The Detroit bankruptcy and the assault on democratic rights

[Octafish]

Detroit today. Your town tomorrow. News analysis from a democratic-socialist perspective:

The Detroit bankruptcy and the assault on democratic rights

By Jerry White
wsws.org, 26 July 2013

EXCERPT...

For the corporate and political establishment in the United States, the largest municipal bankruptcy in American history is a model for a sweeping attack on the more than 20 million federal, state and municipal employees around the country.

SNIP...

Detroit’s city charter also contains limited legal protections against the slashing of pensions for future retirees. Prior to the appointment of Orr by Michigan Governor Rick Snyder, Democratic Party (leader and now) State Treasurer Andy Dillon repeatedly complained that the charter was an obstacle. It requires that the council first order an independent audit on the impact of any cuts and then wait three months before taking any action. The emergency manager, in contrast, has no constraints and can overhaul the benefits outside of the city charter or without union consent.

SNIP...

Nevertheless, the program demanded by Wall Street requires overriding the state constitution and city charter. The new emergency manager is handing over the public lighting system to DTE and preparing the privatization of garbage collection, transportation and the Water and Sewerage Department. In addition, auditors have already estimated the value of the masterpieces at the Detroit Institute of Arts, Belle Isle Park and even the animals at the Detroit Zoo for possible sale to private investors.

SNIP...

Such talk of “benevolent dictators” who have the “political will” to stand up to popular opposition only expresses how deeply democracy has decayed in the US and internationally. In Greece and Italy, “technocratic” governments led by representatives of the international banks have already been installed, and have banned strikes and demonstrations and imposed savage austerity measures.

The American ruling elite plans to destroy the social achievements won by the working class over a century of struggle. The imposition of these deeply unpopular measures–the gutting of pensions, mass unemployment, the looting of public assets by the wealthy–cannot be achieved without employing the methods of a police state. That is what is behind the immense spying apparatus constructed by the American government and the training of military forces for use against “civil unrest” in the US itself.

CONTINUED...

http://www.wsws.org/en/articles/2013/07/26/detr-j26.html

The painting above, "The Wedding Dance" by Pieter Bruegel the Elder (Netherlandish, 1525-1569) is part of the permanent exhibit at the Detroit Institute of Arts.

“Bruegel's lively painting is certainly a celebratory scene, but it may also carry moralizing overtones warning against drinking, dancing, and lust. ” -- Graham W. J. Beal, Director, President and CEO, Detroit Institute of Arts

The Bruegel is one of the DIA's priceless treasures that Koch-DeVoss-Prince directed Gov. Snyder and their appointed toad Kevyn Orr want to sell to their cronies to raise cash for the downtrodden banks.

First time I saw the painting above, I cried. After that initial shock of seeing something so wonderful from half a millennium ago in person, I would surprise myself each time I saw it at the wonderment it would reveal to me -- about it, our world then and now, and from within my self. Now, when I think of it, and the other DIA masterpieces in play for the plutocrats, I cry.

[ceonupe]

1. Are these the rotten banks

That kent Detroit money to pay for its water system and for its retires when it did not have the direct cash flow to do so?

I'm all for protecting the pensions but I don't get why we bash banks and then beg to borrow?

I don't think the pensions will get the huge cut some think but I do think they will see a cut and future retirement programs will be much diffent.

Detroit has a tax base problem and without changing that its going to be hard to save a city that large.

It's funny because the only people buying properties in Detroit are banks. One of which the owner of quicken loans has bought something like over 700million over the last few years. So some people do see a future there.

[Octafish]

6. Banks deserve bashing. FED found $16 trillion to bail out the banksters, including foreign-owned.

Uncle Sam and the FED have found zero to help Detroit.

Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts

by USAHitman

EXCERPT...

What was revealed in the audit was startling:

$16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious – the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

SNIP...

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
and many many more including banks in Belgium of all places

CONTINUED...

http://usahitman.com/aofrrsb/

True, ceonupe. The banks are focusing on the city's hard assets. Detroit also has a jobs problem which has been addressed by a string of Democratic and Republican administrations in Lansing or Washington or anyone else for 46 years.

PS: Welcome to DU!

[ceonupe]

8. So that's why I advocate

Funding to distressed cities thru a more formal program. Of public and private partnership where it can work and direct federal investment were there are no partnerships to be had.


Detroit needs to find a way to shrink its physical size as its doubtful it will ever be a 2million plus city in the same format as it once was. This may mean permanently closing some roads and whole areas and offering to relocate displaced persons. This is extreme but as it stands now the city is just to big it can't even afford to light the whole city let alone police it and serve it with other services.

