happening here thanks to a far right wing leader's visionary forward thinking. There is a _huge_ difference between Detroit and greater Detroit.

http://robertreich.org/
Detroit, and the Bankruptcy of America's Social Contract

By Robert Reich

21 July 13


One way to view Detroit's bankruptcy - the largest bankruptcy of any American city - is as a failure of political negotiations over how financial sacrifices should be divided among the city's creditors, city workers, and municipal retirees - requiring a court to decide instead. It could also be seen as the inevitable culmination of decades of union agreements offering unaffordable pension and health benefits to city workers.

But there's a more basic story here, and it's being replicated across America: Americans are segregating by income more than ever before. Forty years ago, most cities (including Detroit) had a mixture of wealthy, middle-class, and poor residents. Now, each income group tends to lives separately, in its own city - with its own tax bases and philanthropies that support, at one extreme, excellent schools, resplendent parks, rapid-response security, efficient transportation, and other first-rate services; or, at the opposite extreme, terrible schools, dilapidated parks, high crime, and third-rate services.

The geo-political divide has become so palpable that being wealthy in America today means not having to come across anyone who isn't.

Detroit is a devastatingly poor, mostly black, increasingly abandoned island in the midst of a sea of comparative affluence that's mostly white. Its suburbs are among the richest in the nation. Oakland County, for example, is the fourth wealthiest county in the United States, of counties with a million or more residents. Greater Detroit - which includes the suburbs - is among the nation's top five financial centers, the top four centers of high-technology employment, and the second-biggest source of engineering and architectural talent. Not everyone is wealthy, to be sure, but the median household in the region earns close to $50,000 a year, and unemployment is no higher than the nation's average. The median household in Birmingham, Michigan, just across the border that delineates the city of Detroit, earned more than $94,000 last year; in nearby Bloomfield Hills - still within the Detroit metropolitan area - the median was more than $150,000.

The median household income within the city of Detroit is around $26,000, and unemployment is staggeringly high. One out of 3 residents is in poverty; more than half of all children in the city are impoverished. Between 2000 and 2010, Detroit lost a quarter of its population as the middle-class and whites fled to the suburbs. That left it with depressed property values, abandoned neighborhoods, empty buildings, lousy schools, high crime, and a dramatically-shrinking tax base. More than half of its parks have closed in the last five years. Forty percent of its streetlights don't work.

In other words, much in modern America depends on where you draw boundaries, and who's inside and who's outside. Who is included in the social contract? If "Detroit" is defined as the larger metropolitan area that includes its suburbs, "Detroit" has enough money to provide all its residents with adequate if not good public services, without falling into bankruptcy. Politically, it would come down to a question of whether the more affluent areas of this "Detroit" were willing to subsidize the poor inner-city through their tax dollars, and help it rebound. That's an awkward question that the more affluent areas would probably rather not have to face.

In drawing the relevant boundary to include just the poor inner city, and requiring those within that boundary to take care of their compounded problems by themselves, the whiter and more affluent suburbs are off the hook. "Their" city isn't in trouble. It's that other one - called "Detroit."

It's roughly analogous to a Wall Street bank drawing a boundary around its bad assets, selling them off at a fire-sale price, and writing off the loss.  Only here we're dealing with human beings rather than financial capital. And the upcoming fire sale will likely result in even worse municipal services, lousier schools, and more crime for those left behind in the city of Detroit. In an era of widening inequality, this is how wealthier Americans are quietly writing off the poor.


----------



## mariomike (22 Jul 2013)

Thucydides said:
			
		

> I have been trying to see what the figures might be for the Provinces and Municipalities, but so far have not been able to come up with any sort of comprehensive or even comprehensible set of figures.



Thucydides, this may be of interest to you ( and possibly others ).

The Ontario Municipal Employees' Retirement System (OMERS) recently made three proposals that would affect benefits earned in the future. There would be no effect on benefits / pension earned before the effective date.

