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Thread: Detroit Files for Largest Municipal Bankruptcy in US History

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    I'm smarter than the average bear. Perhaps I just don't want to take the time to understand this ****, but, fact is? I don't. In my own investing life, I've done very well -- and I've never invested in one single thing I didn't understand. It's apparent from your links that various people and entities have raped our cities and towns -- due to incompetence and greed on the part of government officials.

    If it sounds to good to be true, of course, it usually is. If it looks like smoke and mirrors, of course, it usually is. Still. Taxpayers shouldn't be on the hook. There is a solution. And public pension plans are simply going to have to take a hit.

    Thank you for the great information, Rabbit. I'm sorry I'm not more savvy in this area. I just don't understand it. And, quite obviously, neither did a whole bunch of other people.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: Detroit emergency manager files bankruptcy

    Quote Originally Posted by Conservative View Post
    Detroit emergency manager files bankruptcy - Chicago Sun-Times

    Amazing how successful the liberal economic policies are for major cities in this country. This is the largest city in the nation to file for bankruptcy with more to come. Liberals better wake up

    "Liberal economics" has nothing to do with this. Detroit did not/does not have a very diversified industry because it does not have a population with diverse skills. In fact, most of the adults are frankly un-hireable outside of manufacturing, food service, and very basic hospitality services. Half of their population is functionally illiterate and they have a 75% high school dropout rate. Detroit's problems are the result of one reason and one reason only; a citizenry which places almost no value on education because they could always just go work at the factory like their father and his father and his father before him. Now the factories are gone and they're left with no education, no skills, no jobs, and ever dwindling tax contributions to pay for civilization.

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by MaggieD View Post
    I really don't mean to be difficult, but this is a subject I have keen interest in. While your source says what IT says, this source says otherwise:



    Public pension funds to face calls to set realistic targets | Reuters

    You can obviously see what happens when the projected return is too high . . . it initially looks like pension funding will be $1 million ("Hey, we can afford that!") when in reality, because rosy projections are used, the actual funding ends up at $2 million. (Or whatever...poor example, but I think you get it.)
    Expected returns during the recession and beyond have been volatile. Just look at places like MN. They can go way down or way up. Actuaries look at trends.

    Looking at my state:
    Historical trends in the market show that average investment returns had been at or above 8.25 percent over the past several decades. In the 25 years leading up to 2009, the average return was 9.7 percent. Some have argued that the economy has fundamentally changed and that investment returns in the upcoming decades will not reflect historical trends. Others reject the idea that there have been fundamental changes that will lead to dramatically lower investment returns in coming years. The Special Commission to Study the Massachusetts Contributory Retirement Systems reported that an 8 percent investment return assumption represents the expected cost for the state to provide benefits. But even if the returns in the upcoming few years are not expected to be 8.25 percent, and if the rate should be lowered (PERAC suggests that over time an investment return assumption between 7 to 7.75 percent may become the standard), the change, according to PERAC, should not occur at once.10 Instead, the rate should be lowered incrementally over a number of years in order to gradually increase the state's yearly obligation, rather than a sudden one-time change.
    Demystifying the State Pension System - MassBudget

    But naturally, each state needs to assess the health of its funds.

    Just for fun here is something I found from RI since they are looking to change their plan: Rhode Island

    The shortfall in Rhode Island’s pension plan for public employees is largely due not to overly generous benefits, but to the failure of state and local government employers to pay their required share of pensions’ cost.
    The savings from the Rhode Island Retirement Security Act (RIRSA) of 2011 are due to its higher retirement age and lowering or suspending the cost-of-living adjustment.
    RIRSA also cut the defined benefit (DB) pension accrual rate and introduced a new defined contribution (DC) plan. The new DC plan doesn’t save the state money, but will cost retirees.
    RIRSA will result in an average benefit cut of 14 percent for future full-career employees. Furthermore, due to the market risk introduced by the DC plan, many future employees will likely do even worse than this average: For the quarter of future employees who are in the lowest quartile of investment returns on their DC plan, the cuts will be 22 percent or higher.
    These cuts to retiree incomes stemming from the hybrid DB+DC plan are not projected to translate into savings for the state, and will do little, if anything, to improve the health of Rhode Island’s pension funds. The changes will actually increase the average annual cost for taxpayers.
    Rhode Island can and should make its pension funds solvent without exposing future retirees to the risks and higher costs of DC plans.

