Detroit has filed for bankruptcy

Discussion in 'Politics, Religion, Social Issues' started by zin, Jul 18, 2013.

  1. zin macrumors 6502

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    #1
    Further in the article it notes that citizens regularly wait 58 minutes for police, and only a third of ambulances are in service. It sounds pretty horrendous.

    What exactly do you think caused this (besides obvious financial mismanagement; just wondering why perhaps this wasn't resolved earlier)?
     
  2. Zombie Acorn macrumors 65816

    Zombie Acorn

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    #2
    The first time I drove through Detroit was also the last time. Dumpster comes to mind.
     
  3. malman89 macrumors 68000

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    #3
    First and foremost, it is due to 1.1 million residents leaving in the past 40 years, 250k in the last 12-13 years. Regardless of this precipitous drop, the city must still service its 140 square miles. There's thousands of abandoned buildings, but those aren't all in one place. It's a few homes here, a few there, spread throughout every neighborhood.

    Show me a city that would survive such a drop in its tax base.

    Combine this drop in population with the devastation of the automobile industry, upon which Detroit (and Michigan) were (and still are, though less) far too reliant. It's more than just manufacturing jobs - it's suppliers, research and development, material providers, and then it trickles down into other industries.

    On top of that, there has not been a true movement for change in Detroit. Case and point: Mayor Bing. Upon his election, he revealed a wonderful plan to focus on city services and slowly consolidate neighborhoods. Enter red tape, an antiquated city government, and an ocean of debt - basically handcuffing his plans. Now he's just a semi-warm body waiting for his term to end. It's not his fault or the city council's necessarily - this can has been kicked down the road for decades.

    (Side note about the antiquated nature: the lack of technology and efficiencies. The 36th District Court collects on 7% of its fines. The City of Detroit has such an ancient infrastructure, workers resorted to maintaining finances and budgets on paper. Paper! Tracking millions of dollars in appropriations by pencil and paper. Clearly not going to work. There's also countless millions in unpaid city taxes, but there is either no way to track outstanding debts, or citizens are too poor or unemployed to pay them.)

    It's the bond agencies, constantly willing to throw more and more money into the city, unable to recognize a bad investment. Clearly something hasn't been going well, but when Detroit came with its hands open, they were more than willing to lend millions and billions in bonds. When a city needs to borrow to a payment for unfunded pension liabilities, it's not a good sign. Even recently agencies stated they have a positive outlook on Detroit debt, as they have assumed a bankruptcy was inevitable.

    It's also the fault of the state - the government in Lansing, as well as the rest of the state. To Detroiters (which typically encompasses the immediate Metro Area as well), Detroit is Michigan. The rest of the state never enjoyed being snubbed as 'outsiders' by Detroit. The state probably should have intervened decades ago - the EFM law isn't new, you know - but social, economic, and racial conflicts (some the fault of the state/suburbs, some the fault of the City of Detroit) stayed any plans.

    ---

    It's a difficult issue not summed up in 1500 character articles or forum posts. I'm hesitantly optimistic regarding the Chapter 9 proceedings. I hope it grants the city the flexibility to shed certain toxic debts, address severe deficiencies in public services, and put the city on sound footing. There's just too much good going on in downtown/Midtown and the immediate surrounding neighborhoods - admittedly a very small part of the city. The city needs bankruptcy restructuring to spread those positive changes to the rest of the city neighborhoods.
     
  4. citizenzen macrumors 65816

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    #4
    So what you're saying is that it's the fault of the poor.

    ;)
     
  5. DakotaGuy macrumors 68040

    DakotaGuy

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    #5
    What are you talking about? The reason it went broke is because they lost their tax base. You can't maintain the same land area and level of services when you lose that many residents and businesses.

    If that didn't cause it's collapse please tell us what did. You do realize that it takes taxpayers to keep a city running right? Although you might not want to hear this it does take businesses and more expensive property and homes to help drive up your tax base. If all you have left is vacant buildings, run down homes, and government assisted living areas your property tax base is wreaked and no sales tax can make up the difference.
     
  6. citizenzen macrumors 65816

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    #6
    The wink was meant to indicate that it was a joke.

    It wasn't the fault of the poor.

    It was the fault of the unions.

    ;)
     
  7. DakotaGuy macrumors 68040

    DakotaGuy

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    #7
    I'm going to say it's the fault of the US auto industry, but more specifically General Motors. They had 60% marketshare in the 1960's and today they hover around 18%. Ford and Chrysler also lost some share, but no where close to the collapse of GM.

    As for me, I drive a Ford which I bought new a couple years ago, but the Detroit automakers just aren't supported anymore the way they once were. GM failed this town or maybe the American consumer did, but one way or another it's just a shell of it's former self.
     
  8. Merkava_4 macrumors 6502a

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    #8
    No jobs available means nobody's paying the necessary taxes to keep the city running. Detroit can't simply ask the federal reserve to start printing money like it does for the federal government.
     
  9. AhmedFaisal, Jul 19, 2013
    Last edited by a moderator: Nov 16, 2013
  10. malman89 macrumors 68000

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    #10
    As sad as it is, there's not much fat left to cut from said services. More like sold off/privatized if anything. That's the one major positive about Kevin Orr (EFM) - his plan was to force creditors to take as little as possible (5-10 cents on the dollar), stop some debt payments completely, and just focus on investing in city services. Few have taken that offer, so here we go with bankruptcy.

    The pension liabilities will be the biggest fight. Supposedly they're covered under the state constitution (haven't read, not a lawyer anyway), but the EFM doesn't quite think so.

