Posts tagged bankruptcy
The Detroit Bankruptcy Contagion – Interview with Ellen Brown
Published by NextNewsNetwork
LOS ANGELES | On December 3rd, Detroit became the largest city to declare bankruptcy in American history. This case, which went on four months, protected the city from creditors.
While some government officials blame Detroit’s financial woes on a declining tax base, other observers say runaway spending was the main cause. The city had an estimate $18 billion in debt at the time bankruptcy was declared.
The money paid out when the city was healthy did not produce significant results for the people of the Motor City. Over 40 percent of streetlights in Detroit do not work. There are also almost 80,000 abandoned buildings in the city.
A judge ruled Detroit could cut pensions, in order to pay other creditors. This is raising a firestorm on controversy among those who were due to be paid.
Observers are questioning who will pay the debt Detroit incurred before entering bankruptcy.
Ellen Brown is a well-respected attorney, who writes for the Huffington Post. Brown is the author of 12 books, including The Web of Debt and The Public Banking Solution.
Brown is our guest on the show today.
Karen De Coster Discusses the Detroit Bankruptcy
Published by NextNewsNetwork
Karen De Coster interview with Gary Franchi for WHDT. The topic is Detroit and the city’s bankruptcy.
Is the Consumer Financial Protection Bureau already “out of control.” Judicial Watch says it is
The CFPB falls under the umbrella of the Federal Reserve. It is funded by the Federal Reserve, which makes the Bureau very unique. Congress can’t reign it in fund wise, because the Federal Reserve makes it’s own rules. The Fed in many ways is bigger than Congress, and in the CFPB the Fed has gained a powerful, self funded tool to do what it wants in the everyday economy.
That’s why the CFPB is coming after bankruptcy records.
First it appears that the CFPB tried to gather millions of private bankruptcy records by going through the US Trustee, a small government agency which deals with bankruptcy matters in this country. That effort failed. Now the CFPB is just coming after the records, held and compiled by a private company, without even appearing to go through any channels.
We are going to be living with the mistakes of Dodd-Frank for a very long time.
Image credit: http://www.againstcronycapitalism.org
About Nick Sorrentino
Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.
Why Are The Chinese Gobbling Up Real Estate And Businesses In Detroit?
Something very strange is happening to Detroit. Once upon a time, it was the center of American manufacturing and it had the highest per capita income in the United States. But now the city is dying and the Chinese are moving in to pick up the pieces. Lured by news stories that proclaim that you can buy homes in Detroit for as little as one dollar, Chinese investors are eagerly gobbling up properties. In some cases, this is happening dozens of properties at a time. Not only that, according to the New York Times “dozes of companies from China” are investing in businesses and establishing a presence in the Detroit area. If this continues, will Detroit eventually become a city that is heavily dominated by China?
At this point, not too many others appear interested in saving Detroit. Right now, there are approximately 78,000 abandoned buildings in Detroit and about one-third of the entire city is either vacant or derelict. People have been moving out in droves and there are only about 700,000 residents left.
For many Americans, Detroit is about the last place that they would want to live. But to many Chinese, this sounds like a perfect buying opportunity. According to a recent Fox News report, real estate agents in Detroit are being overwhelmed with inquiries from China…
Downtown Detroit is home to one of the worst housing markets in the country, as prices of homes have collapsed and foreclosures have soared in the city’s depressed economy.
But some Chinese investors hungry for real estate are hoping Detroit’s losses will be their gain. After Detroit filed for bankruptcy July 18, Motor City property has been a hot topic on China’s social media platform, Weibo, according to a Quartz.com report.
News of the bankruptcy, coupled with a Chinese TV report in March that claimed you could buy two houses in Detroit for the same price as a pair of leather shoes, has piqued investors’ interest.
And these buyers appear to be quite serious. One buyer reportedly bought 30 properties recently, and other buyers say that they want to purchase even more homes than that…
And it appears to be translating into real interest; Caroline Chen, a real estate broker in Troy, Michigan, says she’s received “tons of calls” from people in mainland China.
“I have people calling and saying, ‘I’m serious—I wanna buy 100, 200 properties,’” she tells Quartz, noting that one of her colleagues recently sold 30 properties to a Chinese buyer. “They say ‘We don’t need to see them. Just pick the good ones.’”
Meanwhile, according to the New York Times, dozens of Chinese companies are moving into the city…
Dozens of companies from China are putting down roots in Detroit, part of the country’s steady push into the American auto industry.
Chinese-owned companies are investing in American businesses and new vehicle technology, selling everything from seat belts to shock absorbers in retail stores, and hiring experienced engineers and designers in an effort to soak up the talent and expertise of domestic automakers and their suppliers.
While starting with batteries and auto parts, the spread of Chinese business is expected to result eventually in the sale of Chinese cars in the United States.
Of course this is not just happening in Detroit. The truth is that the Chinese are buying up real estate, businesses and natural resources all over the country.
