STOCK MARKET WATCH -- Wednesday, 27 November 2013

[Demeter]

7. Detroit accused of exaggerating $18bn debts in push for bankruptcy

AND IT'S NOT AS IF ALL THAT MONEY WAS DUE YESTERDAY, OR EVEN TOMORROW....THEY'LL JUST SUCK ALL THE ASSETS OUT, THEN KICK THE REST OF THE DEBT DOWN THE ROAD....THE "DEBTS" TO GOLDMAN AND CO SHOULD BE DECLARED NULL AND VOID, IMO. THE FRAUDULENT DERVIATIVES GS SOLD DETROIT SHOULD BE STUFFED DOWN BLANKFEIN'S THROAT---DEMETER.

http://www.theguardian.com/world/2013/nov/20/detroit-accused-exaggerating-18bn-debts?CMP=ema_565



Detroit's debts are a fraction of the $18bn lawyers pushing for bankruptcy say they are, and their costs are "irrelevant, misleading and inflated," according to a report released Wednesday. A Demos thinktank report, issued as a city judge decides whether to allow Detroit to file for the largest municipal bankruptcy in US history, lays the blame for the city's woes at the feet of falling revenues, Wall Street banks and "extreme assumptions" calculated to make its problems worse than they are.

"There is no doubt that the city has suffered from structural decline and that state and city policies have not successfully addressed that decline. But that is not the immediate issue in a municipal insolvency. The issue is that the cash currently available does not cover the current expenses of the city," said Walter Turbeville, the report's author, a former Goldman Sachs investment banker and a leading expert in infrastructure finance and public private partnerships.

Kevyn Orr, the state appointed emergency manager, has argued that the city's pension and healthcare liabilities are a leading cause of the city's woes. City workers and retirees face draconian cuts on the $3.5bn in pension payments, and another $6bn in healthcare benefits they are owed. The average Detroit pensioner gets $19,000 a year. Under a deal now being discussed they would be given 16 cents to the dollar, cutting the average pension to $3,040. The report claims Orr's focus on cutting benefits and other debts are "inappropriate and, in important ways, not rooted in fact." Turberville questions the necessity of those cuts and the assumptions that underpin Orr's foundation for the $18bn total. According to the report:

• The emergency manager includes $5.8bn of debt from the water and sewerage department as a liability of the city, even though the department serves more than 3 million people across southeastern Michigan. Detroit has just 714,000 residents. "This debt is not a liability of the city's general fund; and, even if it were, only a fraction of it would allocable to the city," he writes.

• Orr's assertion that the city's pension funds have a $3.5bn shortfall is an "estimate, very different from the certain liability of a financial debt, based on calculations that use extreme assumptions that depart from most cities' and states' general practice," he writes.

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