Quotes of the day

posted at 8:11 pm on July 26, 2013 by Erika Johnsen

Michigan Gov. Rick Snyder and Detroit Emergency Manager Kevyn Orr defended their plan for the beleaguered city’s bankruptcy Friday, reiterating their opposition to a state or federal bailout and resisting pressure to meet bondholders’ demands.

Kevyn Orr, Detroit’s emergency manager, reiterated that general-obligation bondholders will get no new deal, adding that taxes are already at the state limit and won’t grow. …

“The state nor the federal government should just simply write checks to take care of liabilities,” said Mr. Snyder. “I haven’t asked and I don’t intend to ask.”

Mr. Snyder said the plan is intended to prioritize improving basic services in Detroit, where functions like ambulance services and police responses have become slow. Mr. Orr agreed and said he is focused on fixing Detroit, not on the implications the restructuring could have on the broader municipal-bond market.

Hope is not a plan,” said Mr. Orr about making hard choices for Detroit’s future.

***

Detroit’s City Council has come under fire for spending time this week writing, voting and passing a resolution supporting a federal investigation into George Zimmerman instead of focusing on its own financial blunders and ballooning crime rate. …

The unanimous vote by the members of the Detroit council on a crime that took place six states and hundreds of miles away came just two days after the Motor City’s latest gun-related death – its 176th homicide of the year.

Tuesday’s resolution called for a federal investigation to see whether civil rights charges are warranted against Zimmerman.

The measure, sponsored by Councilwoman JoAnn Watson, jump-started a discussion in Detroit over what some called the city’s lack of leadership and the need for city officials to first patch up problems in their own backyard.

***

Detroit’s financial crisis hasn’t derailed the city’s plans to spend more than $400 million in Michigan taxpayer funds on a new hockey arena for the Red Wings.

Advocates of the arena say it’s the kind of economic development needed to attract both people and private investment dollars into downtown Detroit. It’s an argument that has convinced Michigan Gov. Rick Snyder and Kevyn Orr, the emergency manager he appointed to oversee the city’s finances, to stick with the plan. Orr said Detroit’s bankruptcy filing won’t halt the arena plans.

“I know there’s a lot of emotional concern about should we be spending the money,” said Orr. “But frankly that’s part of the economic development. We need jobs. If it is as productive as it’s supposed to be, that’s going to be a boon to the city.”

***

Free markets and limited government are to blame for the largest municipal bankruptcy in U.S. history. That is the new meme to explain Detroit’s plight.

Former Michigan Governor Jennifer Granholm blames “free trade” for the decline of Detroit’s auto industry and thus the city itself.

New York Times columnist Paul Krugman suggests that “for the most part the city was just an innocent victim of market forces.” …

In many ways, Detroit is a model of tax-and-spend liberalism. The city’s per-capita tax burden is the highest in Michigan. Detroit has the country’s highest property taxes on homes, the top commercial property tax and the second-highest industrial property tax.

***

Bankruptcy, which will radically cut payments to bondholders and retirees, is the only chance to start over. Yet, if a Detroit bankruptcy succeeds, other cities will be tempted to follow suit. Dozens of other large urban areas have similarly massive pension and debt obligations, with commensurately denuded services and exorbitant taxes — leading to a vicious cycle of depopulation that makes everything worse. Detroit has lost more than 60 percent of its population since 1950.

The moral hazard increases if the federal government steps in to help. The Obama administration is therefore firmly opposed to any “bailout,” recognizing both the political toxicity of the word and the fiscal consequences of a Detroit precedent that invites other cities to line up with a tin cup. Washington cannot afford a nationwide federal bailout of insolvent cities.

However, under pressure from the public-sector unions, whose retirees will necessarily be victimized, the administration will likely offer “assistance” — which implies whatever kind of non-cash payments, indirect funds from other ongoing federal programs and enterprise-zone tax subsidies that it can get away with.

***

So Detroit files for bankruptcy. What does this mean? Pay close attention because it may be coming to you soon, Los Angeles, Baltimore, Chicago, Philadelphia. In 2011, Moody’s calculated the unfunded liabilities for Illinois’s three largest state-run pension plans to be $133 billion. (It is expected to be even larger this year.) That’s the size of six Detroit bankruptcies — give or take a few hundred million.

Of Detroit’s debt of at least $18 billion, about $7 billion is secured by collateral like casino revenues and utility taxes. That means creditors — read: big banks — will get paid. Of the remaining $11 billion dollars or so in unsecured debt, about $9 billion is owed to retirees and current municipal workers, people like firefighters and police officers. These debts come in the form of promised pension checks and health care benefits, all backed by a false, unsecured promise. These are the people who are likely to lose out.