But they seem to have a particular interest in Detroit.
Glass-Steagall: War on Wall Street
Published by laroucheyouth
In the war on Wall Street, Lyndon LaRouche has launched three critical flanks:
1. A new Pecora Commission must be convened;
2. We need a full expose of who in Congress actually belongs to Wall Street;
3. In the wake of what has come to light in the Detroit bankruptcy, we need a list of the crimes committed by Wall Street in each state.
For more information go to www.LarouchePAC.com, follow us at Facebook.com/LarouchePAC & Twitter.com/LaRouchePAC.
Posted by Karen DeCoster
MSNBC: “Detroit is America’s Most Libertarian City”
MSNBC’s Ari Melber describes Detroit’s plight with the usual media rinse-and-repeat conventional spin straight from the standard script: debt up the wazoo, decayed this, bombed-out that, no services here or there. Yawn. Seems I’ve read that 1,492 times prior. And this “condition” of decay he describes is what he deems as a condition one could expect to see as the result of libertarianism. According to Ari, a city that has been governed by unions and Marxists, and raped by nepotistic mobs, has presented to the world a visual of what libertarianism would bring us were we to put it into practice. Yet he never explains the connection between a libertarian philosophical framework and Detroit’s 4+ decades of decline.
Ari states that Detroit needs to “look to Washington.” Indeed, he says Detroit should be an outpost of the Potomac, just like the Banksters. Ari thinks that Congress should convene a special session to save Detroit. The Feds, he says, could bring jobs to Detroit, invest in property, and start up a Detroit branch of the Smithsonian to save the art of the Detroit Institute of Arts (DIA).
These media twerps never express one intelligent sentence about Detroit’s political history and sociological challenges as they pertain to the long-term decay and the current crisis. And now, finally, it can all be blamed on libertarianism and a too-small government. Melber is a boob. Follow me on Twitter @karendecoster. Thanks to Allan Caetano for the link.
Video capture added to original post.
Eminent Domain and the Decline of Detroit
There are about 100 reasons why Detroit is what it is today. More than that. But one of them, according to the attached article, is the city’s abuse eminent domain over the years.
(From The Volokh Conspiracy)
For many years, Detroit aggressively used eminent domain to promote “economic development” and “urban renewal.” The most notorious example was the 1981 Poletown case, in which some 4000 people lost their homes, and numerous businesses were forced to move in order to make way for a General Motors factory.
Image credit: http://www.againstcronycapitalism.org
Posted by Judy Morris
Detroit Red Wings Get New $400 Million Taxpayer-Financed Stadium While the City Goes Bankrupt
Well, you know, I mean, I think that Detroit built a new baseball stadium, it built a new football stadium, and lo and behold, here we are a few years later and Detroit is still going into bankruptcy.
Read the rest at Therealnews.com, here.
By Don Pittis, CBC News
Detroit bankruptcy: Is it a warning sign of things to come?
Detroit’s financial meltdown has lessons for Canada and the rest of the global economy, Don Pittis writes
What if Detroit isn’t a blip? What if, instead, the city’s decision to enter bankruptcy proceedings is a sign of things to come?
Crazy talk? Maybe. But that was the prediction in a recent book by Wall Street financial analyst Meredith Whitney, best known for being one of the very few mainstream analysts to foresee the 2008 banking meltdown.
Interestingly, she also predicted this week’s Detroit bankruptcy.
That may seem less impressive now that it has happened. On the other hand, the screams of outrage from lenders who are being offered 10 cents on the dollar for their billions in bonds by Detroit show that it wasn’t obvious to them.
“I wish there had been a lot more outrage over the past 10, 20 years,” said Kevyn Orr, the bankruptcy expert charged with cleaning up Detroit’s accumulated financial mess, at a news conference Friday.
- Read the latest on Detroit’s financial situation
- Detroit’s crumbling dream fuels art scene
- See photos of decaying Detroit
- Debt-laden places like Detroit offer lessons for Canadian policymakers, Don Pittis wrote in April
The fact is, long after Detroit’s decline had become obvious, the city’s government kept borrowing and lenders kept lending.
Some of the municipal debt against the future was hidden in the city’s own books in the form of off-balance-sheet pension responsibilities. Other borrowing was obvious to everyone, in the form of bonds secured — at least notionally — by Detroit’s future tax revenue.
The whole house of cards teetered on a fiction that the city would return to its former prosperity. But somewhere between 1960, when Detroit had the highest income per person in the United States, and now, the city fell into a vicious circle of decline.
As good jobs left, so did educated people. Nearly half the population is now functionally illiterate. And while loans and liabilities were accumulated when the city had nearly 2 million people, now 700,000 bear all the responsibility for its debts.
Police and fire services are abysmal. Parks are closed. The murder rate is surging. Many bondholders assumed the city would simply continue to raise taxes to cover the interest payments. But as Orr said after the bankruptcy filing, there is just no way he can raise taxes any further. If he did, more and more taxpayers would simply pull up stakes and go somewhere else.