1) Reduce Pension Benefit Indexing to 50% - Members retiring after the effective date of the proposal will continue to be entitled to indexing at 100% of the increase in the Consumers Price Index (CPI), for service up to the effective date (December 31, 2015 as amended). Pension benefits earned after the effective date will only be subject to indexing at 50% of the increase in CPI. In the future, the SC would decide whether pension benefits earned after the effective date would receive additional indexing (i.e. up to 100% of the increase in CPI). The proposal, in its amended form, provides for additional indexing up to 100% of the increase in CPI for the ten years following December 31, 2015, for any pensions in payment during that period. The amended proposal also contemplates a commitment by the SC to fully restore the indexing provisions of the plan when financial conditions allow.

2) Delay Early Retirement Eligibility – Members can still retire 10 years before their normal retirement age (i.e. age 50 or 55). However, pension benefits earned after December 31, 2015 may be reduced by a larger amount for those who elect to retire more than 5 years prior to their normal retirement age. 

3) Reduce Annual Benefit Accrual Rate – This proposal would reduce the formula for determining the pension benefit earned after December 31, 2014 (but only on earnings over the CPP maximum earnings level – the YMPE). There is no effect on benefits that will have been earned before the effective date.

The vote was held at the 25 June, 2013 meeting. All three proposals failed.


----------



## Fishbone Jones (22 Jul 2013)

Nemo888 said:
			
		

> If you factor out infant mortality, childhood mortality and deaths of women during childbirth people live to the same age now as they always did. Your average number of years left if you hit 65 is essentially unchanged. Making most of the talk about cutting pensions rather dubious.
> 
> Add Mike Harris's "megacity" amalgamations to cheaper healthcare, banking and pension regulations. I don't see Detroit happening here thanks to a far right wing leader's visionary forward thinking. There is a _huge_ difference between Detroit and greater Detroit.
> 
> ...



Kind of what I already said, without the fluff.


----------



## a_majoor (24 Jul 2013)

I notice the US media is being very quiet about the "how" Detroit failed. This is unfortunate, because many of Detroits faults are being replicated on greater or lesser scales all around. Even Canadian cities are prey to many of the faults and impulses that laid out Detroit and a multiplicity of bankrupt California cities (I can easily identify several of the factors operating in my home town of London ON, and point to our depressing 9.6% unemployment rate as a leading indicator of how things might go in the future). Detroit didn't "just" happen, and looking upthread, I could offer the counterpoint that many people in the US use the "walling off" techniques like preemptive incorporation in order to prevent Detroit style disasters from engulfing them. (preemptive incorporation means setting your district/community up as a municipality of its own, with the powers to tax, set bylaws, offer services etc. before another polity can absorb your community and tax you to provide "their" services etc. US laws are different in that it is much harder to absorb incorporated municipalities into a "greater metro" type area).

http://blogs.the-american-interest.com/wrm/2013/07/23/note-to-paul-krugman-it-took-more-than-markets-to-ruin-detroit/



> *Note to Paul Krugman: It Took More Than Markets to Ruin Detroit*
> 
> Paul Krugman wrote yesterday that, despite “political and social dysfunction,” the fact is that “decline happens,” meaning the decline of Detroit is actually “just one of those things that happens now and then in an ever-changing economy.”
> 
> ...


----------



## The_Falcon (24 Jul 2013)

Thucydides said:
			
		

> I notice the US media is being very quiet about the "how" Detroit failed....



It's surprising to you that the conglomerate of media outlets and their employed chattel, lecture and scold, cajole, and support politicians who adovocate craddle to grave social welfare programs, hug a thug programs and the like, are silent when a large metropolis finally implodes due to the inability to carry the costs of such programs anymore....I thought you were a little more learned than that   ;D


----------



## Kirkhill (24 Jul 2013)

Detroit's Future.

Cobalt Ontario

Just another company town.


----------



## Fishbone Jones (29 Jul 2013)

Bob was sitting on the plane to Detroit when a guy took the seat beside him. The guy was an emotional wreck, pale, hands shaking, moaning in fear.

          "What's the matter?" Bob asked.

          "I've been transferred to Detroit - there are crazy people there. They've got lots of shootings, gangs, race riots, drugs, poor public schools, and the highest crime rate in the nation."

          Bob replied, "I've lived in Detroit all my life. It's not as bad as the media says. Find a nice home, go to work, mind your own business, and enroll your kids in a nice private school. It's as safe a place as anywhere in the world."

          The guy relaxed and stopped shaking and said, "Oh, thank you. I've been worried to death. But if you live there and say it's OK, I'll take your word for it. What do you do for a living?"

