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Vancouver Off-Topic / Current EventsThe off-topic forum for Vancouver, funnies, non-auto centered discussions, WORK SAFE. While the rules are more relaxed here, there are still rules. Please refer to sticky thread in this forum.
Detroit now under the control of a financial manager, half a step out of bankruptcy.
Quote:
Michigan Gov. Rick Snyder on Thursday tapped a leading bankruptcy lawyer to run the cash-strapped city of Detroit,
a last-ditch effort to turn around the city's long-standing financial problems short of bankruptcy.
The naming of Kevyn Orr as the city's emergency manger will give him many of the same powers as a bankruptcy judge.
He can throw out contracts with public employee unions and vendors that the city can't afford, and he can make
further cutbacks in already depleted city services if he decides they city can't afford them.
But his appointment does not preclude Detroit being forced into the largest municipal bankruptcy in the nation's
history in the months ahead. His powers do not include the ability to make changes in the city's severely underfunded pension funds.
Orr told a news conference that he hopes to be able avoid a bankruptcy, though he said that step couldn't be ruled out.
"Everything is on the table," he said.
He said he hopes to get consent from the various parties to fix the city's balance sheet and thus avoid a bankruptcy filing.
"Don't make me go to the bankruptcy court. You won't enjoy it," he said. "I'm very comfortable in the bankruptcy
court. I don't want to pull that cudgel out unless I have to."
Orr, a Democrat, is a Washington bankruptcy lawyer whose resume includes work on the Chrysler Group bankruptcy
in 2009. He said he is resigning from his firm to avoid any potential conflicts of interest as he engages in negotiations
with various parties.
He also said he believes he can complete the turnaround job in the 18 months allowed under the law. He said he took
the job because he likes the challenge it presents.
"It's the Olympics of restructuring," he said.
The move by Snyder, a Republican, to appoint an emergency manager was opposed by the city council. But it was backed
by Mayor David Bing, a Democrat who stood with Snyder at the appointment announcement.
"Bottom line here, we must stop fighting each other," Bing said. "We must start to work together. I'm happy now I have teammates."
The U.S. auto industry, long associated with the city, has enjoyed a resurgence in the last few years since General
Motors (GM, Fortune 500) and Chrysler Group went into bankruptcy and received federal bailouts. Orr pointed to that turnaround Thursday.
"When I did the Chrysler case here, they said it can't be done, you'll have to liquidate," he said. "Today, Chrysler, GM and Ford (F, Fortune 500) are back, with a bullet."
But the auto turnaround has done little to help Detroit's finances. While GM's headquarters are in downtown Detroit and
there is still a concentration of auto plants and suppliers in southeastern Michigan, there are relatively few facilities within the city limits.
Last month, a state review board issued a report saying the city faces a cash shortfall of more than $100 million by June 30, and that
long-term liabilities, including unfunded pension liabilities, exceeded $14 billion. Detroit has been borrowing to continue operations
and would have fallen about nearly $1 billion short last year if it hadn't issued new debt.
The state takeover of Detroit is very unpopular with many residents in the state's largest city, especially its unions. Critics say it
essentially removes all powers from elected officials, and thus the voters. But Bing said he believes the residents will eventually
be pleased by the changes that take place under the process.
"As far as the citizens (go), I don't think they care who the manager is or who the council is," he said. "They want things fixed."
I don't think this would be the second dip since they have been having issues for a while. What other citys in the US are having these same problems tho? I'm thinking NO?
people shouldn't be so afraid of the term 'bankruptcy' it just means the entity can't pay its creditors.
i'm not exactly sure what it means for a city, but creditors normally come in, take assets and walk away - not sure what assets they can take from the city, but what it will mean is in the future, costs to borrow go up, way up, as risk has gone up of a default.
now, bankruptcy protection (chapter 11 in the US), just means a court gets involved, allows the entity to reorganize itself without the risk of creditors coming and calling their debt... detroit is almost there, but not quite. i would be really interested in seeing what this guy can do... just imagine if he could, over a period of time, reverse the outflow of people from detroit... i'd certainly be interested in picking up some multi family units for $10K in that case (this coming from an experienced investor in US real estate)
funny how most of the properties posted above are owned by 1 entity, all bought for $2-3K, now trying to sell for $10K (was 12K for most until recently)
It'll definitely be very interesting to watch what happens over the next few months. The Unions are absolutely going to hate this but they unfortunately don't have much of a choice right now.
It'll definitely be very interesting to watch what happens over the next few months. The Unions are absolutely going to hate this but they unfortunately don't have much of a choice right now.
this is my FAVOURITE part of this - he has ALL the power... and detroit needs a dictator for a short while
sink or swim - in dire times, democracy isn't the answer
kudos to detroit for having the balls to do this, sorry commie unionists, but you had it too good for too long at the expense of your city!
I don't know whats going on with the US economy... Stocks are hitting all time highs, unemployment numbers are getting better, yet you still hear of issues that are related to a recession.
To be perfectly honest, crime needs to be the first issue to get addressed. Detroit is actually a really nice city, but plenty of people refuse to go there simply based on the crime stats alone. Reduce your crime rate, make it safer for businesses and their employees to move into the city, and you've got half the battle right there.
Yes, I realize it's more complicated than that, but that's the gist of it.
^but the argument can be that you cant reduce crime without increasing the standard of living. which you cant do without.... you guessed it, jobs. now how do you create jobs? that is the question all of america has been asking for 5 years. it isn't a simple problem.
^but the argument can be that you cant reduce crime without increasing the standard of living. which you cant do without.... you guessed it, jobs. now how do you create jobs? that is the question all of america has been asking for 5 years. it isn't a simple problem.
crime isnt the problem, crime is the result.
Oh absolutely. It's your typical Catch-22 situation. Can't create jobs while the crime rate is so high... but you can't tackle the crimes occurring without the tax base to support the policing. And where does that tax base come from? You guessed it - new businesses!
I don't know whats going on with the US economy... Stocks are hitting all time highs, unemployment numbers are getting better, yet you still hear of issues that are related to a recession.
don't you remember that the greatest recession since the great depression happened just 4 years ago?!
how quickly memories fade. that kind of recession doesn't just get done and dusted, some areas get fucked over.
detroit was in trouble before 2008/2009, which made things way worse... but they were always on a downwards trajectory since the 50's.
population growth is one of the most important factors to a healthy, growing, vibrant economy. detroit has had over 50 years (i believe off the top of my head) of population fall, from approx 2 mil to 1 mil - what's shocking isn't the 1 mil fall, it's the 1 mil fall plus the lost additional growth (the US as a whole has probably grown 3% per year or so in population (i'm guessing here, i could check, but i'm not going to))
It's a combination of a lot of stuff. They've issued bonds in 2008 years to pay for things. Now, their loan payments are cutting into their budget. They've had to cut police services because they can't afford them - which isn't helping their crime problem. Roads aren't being fixed, there are blocks where all the street lights are burnt out and they can't afford to fix any of them. They're trying to decrease the size of the city boundaries so they are responsible for less.... Detroit isn't a good place to be right now.
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