It just fustrates me because almost every community I know uses banks and mini bonds to raise funds for useful expensive projects and if we are not careful that option may become much more expensive for many cities.

[mstinamotorcity2]

27. What makes you the

expert???????????? On what Detroit needs. how about some of the systematic shit that was done intentionally to Detroit?????

[ceonupe]

28. no just giving my 2cents

just like you on the interwebs


but yes Detroit as it stands now cant afford its size. something has to give. Maybe a program that turns the unused space in to a free enterprise zone or something like it would help? Or maybe just shutting some roads tearing down the remaining buildings and letting the earth take over?

But as far as helping detroit in its money crunch. The government is going to have to help if the pensions are to be saved because detroit will default. The city has a chance now to right some decade long mistakes. May the government can do for detroit what it did for the big banks and for the automakers and help detroit spin out the old penison system and debts call it the old Detroit (likt he old GM) and then new detroit (the new GM).

[mstinamotorcity2]

35. more like

minus two cents

[DirkGently]

2. They are coming for everything. Not just every last nickel and dime, but

everything of value. How dare the public own land or artwork or water?

If they're able to strip these pensions, they will bankrupt every major city in the country.

[Igel]

3. When a bank goes belly up, the regulators come and take everything.

That includes the artwork.

"Stripping pensions," to me, means digging into the amount of the pension fund and using it for other purposes.

The biggest problem Detroit has is that it has pension liabilities but does *not* have money in the pension fund. To some extent, it didn't put in money it should have. However, it also made bad investments--and part of the bad investments were due to projecting irresponsibly high rates of return on investments.

At the time, funding the pension was often viewed as punitive. After all, why punish citizens today by making them set aside money now when the city's going to be around in the future? In effect, Detroit's politicians pre-emptively stripped the pension fund, at least partially.

In this case Detroit has to blame itself. Nobody forced it to take out bonds, nobody forced it to grant the pensions it did, nobody forced it to not fund pensions, nobody forced it to make all kinds of decisions that, in hindsight, were stupid.

That said, once you look inside "Detroit" and see it not as a monolith but as a lot of separate groups and interests, then you start seeing a lot of compulsion and collusion and it stinks.

[DirkGently]

5. No. Stripping pensions in this context means de-prioritizing a debt

--- owed to the citizens themselves -- which ought to have a higher priority than debts owed to, say, dirty financial institutions that ripped off cities everywhere with dangerous investment vehicles.

A bankruptcy case is largely about prioritizing debts. Wages, for example, are normally a priority debt. Pensions are wages. And yet the hope is apparently to FIRST discharge these obligations to the people, so as to better pay private entities and others.

[Mojorabbit]

26. There is another article today that says the pensions are 90% funded. nt

[HiPointDem]

30. detroit's pensions are 90% funded, according to a recent report. so you're wrong.

[Octafish]

7. Disaster Capitalism, Chicago-style

by Kenzo Shibata
Jacobin, 2.22.13

In public policy circles, crises are called “focusing events” — bringing to light a particular failing in government policy. They require government agencies to switch rapidly into crisis mode to implement solutions. Creating the crisis itself is more novel.

The right-wing, free market vision of University of Chicago economist Milton Friedman informed the blueprint for the rapid privatization of municipal services throughout the world due in no small part to what author Naomi Klein calls “Disaster Capitalism.” Friedman wrote in his 1982 treatise Capitalism and Freedom, “When [a] crisis occurs, the actions that are taken depend on the ideas that are lying around”

In Klein’s book The Shock Doctrine, she explains how immediately after Hurricane Katrina, Friedman used the decimation of New Orleans’ infrastructure to push for charter schools, a market-based policy preference of Friedman acolytes. Secretary of Education Arne Duncan was the CEO of Chicago Public Schools at the time, and later described Hurricane Katrina as “the best thing that happened to the education system in New Orleans.” Duncan is of the liberal wing of the free market project and a major supporter of charter schools.

There aren’t any hurricanes in the Midwest, so how can proponents of privatization like Mayor Rahm Emanuel sell off schools to the highest bidder?

They create a crisis.

CONTINUED...

http://jacobinmag.com/2013/02/disaster-capitalism-in-the-chicago-public-schools/

PS: Thank you, DirkGently, for grokking the situation. These are predators who think themselves better than the prey upon which they feast. I used to call them "un-democratic," but that is too nice a term for fascists who now have access to NSA data to mine for "new opportunities."

