Topic: Detroit Becomes Largest U.S. City To File Bankruptcy (Read 7383 times)

Former Detroit Mayor Kwame Kilpatrick has been sentenced to 28 years in prison for corruption, after a series of scandals destroyed his political career and helped steer a crisis-laden city even deeper into trouble.

Kilpatrick, who served as mayor from 2002 until fall 2008, fattened his bank account by tens of thousands of dollars, travelled the country in private planes and even strong-armed his campaign fundraiser for stacks of cash hidden in her bra, according to evidence at trial.

Any news about Detroit?

they finally filed for bankruptcy, how much longer will GM be headquartered there, maybe its just an empty office building 

Unfortunately for him, it is quite possible that "all applicable adages" - that would have applied in the past 50 years - are simply not applicable in today's world. For the same reason, I believe many existing successful investors like Warren Buffett - who see the situation in the USA as improving - are totally wrong.

There's an interesting article by Meredith Whitney in the Financial Times today - titled "Detroit aftershocks will be staggering" - about Detroit and how there are a whole collection of states in a similar position, ready to do the whole thing. Anybody read it? It's on pastebin

In my opinion, Meredith Whitney is one of the smartest people on Wall Street right now, and furthermore she has the balls to come out and say what's actually going on in the USA. Which says a lot about Wall Street, since she's a woman.

http://vpaste.net/la3QH

There are five more towns like Detroit in Michigan alone. There are many more municipalities across the country in similar positions.

At the root of the problem is the incentive system that elected officials used to face. For decades, across the US, local leaders ran up tabs for future taxpayers; they promised pensions and other benefits for public employees that have strong legal protection. That has been a great source of patronage for elected officials: they can promise all sorts of future perks to loyal supporters (state and local workers) with very little accountability on the delivery of those promises.

Unfortunately for him, it is quite possible that "all applicable adages" - that would have applied in the past 50 years - are simply not applicable in today's world. For the same reason, I believe many existing successful investors like Warren Buffett - who see the situation in the USA as improving - are totally wrong.

There's an interesting article by Meredith Whitney in the Financial Times today - titled "Detroit aftershocks will be staggering" - about Detroit and how there are a whole collection of states in a similar position, ready to do the whole thing. Anybody read it? It's on pastebin

In my opinion, Meredith Whitney is one of the smartest people on Wall Street right now, and furthermore she has the balls to come out and say what's actually going on in the USA. Which says a lot about Wall Street, since she's a woman.

http://vpaste.net/la3QH

There's an interesting article by Meredith Whitney in the Financial Times today - titled "Detroit aftershocks will be staggering" - about Detroit and how there are a whole collection of states in a similar position, ready to do the whole thing. Anybody read it? It's on pastebin

In my opinion, Meredith Whitney is one of the smartest people on Wall Street right now, and furthermore she has the balls to come out and say what's actually going on in the USA. Which says a lot about Wall Street, since she's a woman.

http://vpaste.net/la3QH

Well he's certainly buying when there's blood in the streets, people are fearful, and all the other applicable adages.

http://www.mlive.com/business/detroit/index.ssf/2013/07/dan_gilbert_detroit_bankruptcy.html

Dan Gilbert is dropping billions into Detroit real estate. Apparently the man has vision.

Wow. It would take some real balls to invest in Detroit right now. Well, furthermore, to invest in any business in the USA right now takes balls, IMO.

Btw, anyone notice article today in WSJ talking about the effects of this on the European banks? Seems UBS was involved in lending to the Detroit muni back in the boom years.

http://online.wsj.com/article/SB10001424127887324328904578619993814520624.html?mod=WSJEurope_hpp_LEFTTopStories

The United Auto Workers and American Federation of State, County and Municipal Employees Council 25, two of the Detroit's public union leader heads organised a news conference on the second half of Monday to discuss the alleged constitutional violations in the Detroit's bankruptcy petition.

"I am outraged at how the city's 20,000 public-sector employees have been treated by the governor and the city's new leadership. I know how bargaining can work in difficult crisis situations," Bob King, united auto workers president said.

"In the auto industry, labour with management, the community and government, we all worked together and look at the industry now."

Streets of the city saw Firefighters yesterday from plenty dozen engine houses who organised rallies across Detroit. These rallies would be followed by a series of such gatherings every day in this week. Participating workers at the protest said that the rallies are not strikes but rather are "a way to send a message to city residents."

I predict more cities will file for Chapter 11.

Wow, what brainiac came up with that taxing strategy? 

The simple fact is Detroit has high property taxes and a 2.5% income tax, while none of the suburbs have any income tax. So anybody who earns income has an incentive to move out of the city, and the only people left are the ones who don't earn any money. Having a city full of unemployed people is a recipe for disaster.

