Wednesday, July 24, 2013

Bankruptcy? NO!

Detroit finally gets a jobs program...for lawyers only! Bankruptcy is a feeding frenzy for lawyers, while the local undemocratic "government" (I am using that word with hesitation because there is no governing or following any constitution going on) tells Detroiters they can't afford anything. Its a pile. Its an atrocity and a scam. Assets, pensions, and our voting rights are under attack. Everything Americans hold dear is under threat in Detroit. We are just a part of a much larger plan for some greedy pigs. What they are proposing to do to pensioners will kill them. You cannot take away good healthcare and most of people's income and expect them to live. These greedy pigs have no shame.

  • Read the above articles as the backdrop for this: here are Orr and Snyder at the Manhattan Institute reporting out on their progress with Detroit. The Manhattan Institute also is home to Public Sector Inc., which is basically against public sector unions.

  • Engler (Boo!) is now the head of the  Check out their members for a cast of characters such as Bank of America, JPMorgan Chase, CVS/Caremark, and Barclays. Sound familiar?  But wait, many of these are being sued by the FDIC right now for allegations of interest rate rigging for about 5 years. That's a REALLY big deal. But its not front page news, is it? Rigging cost Detroit millions from the swaps and TRILLIONS around the world. Do you think they will have to pay back trillions, or will they just ask them for a dollar, cuz they are bankers and they are special? Do you think Orr, formerly of the Justice Department and now from Jones Day (which represents of Bank of America), will try to get our money back from the banks, or will they starve pensioners?,0,6595071.story#axzz2wQKtvLtE  

  • So let's take some hard long looks at the people making up the team that is representing "Detroit". I put that in quotes because when the media in the bankruptcy refers to Detroit now they mean the unelected Emergency Manager, whose law firm also represents Bank of America, making decisions on behalf of Snyder and friends, not the people of Detroit. One of the Jones Day lawyers mentioned in this article worked on the Hostess bankruptcy. The Hostess bankruptcy busted the union.  She also worked on the Delta bankruptcy - see the Delta Pilots' concessions in one of the many bankruptcies of the airlines. Orr used to work at the Department of Justice - can you believe? 
  • Why would members of the Obama Administration come to meet with Orr and a fraudulently elected mayor? Really, the primary election should be properly investigated, the bankruptcy stopped by the Secretary of the Treasury, Detroit should have a forensic audit, Detroit sues the banks and we would be fine.  But no, we have pension money, we have a jewel of a water department, we have a gem of an island park. We have the nerve to be a city of poor people with a vast community wealth. 

  • The greedy pigs just never get enough. They just can't leave us the hell alone. Detroiters have been suffering for years - this bankruptcy is revealing that that suffering has been carefully constructed. We are an experiment for the new crappy American city - clean out the people who live there and gentrify it like no one has ever imagined before. To the jackals doing this, we'll see how this works out for you.

  • So is it all a package? Is it a wicked joke a group of people is playing on Detroiters? We don't appreciate it. Not. One. Bit. Its obvious that there are no longer Democrats and Republicans. There are the greedy pigs (and all willing to be bought by them for a penny) and the rest of us. 

  •   The first and most important step for Detroit to recover is to get its own finances in order, fix all the financial systems and update them, collect all back taxes (or at least account it and sell the debt), and sue for all the ways Detroit has been victimized by banks. This is what good governance would include. Orr and Snyder and their friends are not interested in governance, just protecting bond insurers and bondholders. I am not sure how a federal court could seriously take anything from Detroit in the state of financial record keeping it is in and from an appointee, not an elected official. The judgement would be made of financial jell-o and the representative of Detroit would be a man (the EM) who probably has the good and welfare of banks on his mind, not people who (didn't) elect him. See first bullet below about how federal bankruptcy court can't do what Snyder and friends have cooked up in the EM Law.  (More information on the stresses on Detroit's economy are on my finances post.)