          "I'm a tail gunner on a Budweiser truck."


----------



## dapaterson (29 Jul 2013)

Why would there be any risk on a Budweiser truck?  Is there anyone so desperate that they'd stoop to drinking that stuff?


----------



## Bruce Monkhouse (29 Jul 2013)

It was Canadian Budweiser.......


----------



## Humphrey Bogart (29 Jul 2013)

dapaterson said:
			
		

> Why would there be any risk on a Budweiser truck?  Is there anyone so desperate that they'd stoop to drinking that stuff?



when all you can get to drink is Shitty Kitty (Labatt Wildcat) you will drink anything  ;D


----------



## a_majoor (30 Jul 2013)

You really can't make this stuff up. Detroit declares bankruptcy then wants taxpayer funds to build a $650 million dollar arena (transferring tax dollars to a billion dollar conglomorate. Great optics there):

http://www.cbc.ca/sports/hockey/nhl/story/2013/06/19/sp-nhl-red-wings-arena-detroit-ilitch.html



> *Detroit, Red Wings announce plans for new arena*
> Over 40% of cost to come from public funds
> 
> The Associated Press Posted: Jun 19, 2013 3:30 PM ET Last Updated: Jun 19, 2013 9:40 PM ET
> ...


----------



## a_majoor (31 Jul 2013)

The Mayor of Detroit might be getting company soon, Chicago's financial situation is pretty bleak as well. The reported debt for Chicago is more than twice what the reported figure for Detroit is (and there is reason to think Detroit's reported debt isn't all there is). You might think that the wave of bankruptcies in California municipalities might have attracted a bit of attention, maybe a learning opportunity...

http://blogs.the-american-interest.com/wrm/2013/07/30/detroit-is-that-you-chicago-in-big-trouble/



> *Detroit, Is That You? Chicago In Big Trouble*
> 
> It looks like Detroit may yet have competition for the distinction of America’s most poorly run city. The unprecedented triple-drop in Chicago’s bond rating and the city’s shiny new long-term debt figure—$29 billion—should have pols quaking in their boots. The Chicago Sun-Times has published some distressing numbers from Chicago’s recent audits:
> 
> ...



And after Chicago, what other American cities are poised to go over the edge?


----------



## Edward Campbell (6 Aug 2013)

E.R. Campbell said:
			
		

> Millions of American voted themselves the _American dream_: well paying jobs, many in the public sector, early retirement and guaranteed (maybe) defined benefit pension plans.
> 
> Few private sector companies still offer defined benefit pension plans - the sort we, retired CF members, have - any more. In fact pension liabilities are amongst the biggest threats facing industrial enterprises, companies like _Ford_ or _General Motors_. Defined benefit pensions were the "jewel in the crown" for most trade unions, and industrial works bargained, struck and picketed for them, trading off pay raises in the bargaining process. Public sector workers got them, too ... usually without any bargaining, much less strikes and tradeoffs at all. Defined benefit pensions were part and parcel of the old, pre-union civil service "iron rice bowl," along with great job security and, relatively, low salaries. It seemed, to taxpayers and workers alike, a fair bargain: civil servants worked hard, for modest (but adequate) salaries and they got a level of job security about which unionized, industrial workers could only dream and then they received a guaranteed pension.
> 
> ...




George F Will appears to agree with me in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the _Washington Post_:

http://articles.washingtonpost.com/2013-07-31/opinions/40912818_1_loaves-and-fishes-democracy-caterpillar


> Detroit’s death by democracy
> 
> By George F. Will,
> 
> ...




Read this bit again: "There you have today’s liberalism: Human agency, hence responsibility, is denied. Apart from the pesky matter of “voting in elections” — apart from decades of voting to empower incompetents, scoundrels and criminals, and to mandate unionized rapacity — no one is responsible for anything. Popular sovereignty is a chimera because impersonal forces akin to hurricanes are sovereign."

I agree!