This.  Pictures don't lie.

http://www.mackinac.org/images.aspx?ID=7453#1961

Is anyone really surprised by this?  Detroit has been a ghost town for years.  You can buy actual houses there for $5,000, but why would you want to?  People strip the houses for copper there and probably get away with it.  The city has been abandoning large portions of what used to be part of the city just because a) no one lives there any more and b) it can't afford to keep them up.

The only thing that surprises me about this is that it took them this long to declare bankruptcy.

Might be a good time to buy-to-rent in Detroit. Especially if the USD tanks as that will mean that inland production will go up (imports gets more expensive). The bankruptcy might lead to better financial control and federal money/ local tax breaks etc

If I was in the US and wanted to start up a production facility, Detroit might be a likely location.

From the bottom the only way is up.  

I am unfortunatelly not sure about that. I know some things are more free there in US than here in Europe (some not on the other hand), but I guess by avoiding taxes, all their fascist registers etc., not recognizing SS homeland security forcers and other crap, I'd meet the SS homeland security forces sooner rather than later and probably end in some concentration camp special detention center.

Any chance to buy a few blocks and declare independency on federal govenrment?

Please explain how an overburden of debt will tank the USD.  I see debt as deflationary since interest sucks dollars out of the economy.  Defaults will erase uninsured savings (don't keep more than the FDIC limit).  Made in the USA will return, but there will be few jobs.  Robots or 3-D printers are cheaper in the first year than human labor for many tasks.  Even further excess labor supply will lead to wage cuts.  Productivity per worker will boom as robots and software replace people.  Humans will still be needed for most construction (although people are 3-D printing skyscrapers now), robot maintenance, customer service, engineers, programmers, and highly delicate work (although this can be aided by machines).  Of course, there will still be demand for creative types to entertain and enlighten us.

Put your hands up for Detroit.

Keep your eye on Illinois then. Almost every major company there has fled to other states.

There are so many cities in the USA, one down doesn't really matter, if a state is down, then it will be real news!

The language of budget cuts, austerity, and sequestration seem to dominate the media's landscape these days, instilling fear into Americans of vital government services being cut and chaos ensuing if governments aren't allowed to spend and borrow infinitely. Conservatives decry supposed cuts to the military-industrial-complex, and liberals bemoan that without government welfare transfer programs, there would be social Darwinism. Senator Barbara Boxer (D-Calif.) even blamed the Benghazi scandal on — wait for it — budget cuts and the sequester.

Leaving aside the details on whether the U.S. budget is actually shrinking, one needs to look no further than the city of Detroit to find the spontaneous order, civic cooperation, and peaceful market forces that take over when government simply isn't around.

Detroit is absolutely bankrupt. The city faces a cash shortfall of more than $100 million by June 30. Long-term liabilities, including pensions, exceed $14 billion. Michigan Governor Rick Snyder wants to bail out Detroit's city government even further. Thanks to the financial situation of Detroit, emergency services like police and fire departments are being severely cut short. 911 is only taking calls during business hours. Homes have been abandoned making parts of the city look like a ghost town.

If our public servants are right and wouldn't dare lie and try to scare us, then chaos, anarchy and lawlessness should reign in Detroit now, right? Well, not exactly.

Dale Brown and his organization, the Threat Management Center (TMC), have helped fill in the void left by the corrupt and incompetent city government. Brown started TMC in 1995 as a way to help his fellow Detroit citizens in the midst of a rise in home invasions and murders. While attempting to assist law enforcement, he found little but uninterested officers more concerned with extracting revenue through traffic tickets and terrorizing private homes with SWAT raids than protecting person and property.

In an interview with Copblock.org, Brown explains how and why his private, free market policing organization has been so successful. The key to effective protection and security is love, says Brown, not weapons, violence, or law. It sounds a bit corny, yes, but the results speak for themselves.

Almost 20 years later and Detroit's financial mess even more apparent, TMC now has a client base of about 1,000 private residences and over 500 businesses. Thanks to TMC's efficiency and profitability, they are also able to provide free or incredibly low-cost services to the poor as well.

The reasons TMC has been so successful is because they take the complete opposite approach that government agencies, in this case law enforcement, do. Brown's philosophy is that he would rather hire people who see violence as a last resort, and the handful of Detroit police officers who actually worked with Brown in the earlier years and have an interest in genuine protection now work for TMC. While governments threaten their citizens with compulsion, fines, and jail if they don't hand over their money, TMC's funding is voluntary and subject to the profit-loss test; if Brown doesn't provide the services his customers want, he goes out of business.

This means that Brown is not interested in no-knock para-military SWAT raids, "officer safety" as the highest priority, bloated union pensions, or harassing people for what they have in their bloodstream. TMC works with its customers on the prevention of crime as well rather than showing up after the fact to take notes like historians.