***

At night, Stockton, Calif., becomes a ghost town. Streets lined with boarded-up buildings and rubbish-strewn parks are mostly empty except for drug dealers and their customers, says Dave Macedo, president of the local firefighters’ union. Even in daylight, shootings break out with regularity, and the city of 300,000 was ranked the 10th most dangerous in the country in 2012. “It’s the wild, wild West out there,” says Macedo. Or rather, the wild, bankrupt West. …

Like California, Michigan’s constitution prohibits changes to pension benefits, which creates complex legal conflicts. On Thursday, just 20 minutes after Detroit filed for bankruptcy, Ingham County Circuit Court Judge Rosemarie Aquilina found the Chapter 9 filing to be unconstitutional on the grounds that it violated pension protections included in a state-constitution amendment. That ruling, along with other lawsuits seeking to stop the bankruptcy, was halted by a Michigan Court of Appeals on Tuesday in response to a motion filed by Attorney General Bill Schuette. And on Wednesday, the federal judge overseeing the bankruptcy also froze all state-court lawsuits against the city. But the battle of state constitution vs. federal law still looms.

***

When Greece ran into financial trouble three years ago, the problem soon spread. Many observers were mystified. How could such a little country set off a continental crisis? The Greeks were stereotyped as a nation of tax-dodgers who had been living high on borrowed money for years. The Portuguese, Italians and Spanish insisted that their finances were fundamentally sound. The Germans wondered what it had to do with them at all. But the contagion was powerful, and Europe’s economy has yet to recover.

America seems in a similar state of denial about Detroit filing for bankruptcy. Many people think Motown is such an exceptional case that it holds few lessons for other places. What was once the country’s fourth-most-populous city grew rich thanks largely to a single industry. General Motors, Ford and Chrysler once made nearly all the cars sold in America; now, thanks to competition from foreign brands built in non-union states, they sell less than half. Detroit’s population has fallen by 60% since 1950. The murder rate is 11 times the national average. The previous mayor is in prison. Shrubs, weeds and raccoons have reclaimed empty neighbourhoods. The debts racked up when Detroit was big and rich are unpayable now that it is smaller and poor.

***

The federal government has habitually promised benefits without making adequate provision to honor them. Social Security already pays more in benefits than the payroll tax brings in, and its trustees say its finances will only worsen. Privately, President Obama conceded what researchers at the left-leaning Urban Institute reported: that for every dollar Americans pay into Medicare, they will ultimately receive about $3 in benefits. Obamacare commits us to trillions in additional future spending.

Washington gets away with this because the U.S. Dollar is still the world’s reserve currency and we own the printing press. How long can that last?

The first step in solving any problem is acknowledging you have one, and then accurately defining it. Only then can you start looking for real solutions.


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I’m actually hoping she’s lurking here. She knows who I am.

wolly4321 on July 27, 2013 at 1:31 AM

Over, for Bmore

Schadenfreude on July 27, 2013 at 1:34 AM

This time, Bmore

Schadenfreude on July 27, 2013 at 1:34 AM

Boyd Rice – Absence Makes The Heart Grow Fonder

Schadenfreude on July 27, 2013 at 1:23 AM

Then – there’s always the corollary to that:

“Absinthe makes the farts go “HONDA!’”……..

williamg on July 27, 2013 at 1:38 AM

G’nite good folks. See ya in the morn.

wolly4321 on July 27, 2013 at 1:52 AM

Cocktails For Two

williamg on July 27, 2013 at 2:21 AM

For williamg:

Tyla Gang – “Styrofoam”

Anti-Control on July 27, 2013 at 3:10 AM

The leader of one nation gets it. Too bad it’s not ours. Not our current President, nor his predecessor. (disclaimer: I think this is legit, but I’m not sure)

On February 4th, 2013, Vladimir Putin, the Russian president, addressed the Duma, (Russian Parliament), and gave a speech about the tensions withminorities in Russia “In Russia live Russians. Any minority, from anywhere, if it wants to live in Russia , to work and eat in Russia should speak Russian, and should respect the Russian laws. If they prefer Sharia Law, then we advise them to go to those places where that’s the state law. Russia does not need minorities. Minorities need Russia , and we will not grant them special privileges, or try to change our laws to fit their desires, no matter how loud they yell ‘discrimination’. We better learn from the suicides of America , England , Holland and France , if we are to survive as a nation.The Russian customs and traditions are not compatible with the lack of culture or the primitive ways of most minorities. When this honorable legislative body thinks of creating new laws, it should have in mind the national interest first, observing that the minorities are not Russians. The politicians in the Duma gave Putin a five minute standing ovation!!!

VorDaj on July 27, 2013 at 4:03 AM

Kevyn Orr, Detroit’s emergency manager, reiterated that general-obligation bondholders will get no new deal, adding that taxes are already at the state limit and won’t grow. …

But just think of all the jobs that will be created when they bulldoze the rest of the city!