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    Re: Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by MaggieD View Post
    I'm smarter than the average bear. Perhaps I just don't want to take the time to understand this ****, but, fact is? I don't. In my own investing life, I've done very well -- and I've never invested in one single thing I didn't understand. It's apparent from your links that various people and entities have raped our cities and towns -- due to incompetence and greed on the part of government officials.
    Well, truth be told it was Wall Street that made out. Even the corrupted government official was charged although I think some are giving the public's power away when they hire these emergency managers who happen to have their own special ties to Wall Street. This incestuous relationship spells trouble. I do not think people should be held as collateral damage. Personally, I think Wall Street should clean up the mess but since they won't and we did clean up theirs its not right to take out retirees. I'm thinking a good start would be the financial transaction tax. Use that revenue to help cities across the US that have never fully recovered from the financial meltdown. That will never happen though. The financial banking industry is way too powerful.

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    Re: Detroit emergency manager files bankruptcy

    Quote Originally Posted by a351 View Post
    Let's not be obtuse. The fact that five individuals *liked* the OP should be indicative in and of itself. On many other assorted sites and social media I've seen others take glee in the announcement. Politics at its worst.

    In the same way that New Jersey's anemic recovery under Christie has proven conservative principles to be inept and inapplicable in any scenario. Or, we could concede the fact that some issues extend beyond purely political terms.
    Christie is not a conservative and NJ is largely run by the corrupt democrat machine.
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    Re: Detroit emergency manager files bankruptcy

    Detroit is first. California and Illinois are next...then the Big Dog...The Federal Government is coming. With $16 trillion in unfunded liabilities in the next 10 years, there's no way to avoid fiscal failure. With the combined debt exceeding $20 trillion this year, and that number won't be getting smaller. There is simply no way to pay it back. Even devaluation can't fix it.
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    Re: Detroit emergency manager files bankruptcy

    What this does for me is show-more than anything else-the downside of the 'American dream' on a massive scale. That the issues for the ultimate demise of a once prosperous, thriving city are numerous and ubiquitous, does not make the news any less shocking. In saying that, population flight seems to be the biggest contributing factor: I wonder how they are going to tempt Americans back into the city?

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    Detroit Files for Largest Municipal Bankruptcy in US History

    Quote Originally Posted by rabbitcaebannog View Post
    Well, truth be told it was Wall Street that made out. Even the corrupted government official was charged although I think some are giving the public's power away when they hire these emergency managers who happen to have their own special ties to Wall Street. This incestuous relationship spells trouble. I do not think people should be held as collateral damage. Personally, I think Wall Street should clean up the mess but since they won't and we did clean up theirs its not right to take out retirees. I'm thinking a good start would be the financial transaction tax. Use that revenue to help cities across the US that have never fully recovered from the financial meltdown. That will never happen though. The financial banking industry is way too powerful.
    Explain just how "wall street made out" and is responsible for this mess?

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    Re: Detroit emergency manager files bankruptcy

    Quote Originally Posted by gunner View Post
    I wonder how they are going to tempt Americans back into the city?
    They can do what Chicago has done. It would have an immediate revitalizing effect: Require that all municipal workers and public school teachers reside within their city limits. They can start with new hires. And give those already working for the city five years to relocate.

    Imagine the revitalization that would occur.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: Detroit emergency manager files bankruptcy

    Quote Originally Posted by Napoleon View Post
    "Liberal economics" has nothing to do with this. Detroit did not/does not have a very diversified industry because it does not have a population with diverse skills. In fact, most of the adults are frankly un-hireable outside of manufacturing, food service, and very basic hospitality services. Half of their population is functionally illiterate and they have a 75% high school dropout rate. Detroit's problems are the result of one reason and one reason only; a citizenry which places almost no value on education because they could always just go work at the factory like their father and his father and his father before him. Now the factories are gone and they're left with no education, no skills, no jobs, and ever dwindling tax contributions to pay for civilization.
    And the city managers couldn't see any of this coming? They had no concept of how to manage a downturn? Sorry, this is all on the politicians who run the city and its finances. The people got the management they elected. It was incompetent. It is tragic.

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