Chapter 9 Bankruptcy - from the official US Courts website. "The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan." Interesting to note that Chapter 9 is sort of feds hands-off  - see why: " The restrictions imposed by 11 U.S.C. § 904 are necessary to ensure the constitutionality of chapter 9 and to avoid the possibility that the court might substitute its control over the political or governmental affairs or property of the debtor for that of the state and the elected officials of the municipality." But we have an EM that can substitute his unelected control over our municipality's political affairs and property? So what the federal bankruptcy laws carefully avoid, the EM Law openly steps into?
  •  Municipal Bankruptcy: An Overview This is a meaty article about what has happened to cities who went through bankruptcy. Some of the "solutions" on the bankruptcy buffet are: 
    • not paying into/cutting pension funds
    • cutting staff (as if Detroit could cut anymore)
    • paying millions in legal fees (as if aren't already paying enough for lawyers, like Jones Day, the law firm the Emergency Manager comes from, plus more budgeted for next year)
    • extending the already nearly immortal life of the the bonds to stretch them over even more years (leaving debt not just for your children, but your grandchildren), 
    • higher taxes (we are already the highest taxed city of over 50,000 in the state) 
    • bank concessions (let's see that happen. lol)
    • I didn't see anyone losing their parks or art in the bankruptcies - assets are supposedly protected - I am checking into that. Creditors can try to make us, but it seems to be up to the municipality. I don't know for sure. I don't think the bankruptcy lawyers know for sure. There is a good chance that Orr decides on this and it was set up to checkmate us.
    • It seems bondholders are the number one priority, not the well being of the city's residents. 
  • Here is Stockton's "confidential neutral evaluation process used by the City to try and
    avoid bankruptcy, known as AB 506".
  • Broke Cities Facts and Opinions on Municipal Bankruptcy in California


I find it hard to believe that a city that is as behind technologically, neglected and understaffed could be held up to any kind of real numbers in the accounting world. Anyone who does business with the city knows that there are always problems, indicative of a much larger set of problems with bookkeeping and accounting. What actual facts would be sending us to bankruptcy? Crucial steps are missing here that need to be done without political bias on either side of the political spectrum that are in the best interests of the people of southeastern Michigan. These needed to be done years and years ago for the benefit of citizens, retirees, bondholders, and city workers. If this would have been done by the state when this started, we may have already been on our way to a certain future, whatever that may be. 

1. We need an open source software suite (cheaper than proprietary) for collecting taxes, putting city, authority, pension funds and school system finances online for the public up the minute connected to campaign contributions. I am fairly certain the open source community would be willing to help Detroit with this. We need it to be customized to Detroit’s needs with training and ongoing security. It should have the capability to show our finances in an easy to understand format. Ann Arbor has a good online example but it would be better for us if it had one more level of depth. For example, under vendor payments, it breaks it down into "expense type". There needs to be a real description of how that money was spent. We could also add names of people who are in charge of the companies the city does business with. It would be better if a user could click the names and it would search the campaign contributions for local elected officials. I think just having that system would cut down on a lot of unethical and illegal activity. The most important ingredient in transparency is the details. 

2. We need to input all data into the systems. Who we really owe, how much and who owes us and how much needs to become crystal clear. Money owed to us needs to be collected, bills we owe need to be paid.

3. We need a real independent audit (NOT the city, the State or Jones Day), with macro and micro forensic auditing where it is needed along with money for prosecution of all guilty parties. A real house cleaning.

4. The law department should pursue predatory mortgage lending, the mass neglect of property owned by banks, interest rate swaps and any other financial wrongdoings to Detroit and its citizens.

5. The department of administrative hearings (and all personnel in the departments that report the blight)  should aggressively pursue major blight violations. A 311app and a working 311 phone line would allow citizens to assist in identifying blight. The city should start billing for mowing lawns and boarding up homes that belong to absentee property owners and banks.

6. I would institute a Community Financial Watchdog Committee, a volunteer group of ethical, financially savvy Detroiters who will watchdog Detroit's finances. No more good ideas lost to idle chatter. Now is the time for all financial minds to help. They will critique Detroit's  transparency efforts and clean out of the city departments and authorities. They will help the city pursue all money owed to us from the institutions who victimized Detroit as a city or individual citizens. In addition they will give input if the see grants or job producing opportunities that Detroit should be taking advantage of.

Then lets see where we are and go from this educated position into the future, whatever that maybe. Then let truly elected, not "selected" officials of the greedy pigs and also citizens decide on the best path to take for the immediate future and for future generations.

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