[DirkGently]

14. It's far more radical then anything supposed "socialists" are seeking.

We are still far overbalanced toward extremist capitalist economic policies in this country. Nationalized healthcare is a simple, logical thing that we cannot even discuss. Hell, we can't seem to even regulate banking to prevent it from doing the thing it JUST DID.

This tactic was tested and proven in South America, brought to bear in post-Katrina Louisiana, and now it's knocking at the door everywhere. Schools, prisons, "security." Now they want entire cities.

And it appears they will get them.

[Octafish]

15. It's like witnessing a bank robbery and running to the police station to report it...

...and the sergeant behind the desk is the guy you just saw robbing the bank.

Uncle Sam once was the referee who made it possible for the great American middle class to develop.

Thanks to Have-Mores buying up as many politicians as needed for a veto-proof majority, the Middle Class is facing extinction, downsized to serfdom.

10,000,000 homeowners lost their homes in the great bankster bailout -- the very people Tim Geithner used to "foam the runway" so the banks could make a soft landing.

I'd say vote the bums out is the answer, but then I'd be wrong. Gen. Clapper is the kindest, bravest, warmest, most wonderful human being I've ever known in my life.

[DirkGently]

24. No, this is going to take massive, sustained public pressure.

I actually think we'll get there. Question being how bad it will get before the public is sufficiently incensed.

[Catherina]

4. But they'll get a new hockey arena & billionaire Mike Ilitch gets an entertainment district

City worker pensions being cut by 90 percent, city employee health care deductibles jumping 3 1/2 times from $200 to $750, public services are being privatized, museum art collections, even animals in the zoo being priced to sell, what's there for the profiteers not to love?

[Octafish]

9. On Vultures and Red Wings: Billionaire Gets New Sports Arena in Bankrupt Detroit

Dave Zirin
The Nation, July 29, 2013

The headline juxtaposition boggles the mind. You have, on one day, “Detroit Files Largest Municipal Bankruptcy in History.” Then on the next, you have “Detroit Plans to Pay For New Red Wings Hockey Arena Despite Bankruptcy.”

Yes, the very week Michigan Governor Rick Snyder granted a state-appointed emergency manager’s request to declare the Motor City bankrupt, the Tea Party governor gave a big thumbs-up to a plan for a new $650 million Detroit Red Wings hockey arena. Almost half of that $650 million will be paid with public funds.

This is actually happening. City services are being cut to the bone. Fighting fires, emergency medical care and trash collection are now precarious operations. Retired municipal workers will have their $19,000 in annual pensions dramatically slashed. Even the artwork in the city art museum will be sold off piece by piece. This will include a mural by the great radical artist Diego Rivera that’s a celebration of what the auto industry would look like in a socialist future. As Stephen Colbert said, the leading bidder will be “the museum of irony.”

They don’t have money to keep the art on the walls. [font color="red"]They do have $283 million to subsidize a new arena for Red Wings owner and founder of America’s worst pizza-pizza chain, Little Caesar’s, Mike Ilitch, whose family is worth $2.7 billion dollars. (“Friends! Romans! Countrymen! Lend me your pensions!”)[/font color]

SNIP...

There is a right-wing narrative about Detroit that the city is in peril because of some combination of the 1967 “race riots” and greedy unions. The reality is that black and brown residents of Detroit made Motown and those “greedy unions” built a stable working class that could realistically dream of a better life for their own children. The breaking of Detroit should be seen, in the words of David Sirota, as an indictment of right wing economic orthodoxy. Instead, the bankruptcy has been used as a warning to other cities that unions, pensions and a culture of resistance are roads to ruin.

CONTINUED...

http://www.thenation.com/blog/175467/vultures-and-red-wings-billionaire-gets-new-sports-arena-bankrupt-detroit#axzz2avgCW0Gd

PS: Thanks for grokking, Catherina. I Why so few DUers, of all people, seem to give a damn is a real mystery to me.

[Catherina]

10. To a man who wasn't even paying the taxes!

A day after the Ilitch organization won state approval for public assistance to build its proposed $650-million entertainment center downtown, Mayor Dave Bing and a top aide confirmed the city believes Olympia Entertainment owes about $1.5 million in unpaid property taxes at Joe Louis Arena, where the Red Wings have played hockey for decades.

