Obama administration begins stealth bailout of Detroit

originally posted by: Bassago
That's an interesting take on it anyway. So you believe that because greedy and corrupt city managers,mayors, and councils have bankrupted Detroit so badly that the rest of the state or even country need to bail them out? Just because those guilty parties are "long gone?" I believe not.

The problem is that the money they stole is long gone. Sure, some lawyers can probably prosecute a few people, and they likely even deserve it but it will be tough to prove malicious intent and criminal incompetence has a very high bar. This is the reason the people who caused the 2008 crash haven't been prosecuted. These types of things are very tough to prove to a reasonable standard. Besides the prosecution isn't what matters, it lets us enact vengeance but isn't it more important to fix the problem?

The money is gone, it has been stolen from decades of mismanagement. On top of that, Detroit needs to be rebuilt. No city in America should be at the standard Detroit is currently in. The fact that it was once one of our greatest cities makes it that much worse. The only way anyone will be willing to work for the city and rebuild it, is if existing contracts are honored. If they're not bailed out, it's pretty symbolic of the downfall of the country in general.

There is some truth to that, the willful underfunding of pension funds in order to divert that money to sustaining decades long failing budgets is a big one. Those people may belong gone as you indicated but many could be located and prosecuted. Never going to happen though with Obama and Eric Holder in charge, will it?

I think Obama wants to prosecute them, Eric Holder I'm not so sure about but it doesn't really matter. It's easy to prove these people did a bad job, but it's very difficult to make a crime out of that bad job. Simply being bad at your job and hemorrhaging money from a fund for decades isn't a crime, and it will never be a crime because it has massive implications for congress and the SS fund.

a reply to: Bassago

Good. If we can bailout banks and Baghdad then surely our own cities can be bailed out too.

originally posted by: Bassago
Many people here are familiar with Detroit's financial meltdown, bankruptcy and pleading to the Obama administration for a bailout. Until recently the administration position was "Nope, not gonna hand bailout money to Detroit."

Looks like that might just change in the near future. Got to keep all those democratic voters, unions and bureaucrat's in the administrations corner going into a tough mid-term election. But where to come up with a quick $100 million or so?

They could have cancelled one of his or his wife's extravagant overseas trips and deferred those funds to Detroit.

a reply to: Aazadan

You make some excellent points which to some degree I agree with. Saddling the national taxpayer with debt diverted from the original source of this monetary fund feels a a bit wrong though.

I'd feel much better about this if we grabbed that $1+ billion the administration has promised to Ukraine and used it to help Detroit. Not much better but some and it would do more. Not enough to replenish the looted/underfunded/mismanaged pensions though.

In the end some things that have been looted, run-down and just plain ruined cannot be fixed. I believe Detroit may be in that category and will just become another yawning money pit.

a reply to: Bassago

Well, the 1B$ would pretty much take care of things actually.
The funds have come back somewhat, due to the Stock MArket doing well.
There is a school of thought that Orr and Detroit made the numbers look worse, first to get and EM in place, and second to make the bankruptcy get slammed through.
IN addition to the [illegal] swaps deal to shore up the City's pension shortfall in contributions, the city has not paid its contributions since December 2012....and that has added up.....over $200 millions and growing.
The Pension Funds have taken the City to court AT LEAST once to force them to pay up...and the Funds won at least once.

Detroit seems able to meet payroll these days....and pay the army of overpriced attorneys.
Detroit has allowed itself to slide into corruption and ruin.....and has had a lot of help there:
metrotimes.com...

“There is policy and political blame aplenty to go around,” he explained. “That is, officials in Detroit kept a large city government that was not proportionate to the city’s shrinking population in place. The state cut funding for infrastructure, education and transit. And the federal government steadily withdrew urban support beginning in the 1980s.

“The folk wisdom in Detroit is, ‘Oh, it’s mismanagement in city hall that caused the city’s problems.’ City hall is a player for sure, but the causes of this were far deeper. It had to do with macroeconomic and macro-political problems that were well beyond the boundaries of the city.”

The retirees should not be held accountable for these crooks.
And, FWIW, pension reform is badly needed.....gone are the days of cushy defined contributions.

a reply to: DontTreadOnMe

Yeah, the billion would really help if it went to the pensions only but doubtful a bankruptcy judge is going to let the other $7 billion in debts just slide so the pensions can be pumped up.

This city has a breathtaking amount of bad management going back as far as Coleman Young in the mid 70's. At least that's when it seems the money problems/debt began to skyrocket. That the state shorted Detroit out of 100's of millions since 1998 doesn't help either.

Pension reform is a must if some cities in the US are to have any hope of future services and livability. As stated earlier, who will ever go there and work?

a reply to: Bassago
There has already been settlements with two other classes of creditors.

And, as I stated....there is some disagreement as to the correct total amount Detroit owes.

There have been issues since tahe early 70s....during that time the feds propped up major urban areas with the CETA program...and likely others.
But, that was a bandaid.
Detroit should have taken steps then to curb spending.....and live within its means...but LOL....that wasn't going to happen....there's a good book on Detroit, called Detroit, a biography, by Scott Martelle...its worth reading.