----------



## a_majoor (6 Aug 2013)

These numbers could apply to a province or small nation; quite frightening when applied to a city. And of course the population of cities and even States is quite mobile. Attempting to rectify the problem using "revenue enhancement" as opposed to bringing spending under some sort of control will simply accelerate the cycle as anyone with the ability to leave does so:

http://blogs.the-american-interest.com/wrm/2013/08/06/chicagos-pensions-crisis-in-black-and-white/



> *NYT: Chicago The Next Detroit*
> 
> How much trouble is Chicago in? According to the New York Times front page this morning, this much trouble:
> 
> ...



Well Obama effectively told Detroit to drop dead (and Detroit has long been a Democrat bastion), so the optics of helping one city but not another will wreak havoc on the Democrat "base". The fact that Detroit is also largely populated by minority Americans will also put a lot of stress on the Democrat coalition if Chicago is favoured over Detroit.


----------



## a_majoor (17 Sep 2013)

A piece on Via Media that goes into the bankruptcy in a bit more detail. Notice the long term pattern of failing to fix the problem and attempting to rely on taxation to cover the ever growing shortfalls. Lessons for Ontario and Quebec tested out on a smaller scale (also lessons for many American "Blue" jurisdictions):

http://blogs.the-american-interest.com/wrm/2013/09/16/a-financial-history-of-detroit/



> *A New Financial History of Detroit*
> 
> The story of Detroit’s decline has been told and retold so many times now that you’d be forgiven for assuming there’s nothing more to say. But the Detroit Free Press has put together a new, comprehensive financial history of the city from 1950 to the present, gleaned from tens of thousands of pages of archival data on the city’s finances. It provides a much clearer picture of the city’s collapse than anything we’d seen before.
> 
> ...


----------



## a_majoor (23 Sep 2013)

Citizens of Detroit (and I mean citizens in the truest sense of the word) take matters into their own hands to keep a functioning community going. How well the succeed can be debated, and I'm sure self important bureaucrats will try to insert themselves into the process (I have heard stories in the past where citizens who start attending to parks that have been essentially abandoned by city work crews receive _cease and desist_ orders from the city since they are doing jobs reserved for the city work's department).

BZ for rebuilding the "small platoons" of civic life. Best of luck to them:

http://reason.com/reasontv/2013/09/23/the-mower-gang-anarchy-in-detroit-part-i



> *The Mower Gang: #Anarchy in Detroit, Part I*
> Zach Weissmueller | September 23, 2013
> 
> We all know Detroit's in trouble: A bankrupt city full of crumbling houses, abandoned factory buildings, and a dwindling population.
> ...


----------



## The_Falcon (25 Sep 2013)

Thucydides said:
			
		

> Citizens of Detroit (and I mean citizens in the truest sense of the word) take matters into their own hands to keep a functioning community going. How well the succeed can be debated, and I'm sure self important bureaucrats will try to insert themselves into the process *(I have heard stories in the past where citizens who start attending to parks that have been essentially abandoned by city work crews receive cease and desist orders from the city since they are doing jobs reserved for the city work's department).*
> 
> BZ for rebuilding the "small platoons" of civic life. Best of luck to them:
> 
> http://reason.com/reasontv/2013/09/23/the-mower-gang-anarchy-in-detroit-part-i



You are probably thinking of Toronto, and yes it did happen.


----------



## mariomike (25 Sep 2013)

Hatchet Man said:
			
		

> You are probably thinking of Toronto, and yes it did happen.



Like so many other things, the City wrote a Policy regarding Volunteers:
https://wx.toronto.ca/intra/hr/policies.nsf/9fff29b7237299b385256729004b844b/aeff121824d7b2fe85257402005f765f?OpenDocument


----------



## a_majoor (26 Sep 2013)

The cautionary tale continues:

http://dealbook.nytimes.com/2013/09/25/undisclosed-payments-cost-detroit-pension-plan-billions/?_r=1&



> *Detroit Spent Billions Extra on Pensions*
> BY MARY WILLIAMS WALSH
> 
> Detroit’s municipal pension fund made payments for decades to retirees, active workers and others above and beyond normal benefits, costing the struggling city billions of dollars and helping push it into bankruptcy, according to people who have reviewed the payments.
> ...


----------



## mariomike (19 Aug 2016)

Video: Detroit at night (Guy gets run over by a car near the end).

"This video may be inappropriate for some users. Sign in to confirm your age."
https://www.youtube.com/watch?v=vMWHJDr8fxE


----------