Bing said Friday that although his administration believes the Ilitch organization owes the taxes, his staff is working to reconcile the amount. The mayor was careful to point out that he is a strong backer of the Ilitch plan for a new arena that would anchor an entertainment, retail and housing district downtown and did not want the tax debt to reflect poorly on the effort to build the complex.

http://www.freep.com/article/20121215/NEWS01/312150077/Detroit-Mayor-Dave-Bing-Mike-Ilitch-owes-us-1-5M-but-we-ll-work-it-out

I don't know why so few seem to care. Detroit's just a test run. I worker pensions aren't safe in Detroit, they're not safe anywhere. Things are only going to get worse with the TPP too.

Here's the part no one wants to discuss

Michigan Leads Nation in Massive Corporate Tax Breaks (The Untold Story of Detroit's Decline)

[Octafish]

13. Incredible story! NOTHING about that in the local media.

"These corporate big subsidy deals are pretty much free giveaways for companies" that average out at $465,000 per job.

Thank you, Catherina. This report is going to be spread far and wide in Motown.

[Catherina]

20. Thank you Octafish! n/t

[nashville_brook]

16. whoa.

[DirkGently]

25. Well there's a few debts to be pursued in the bankruptcy.

Why do I think that won't happen, somehow?

[HiPointDem]

31. catherina, i made an op from your post here:

http://www.democraticunderground.com/10023401246

[Catherina]

33. I'm grateful you did. I'm sure there's much more of that out there

because we know it's going on all over. Yesterday I read that the same Google that hides its money offshore and reports most of it as *foreign* income, is suing the IRS for turning down one of their exemptions or something. The amount was in billions.


Thanks HiPointDem

[navarth]

21. Ilitch is the Murderer of Tiger Stadium.

I used to be a diehard Detroit Tigers fan. I lived and died with that team through the 70's and 80's. Tiger Stadium was a classic, history in the flesh. Ilitch initiated a destalinization program through purchased mouthpieces and air time buys, generating the most vicious slander about that dear old building. There was absolutely no need to replace Tiger Stadium. We did everything we could to save it. This greedy billionaire wanted to consolidate his downtown entertainment district with the FOX and STATE theatres and in the process gain control of all the parking. Parking at Tiger Stadium was a joy. You just parked in the Corktown neighborhood around the stadium and enjoyed a nice walk to the gate. Ilitch forced taxpayers to abandon a lovely classic baseball stadium and blackmailed us into buying him a new one.. It was ALL ABOUT THE FUCKING MONEY, not about the sacred trust of preserving Detroit Baseball History. I will never forgive this, ever.

Put it this way: The (former) Tigers now play in a new plastic stadium named after a corporation that moved its headquarters from Detroit to Dallas. That is emblematic of globalization on a smaller scale, like when you go to shopping plazas on the outskirts and there's no way to tell which city you're in. Whatever city you're in, you go to McStadium. (Excepting of course Fenway and Wrigley...how long will they last? Good luck to them...)

Pardon the digression....this thread just touched a sore spot.

[mick063]

11. It goes much deeper than what is happening now

It is the circumstances that led to Detroit's demise. Those circumstances are in place for more Detroits.

And so the carnage begins. One city after another with Detroit setting the precedent of how they all must be dealt with.

The financial moguls are out to rape all public assets. They hide it within a message that government has failed so that they must "take over".

Americans will soon find out how much more "efficient" private governance really is. We dove in, head first, into the lie that they would "trickle down". We then dove, head first, into the lie that they could do it better. We sold our souls to the devil and Detroit is our first glimpse of hell. The Christian prophecy appears to be true.

[Octafish]

22. Zen Throat-Cutting in Detroit

When Capital comes to collect, laws don’t matter; even unjust laws are being broken to speed the process of stripping Detroit of its last “asset.” The question must now be raised: “At what point do you destroy a city to satisfy the creditors?”

by Tom Stephens
Black Agenda Report,

"Now look, I’m a trial attorney. I can cut somebody’s throat and leave them to bleed out in the gutter with the best of them. But I didn’t want to do that. That’s not my role in this job. My role in this job is sort of the zen of emergency management." -– Detroit Emergency Manager Fascist Kevyn Orr <1> (June 10, 2013) -- Emergency managers make unjust laws; they don’t follow them.

What laws, if any, do Michigan Governor Rick Snyder, the Jones Day law firm and Detroit Emergency Manager Kevyn Orr 2[2] think they are working under? The answer is apparently none. Not even the requirements of their own “emergency management” legislation, rammed through a compliant lame duck legislature without any democratic process at all – no hearings or amendments or debate allowed – in December 2012. This was their replacement for Snyder’s previous “dictator” statute, rejected by Michigan voters in November.