    It's a really difficult subject. Targeting those who live on a fixed income is pretty ridiculous, but so is the fact that someone may only pay a few hundred thousand into a pension fund, then collect millions. It's clearly an unsustainable model, and it's in place all over the country (see: Chicago/IL). It's probably to the point where just reforming pensions for current/future employees probably isn't good enough, but who knows what will happen.
     
  11. Huntn macrumors G5

    Huntn

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    #11
    This appears to be the way of the world. It's the little people who will be screwed.
     
  12. SactoGuy18 macrumors 68020

    SactoGuy18

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    #12
    In the end, the combination of the effects of the 1967 riots caused by racial tensions, the late Mayor Coleman Young "encouraging" a lot of people of means to leave the city, severe financial mismanagement, and massive changes to the automotive industry that finally resulted in what happened yesterday.

    I mean, look at the Detroit metro area now: a completely destitute city surrounded by some of the richest suburban communities in the USA.
     
  13. TPadden macrumors 6502a

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    #13
    Chicken, meet egg...... :rolleyes:.
     
  14. turtle777 macrumors 6502a

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    #14
    I don't see how why that would be entirely true.

    The only way I can halfway align your view is to say that GM's success and market share back in the day made them agree to stupid union demands and eventually got them into a hostage situation.

    You still need to blame the unions for sucking the lifeblood out of a once thriving auto industry. GM and Ford might have made stupid management decisions, but that's their right in a free market system. Smarter companies will (and did) take over.

    -t
     
  15. zin thread starter macrumors 6502

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    #15
    Why did so many people begin to leave the city? I can understand why people would want to leave now, but what exactly started the 'great escape'?
     
  16. MegamanX macrumors regular

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    #16
    Detroit auto manufacturing has been going down for a long time. It been reducing in size for years so that is part of the massive bleed on the city. The past few years only made the problem worse.
     
  17. benthewraith macrumors 68040

    benthewraith

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    #17
  18. turtle777 macrumors 6502a

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    #18
    This judge is obviously a complete idiot.

    To quote: “I have some very serious concerns because there was this rush to bankruptcy court that didn’t have to occur and shouldn’t have occurred,” Aquilina said.

    RUSH ? WTF ? This bankruptcy is soooo long in the tooth.

    -t
     
  19. MegamanX macrumors regular

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    #19
    States are allowed to be more restrictive that federal law. Federal law might allow it but state law/ constitution does not allow it. Hence the ruling.
     
  20. jcpb macrumors 6502a

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    #20
    Pretty much.

    Detroit is like Gunkanjima and Chernobyl - they are ghost towns. Difference:

    Gunkanjima was shut down after the mining company closed coal mining operations.

    Chernobyl was abandoned after the nuclear reactor meltdown.

    Detroit still has people clinging onto the false hope that the fallen city - which its causes can be traced all the way to racial intolerance - can somehow, magically, be saved by others.

    "We chased the rich people out of our land. We lost our jobs. Now we want the rich people to come back and give us jobs." Well, it's not the rich people who left Detroit, but the similarity remains.
     
  21. Technarchy, Jul 19, 2013
    Last edited: Jul 19, 2013

    Technarchy macrumors 603

    Technarchy

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    #21
    1967 Riot +

    Jerome Cavanagh (One of the most destructive Riots in American history on his watch)
    Roman Gribbs
    Coleman Young (20 years? Really? Should have been smarter and booted him from office)
    Dennis Archer
    Kwame Kilpatrick (LOL)
    Kenneth Cockrel, Jr.
    Dave Bing

    =

    Bankrupt Detroit (AKA 3rd world in North America)
     
  22. NickZac macrumors 68000

    NickZac

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    #22
    The entire US' infrastructure has slowly been breaking down through neglect. If you look at the US, most of the major infrastructural developments were in the 1955-1970 range and actions in that time period has largely defined society as we know it through today. Since then, all further advancements have been a lot slower and less profound. And now, the infrastructure that has not been replaced/modernized is breaking down which is perpetuating a cycle. The tendency of American government to finance things with huge amounts of debt rather than long-term public planning is part. Citizens have also moved from active roles in the community to passive ones, and communities have slowly degraded. The economy slowing down is resulting in the tendency of debt-financing to hit a breaking point. The cost of living is rising faster than the living wage, and the middle class is slowly shrinking. Both political parties like to blame this on each other and acuse a 4 or 8 year presidency term as the primary cause...in reality, this has occurred over a period of decades and virtually all of us are at fault.

    Money wasn't collected wisely. Money wasn't spent wisely. Management of resources and assets were piss poor. Until recent times (late 1990s), there was a lack of strategic planning in an area that requires that planning is done from decade-to-decade instead of month-to-month, or year-to-year. A lot of this is summarized in a report from an inquiry panel that President Clinton charged Vice President Gore of overseeing in which they essentially concluded that American government wastes a lot of money and better planning has the potential to slash inefficiencies greatly. It also concluded that prioritization of funding priorities had a lot of room for improvement...for example, replacing a transport fleet of 50 aircrafts that are half a century old is often looked at the same scale of importance as updating bathroom facilities in government buildings. This report suggested modification of how thought, planning, organization, and implementation occur. Since then, the findings have gone largely unimplemented on any notable scale, and many large government organizations have refused to modify budgeting practices (see "budget wars").

    This took decades to reach the point today, and it will take decades to fix if it ever will be fixed at all. There will be more to come.
     
  23. jcpb macrumors 6502a

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    #23
    To sum up what NickZac said:

    to the lazy people: "if it ain't broken, don't fix it"
    to the proactive people: "if it ain't broken, it isn't working well enough"

    It will require a national crisis before people start waking up and stop being lazy. Then again, the more things they try to change... the more they stay the same.
     
  24. jcpb macrumors 6502a

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