The heroic Brown and TMC are a great example of how the market and civil society can and do provide services traditionally associated with the state far better, cheaper and more in tune to people's wants and needs. I have always believed policing, protection and security are far too important to be run by the state — especially in age of militarized Stormtroopers — and Brown is helping show why.

Law enforcement isn't the only "essential government service" that the private sector is taking over and flourishing in. The Detroit Bus Company (DBC) is a private bus service that began last year and truly shows a stark contrast in how the market and government operates. Founded by 25-year-old Andy Didorosi, the company avoids the traditionally stuffy, cagey government buses and uses beautiful vehicles with graffiti-laden exterior designs that match the heart of the Motor City. There are no standard bus routes; a live-tracking app, a call or a text is all you need to get picked up in one of their buses run on soy-based biofuel. All the buses feature wi-fi, music, and you can even drink your own alcohol on board! The payment system is, of course, far cheaper and fairer.

Comparing this company's bus service to say, my local San Francisco MUNI transit experience, is like comparing the services of local, free-range, organic farms in the Bay Area to the Soviet bread lines.

Not surprisingly, the city government, which has no time to protect its citizens, does manage to find the time to harass peaceful citizens in this spontaneous, market order. Charles Molnar and a couple of other students from the Detroit Enterprise Academy wanted to help make benches for the city's bus stops, where long-waits are the norm, equipped with bookshelves to hold reading material.

Detroit Department of Transportation officials quickly said the bench was "unapproved" and had it taken down. Silly citizens, don't you know only governments can provide these services?

The TMC and the DBC are just two of the larger, more visible examples of the market and voluntary human cooperation reigning in Detroit. "Food rebels," running local community gardens, are an alternative to Big Agriculture and government-subsidized factory farms. Private parking garages are popping up. Detroit residents are using Lockean homesteading principles to repurpose land amongst the rubble of the Fed-induced housing bubble. Community events like Biergartens and large, civic dining gatherings (with no permits or licenses!) are being organized privately. Even Detroit's artists are beginning to reflect this anarchic, peaceful movement in their artwork.

Detroit's city government may be in shambles financially, but the citizens of Detroit are showing what happens when people are given their liberty back. For centuries, libertarians have been arguing for strict limits on state power, the benefits of private, civic society, and the bottom-up, spontaneous order that arises where free markets and voluntary interactions dominate. Perhaps we shouldn't be so scared and sicken with political Stockholm Syndrome the next time politicos fear-monger over budgets cuts.

Please explain how an overburden of debt will tank the USD.  I see debt as deflationary since interest sucks dollars out of the economy.  Defaults will erase uninsured savings (don't keep more than the FDIC limit).  Made in the USA will return, but there will be few jobs.  Robots or 3-D printers are cheaper in the first year than human labor for many tasks.  Even further excess labor supply will lead to wage cuts.  Productivity per worker will boom as robots and software replace people.  Humans will still be needed for most construction (although people are 3-D printing skyscrapers now), robot maintenance, customer service, engineers, programmers, and highly delicate work (although this can be aided by machines).  Of course, there will still be demand for creative types to entertain and enlighten us.

Might be a good time to buy-to-rent in Detroit. Especially if the USD tanks as that will mean that inland production will go up (imports gets more expensive). The bankruptcy might lead to better financial control and federal money/ local tax breaks etc

If I was in the US and wanted to start up a production facility, Detroit might be a likely location.

From the bottom the only way is up. 

Might be a good time to buy-to-rent in Detroit. Especially if the USD tanks as that will mean that inland production will go up (imports gets more expensive). The bankruptcy might lead to better financial control and federal money/ local tax breaks etc

If I was in the US and wanted to start up a production facility, Detroit might be a likely location.

From the bottom the only way is up.  

Can I move into one of the houses next to you and bring my Bitcoin miners? I just need electric and Internet. I mostly just keep to myself and own my own means of protection. I could probably find someone similar to me that could live in the house on the other side of you.

I have no neighbors. two houses on either side and both behind me are empty, and I live in the nicest area still inside Detroit! it is now common practice here if police catch you squatting, as long as your not scrapping copper, have no open fires or illegal electric hook-ups and not trashing the place, your allowed to stay with no hassles. they even started alowing squatters to get legal gas/electric hook-ups with a few inspections and a pre-paid account.

Bitcoin user not affected

Cost of ownership throws me off :/

I was just thinking might be a good time to buy land.

Detroit is an order of magnitude worse than any other major city in the US. This isn't necessarily a leading indicator, although some of the same dynamics (massive indebtedness, stagnant/declining revenues, underfunded pensions) apply. My guess is what Detroit is going through now will be happening elsewhere, but only 5+ years from now.

Detroit is an order of magnitude worse than any other major city in the US. This isn't necessarily a leading indicator, although some of the same dynamics (massive indebtedness, stagnant/declining revenues, underfunded pensions) apply. My guess is what Detroit is going through now will be happening elsewhere, but only 5+ years from now.