The O meant what he said about “shovel-ready jobs” dammit. Wonder how much they pay for tearing down crack houses in what used to be middle class neighborhoods in the deep dark past…well, 30 years ago I guess.

This is the Cloward-Piven/NWO way to solve the problems with our nation’s “crumbling infrastructure”. Just get rid of the blight and, problem solved!

Dr. ZhivBlago on July 27, 2013 at 4:08 AM

The tiniest, tiredest, litta mouse — just checking in.
Bereft of sleep, that’s only a passing phase…
Thinking of you all. Nicest way of course.
Difficult to ignore the goings-on.
Levin and Jeff Beck in the listening.
If I may, Mr. Jeff Beck
http://www.youtube.com/watch?v=bYqN-3JEe1Y

the link button is upside down
trinkets
what it is

mickytx on July 27, 2013 at 4:40 AM

nadia, Jeff Beck, even a caveman can do it…
pfft!

mickytx on July 27, 2013 at 4:45 AM

Oh, and yes, every last sound from … is a lie, but why bother?
It’s all lie-central in DC.
We’ve lost, momentarily to our ‘representatives’.
Suits, lots of orange, or striped if you prefer, suits.
Cuffs? —-> cuffed

mickytx on July 27, 2013 at 4:51 AM

The O meant what he said about “shovel-ready jobs” dammit. Wonder how much they pay for tearing down crack houses in what used to be middle class neighborhoods in the deep dark past…well, 30 years ago I guess.
Dr. ZhivBlago on July 27, 2013 at 4:08 AM

…you are dead on almost in your guess Doc!…25 years ago I lived about a mile from my folks in Detroit…who lived in Grosse Pointe (a STILL very beautiful well-to-do-suburb touching Detroit)…an all stone house with all leaded glass doors, marble sills, cove ceilings, wood floors, wood panel…even the four rooms in the basement that were of cinder block had wet plaster covering them…a full bathroom in the 40 x 20 room upstairs, with it’s own sitting room…in a three bedroom bungalow…
Last year I took my kids to show them where mom and I started out…I almost wept!…boarded up houses…the whole neighborhood was SO different…my kids made sure the doors on the car were locked (Obama)…and my folks old neighborhood in Grosse Pointe…even more beautiful!

KOOLAID2 on July 27, 2013 at 7:48 AM

It looks like Egypt is about fly apart.

rob verdi on July 27, 2013 at 7:55 AM

America seems in a similar state of denial about Detroit filing for bankruptcy.

No, just liberals and Democrats.

zoyclem on July 27, 2013 at 8:26 AM

Found this picture out and about.

Thought the morning crew might enjoy it. :) The news is wrapped up in losers losing, but we’ve got some winners winning, too.

(Morning, morning crew!)

Axe on July 27, 2013 at 8:59 AM

3 minute tour Grosse Point to city. Stark.

Bmore on July 27, 2013 at 9:34 AM

Morning, Patriots. Obama owes our Vietnam Veterans and the families of those who gave their lives in service to our country, an apology. Period.
My take.

kingsjester on July 27, 2013 at 9:39 AM

Jazz is funny. He puts up a pot thread first thing Saturday morning and fills it with all the heads of HA. Lol!

Bmore on July 27, 2013 at 10:03 AM

Funny ha ha or funny wierd?

I’m going with the later.

wolly4321 on July 27, 2013 at 12:19 PM

After the introduction of the iconic ’55 Chevy with its new “small-block V8″, Chevrolet sold roughly one-fourth of all new cars in America, prompting a call for the break-up of GM.

How the mighty, and the places where the mighty lived, have fallen.

Another Drew on July 27, 2013 at 1:16 PM

VorDaj on July 27, 2013 at 4:03 AM

I can’t find that speech – several urban legend-type sites say it didn’t happen.

But in somewhat more toned-down language he apparently wrote at least one like-minded article and gave a similar speech to his Federal Migration Service (January 2012). He’s a whole lot more conservative about it than most in our government.

I haven’t found a Russian source for the whole text of the January 2012 speech but here’s a reported excerpt:

We must create the conditions for immigrants to normally integrate into our society, learn Russian and, of course, respect our culture and traditions and abide by Russian law. In this regard, I believe that the decision to make learning the Russian language compulsory and administer exams is well grounded. To do so, we will need to carry out major organizational work and introduce corresponding legislative amendments.

(All of the following are dated in the same week of January 2012):

The Voice of Russia’s report on the speech

rt report on the speech

rt report of article

Visa Bureau’s report of newspaper article

Shay on July 27, 2013 at 1:36 PM

One hockey arena == one Solyndra

And will generate about as many jobs.

unclesmrgol on July 28, 2013 at 1:20 AM

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