According to Orr, this is a disaster you could have seen coming years ago. Sure, the city was irresponsible in its borrowing — but just as in the sub-prime loan collapse, it is the responsibility of lenders to make sure they will get paid. It’s as if the bondholders who lent the cash hadn’t seriously considered where the money would come from to repay their loans.
Which is exactly Meredith Whitney’s point. In her book Fate of the States: The New Geography of American Prosperity she says the Detroit crisis is far from unique. “Awash in new tax revenues, cities and states borrowed and spent as if the good times would never end. Unfortunately, they did,” Whitney says in the book written well before the current bankruptcy filing.
She says that in the wake of the U.S. property meltdown of the past few years, the cities and states that found themselves dangerously in hock were also the ones that had hidden pension debt, just like Detroit.
She says lenders have been poor at taking that into account. “State and local governments have underfunded — even non-funded — their pension funds for years now, and they can’t seem to break the habit,” Whitney writes. “In New Jersey, actual debt is at least four times greater than bonds outstanding.”
Part of Whitney’s analysis is especially interesting to Canada. Looking at the American experience, she says that the accumulation of debt in places that were formerly prosperous is contributing to a population shift to areas like the Midwest and the Dakotas, the former “flyover” states.
North of the border, we are seeing something similar as the old industrial areas of Canada struggle to deal with debt while the prairie provinces boom. In some ways Detroit is an analogy and a warning to the rest of the global economy.
Instead of taking our knocks during the bad times, governments borrowed and central banks created money to help us through, assuming that good times would soon return. If the world bounces back and returns to growth, if the tax base resumes its growth, all will be well.
That didn’t happen in Detroit. It may not happen in Greece and Portugal. As she makes very clear, while Whitney is not predicting widespread defaults, she warns that Detroit is only one of the governments that won’t be able to make their payments. In the wake of this week’s events, lenders who were skeptical of her thesis are likely to scoff a little less.
Detroit’s problems are far from over. Bankruptcy is no picnic, and the city faces at least 15 months of court battles. Provisions of Chapter 9, the bankruptcy rule for cities, have never been used for a collapse of this magnitude.
Compared to the day he took the job, Orr looks haggard. But by taking its knocks now, going through the painful process of bankruptcy draws a line under Detroit’s problems, just as it did for Chrysler and General Motors when they filed for bankruptcy almost exactly four years ago.
As Michigan governor Rick Snyder said at Friday morning’s press conference, this is a chance for Detroit to carve out a new future: “Now is our opportunity to end 60 years of decline.”
Copyright © CBC 2013
Republished with permission
Everything Is Fine, But…
Everything is going to be just great. Haven’t you heard? The stock market is at an all-time high, Federal Reserve Chairman Ben Bernanke says that inflation is incredibly low, and the official unemployment rate has been steadily declining since early in Barack Obama’s first term. Of course I am being facetious, but this is the kind of talk about the economy that you will hear if you tune in to the mainstream media. They would have us believe that those running things know exactly what they are doing and that very bright days are ahead for America. And it would be wonderful if that was actually true.
Unfortunately, as I made exceedingly clear yesterday, the U.S. economy has already been in continual decline for the past decade. Any honest person that looks at those numbers has to admit that our economy is not even close to where it used to be. But could it be possible that we are making a comeback? Could it be possible that Obama and Bernanke really do know what they are doing and that their decisions have put us on the path to prosperity? Could it be possible that everything is going to be just fine?
Sadly, what we are experiencing right now is a “mini-hope bubble” that has been produced by an unprecedented debt binge by the federal government and by unprecedented money printing by the Federal Reserve. Once this “sugar high” wears off, it will be glaringly apparent that by “kicking the can down the road” Bernanke and Obama have made our long-term problems even worse.
Unfortunately, most Americans don’t understand these things.
Most Americans just let their televisions do their thinking for them, and right now their televisions are telling them that everything is going to be fine.
But is that really the case?
Everything is fine, but the city of Detroit has just filed for Chapter 9 bankruptcy. It will be the largest municipal bankruptcy in U.S. history…
Detroit filed for the largest municipal bankruptcy in U.S. history Thursday after steep population and tax base declines sent it tumbling toward insolvency.
The filing by a state-appointed emergency manager means that if the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.
Wait a minute, didn’t Barack Obama say that he “refused to let Detroit go bankrupt” less than a year ago?
Everything is fine, but continuing claims for unemployment benefits just spiked to the highest level since early 2009.
Everything is fine, but in the month of June spending at restaurants fell by the most that we have seen since February 2008.
Everything is fine, but the United States is losing half a million jobs to China every single year.
Everything is fine, but the U.S. economy actually lost 240,000 full-time jobs last month.
Everything is fine, but the number of full-time workers in the United States is now nearly 6 million below the old record that was set back in 2007.