Because according to the terms of that bastard legislation, in February 2013 a state-appointed February Financial Review Team was supposedly studying Detroit’s financial crisis and making recommendations to the Governor. And they were meeting and claimed to be studying the situation, all right. But we now know that at that time in the background the Governor was secretly offering the job of Detroit Emergency Manager to Jones Day bankruptcy lawyer Kevyn Orr.

Meanwhile, and also in secret, Orr’s giant 2,400-lawyer corporate law firm was negotiating a lucrative contract for itself as Detroit’s “restructuring counsel.” The race to impose self-interested corporate “solutions” on Detroit was on.

SNIP...

Most recently, Orr held a heavily publicized meeting with Detroit’s creditors on June 14, 2013 at Metro Airport. He announced that he will screw workers and retirees, supposedly for the benefit of residents.


CONTINUED...

http://www.blackagendareport.com/content/zen-throat-cutting-detroit

[suffragette]

12. Pillaging for modern times

Initiated through ShockDoctrine rather than overt war, but still the 1% raiding the 99, only now in the guise of Austerity entities and emergency 'managers.'

And people not in Detroit will cling to any conceivable factor to see Detroit as somehow culpable or different from where they are since to view any similarities would expose to them their own risk of being victimized.

[Bunnahabhain]

17. If Detroit's re-org goes well

there are going to be a bunch of disappointed conspiracy theory and other folks.

There are no white hats and black hats here. One side is not "the good guys" and one side is not "the bad guys." Crooked city politicians, led by Coleman Young for 20 years, raped the city for themselves and handed out egregious contracts to unions so they would stay in power. It's called "moral hazard" and I suggest people go understand what this is.

Because all this was going on a blind eye was turned to all the corruption. Has anyone tabulated the number of felons already convicted and those currently under indictment? The billions lost?

And then while all this was going on no one with any sense was putting the brakes on irresponsible lending, because after all, it takes money to do the first two things and it has to come from somewhere. The banks were certainly complicit in this and should take a major haircut.

This all happened in front of the backdrop of the US auto industry losing it oligopoly grip on the US car market which had concentrated impact on the Detroit area.

No, a perfect storm, from both the left and the right, that has raged for decades and the levies finally burst.

[mick063]

19. Yes

Last edited Sun Aug 4, 2013, 02:12 AM - Edit history (2)

The crooked government of Detroit can be linked to the jobs leaving and the tax base which diminished.

Yet, the circumstances which caused failure as well as the failed leadership of Detroit must somehow justify that Detroit's assets must be privately owned and that Detroit's services must be privately run.

May Detroit, which stood proudly for well over a century, be the example of what a few decades of Federal policy can do. Our nation imposed globalization on a city which supplied us with an example of what industrious workers can provide. The city that fought to give us reasonable working hours and reasonable pay is now the favored symbol of what is "wrong" with America. Now, after our nation put the city in a position to fail, can do nothing for her, except to point at local government and unionized workers as justification to let her die.

[Bunnahabhain]

23. We will see what happens

Orr is a long time Dem, Obama (although you would not know it to read some of the posts here) is a Dem and has faith in Orr, and everyone is watching. It's clear the banks will be taking a major haircut as they should for their part in this. Maybe we'll get a just solution for pensioners and a way forward. The status quo is certainly not sustainable.

I left Detroit in the mid-90s after a lifetime in and around it. My family was generations deep in the auto industry and all card carrying union members. I knew they were living in the past over 20 years ago.

[HiPointDem]

32. There are many black hats & few white ones. Detroit was deliberately destroyed. And now it's

being stolen.

Everything you've said is propaganda written by the people who are stealing it.

[Bunnahabhain]

34. Are for real?

What I said is propaganda? You win as I am really no good at dealing with preposterous accusations.

[Catherina]

18. Detroit's median household income is now LESS THAN HALF what it was in 1970

A statue of sculptor Aguste Rodin’s ‘The Thinker’ is seen in front of the Detroit Institute of Arts museum along Woodward Avenue in Detroit, July 21, 2013.

...

Detroit Median Household Income (in 2010 dollars)
1960 $44,708
1970 $56,452
1980 $45,074
1990 $41,902
2000 $37,300
2010 $26,098

http://blogs.wsj.com/washwire/2013/08/02/politics-counts-how-detroit-is-different/?mod=e2tw

[Uncle Joe]

29. Kicked and recommended.

Thanks for the thread, Octafish.