Dave Bing: Today was a 'very, very difficult day'

[realorange]

Detroit was on life support after the riots. Then they had a criminal for a mayor who made sure they'd never come back.

 

[Cheriehoop]

I was shocked to read that Detroit's population has been shrinking all the way back since 1950 from over 1.8 million to a little over 700,000. A population of 700k can't support an infrastructure and obligations of 1.8 million. Plus that remaining population is almost all poverty striken. Over 40% of the traffic lights no longer work. Has to be a nightmare. Sad because Dave Bing tried to fix it rather than flee like most.

 

[texascpa]

Correct. They'll take this over and the current retirees will be fine once the PBGC is responsible. The problem is during bankruptcy the retiree payments and benefits are usually frozen until a judge has made a ruling to continue paying them. Depending on how long that takes most retirees will be in some serious short term financial trouble.

Also the current union employees of Detroit will be screwed. They will probably get penny's on the dollar for what their potential pension would have been once its settled.

Which means that maybe current union employees need to move to 401K accounts rather than pensions. Safer, more reliable and usually a better return.

 

[Lawrinson14]

someone is going to make a fortune off of Detroit's misfortune. Real estate values cannot go any lower there. If I had a boat load of cash, I would pick up some detroit properties, knock em down, and just hold onto the land.

 

[SWC75]

The fact that the pension liability is unsustainable is not his fault. And there is a high probability that his pension and retiree health benefits represent the vast majority of his retirement income. Losing some or all of that would be catastrophic to the financial well-being of that retired individual.



If a bond that a fund manager owns get marked down to pennies on the dollar, the losses are spread over, as you point out, thousands of ultimate investors so each investor gets a small ding - hardly catastrophic.

It is one thing to punish the intrasigence of active employees, whether it be municipal employees like the Chicago teachers union or corporate ones like the Hostess employees , who simply refuse to acknowledge economic reality and continue to make financial demands that are impossible to satisfy.

They should take the same hit that the creditors should, and perhaps an even harder hit, but to punish an individual whose working life is effectively over and has little to no opportunity to replace that lost income, is simply not fair.

Also, when you pay people pensions, they are going to spend that money in the market, which will help get the economy moving again. investors will probably take their money elsewhere and leave Detroit to collapse.

 

[ebucklewis]

Also, when you pay people pensions, they are going to spend that money in the market, which will help get the economy moving again. investors will probably take their money elsewhere and leave Detroit to collapse.

where do you think the money comes from when you pay a public employees pension?

 

[texascpa]

Also, when you pay people pensions, they are going to spend that money in the market, which will help get the economy moving again. investors will probably take their money elsewhere and leave Detroit to collapse.

That's assuming that a majority of the pensioners still live in Detroit, and if you figure that more than half of the population of Detroit has moved out over the last 50 years, there's a pretty good chance that more than half of the pensioners also no longer live in Detroit.

 

[realorange]

someone is going to make a fortune off of Detroit's misfortune. Real estate values cannot go any lower there. If I had a boat load of cash, I would pick up some detroit properties, knock em down, and just hold onto the land.

Talk to DC and ask how that worked for him.

 

[Todd Gack]

Talk to DC and ask how that worked for him.

I don't think DC was speculating -- rather he was putting money into businesses, etc. that didn't pan out. As to Lawrinson's point, in January 2009 Ford stock was at $2 a share -- it went over $17 this week.

 

[cuseattle]

About a week ago there was a thread on the basketball board called "what was your worst job ever". I was referencing that as a way to comiserate with Bing.

 

[AlaskaSU]

I was shocked to read that Detroit's population has been shrinking all the way back since 1950 from over 1.8 million to a little over 700,000. A population of 700k can't support an infrastructure and obligations of 1.8 million. Plus that remaining population is almost all poverty striken. Over 40% of the traffic lights no longer work. Has to be a nightmare. Sad because Dave Bing tried to fix it rather than flee like most.

His primary residence is not in the City of Detroit. He lives in the burbs outside of City limits. What sane person would risk life and limb living in that hell hole of tax and spend, pro-union progressive politics? Its a workers paradise and it ended just like all the others. .

 

[Todd Gack]

His primary residence is not in the City of Detroit. He lives in the burbs outside of City limits. What sane person would risk life and limb living in that hell hole of tax and spend, pro-union progressive politics? Its a workers paradise and it ended just like all the others. .

We can't all live in a state that gets more than it gives back: http://www.foxbusiness.com/government/2012/08/03/states-that-get-most-federal-money/.

 

[AlaskaSU]

Also, when you pay people pensions, they are going to spend that money in the market, which will help get the economy moving again. investors will probably take their money elsewhere and leave Detroit to collapse.

Love the liberal reasoning. Unemployment compensation is the best way to stimulate the economy as per Pelosi, same reasoning as paying exorbitant pensions is good for the economy. Why not tax at 100% and have gvt. allocate all the money as Obama's Father advocated while making a name for himself among UN African radicals.

Investment is how an economy grows. The opportunity to earn a profit drives investment. A gvt that confiscates profit is an economy that does not allocate capital efficiently. It will go broke. Detroit is not an Island. It was part of a competitive US and world economy. Its policies punished investment.

 

[cuseattle]

Not to turn this into an OT thread but you have no idea what you are talking about.

Detroit's current financial woes are decades in the making.

What bothers me about this whole process is that retirees may end up in line behind secured creditors for both their pension and their retiree health benefits.

Those are the people who should be paid first.

I replyed to your post above.

 

[AlaskaSU]

We can't all live in a state that gets more than it gives back: http://www.foxbusiness.com/government/2012/08/03/states-that-get-most-federal-money/.

The figures you refer to are meaningless. Alaska is full of some of the countries largest military bases. They are the basis of gvt expenditures in Alaska. Russia is only a stones throw away and the polar route is the quickest to Europe. The only benefit Alaskans get are the same as you get, namely self-defense except that some of the bases, like Elmendorf, are so large that they have multiple 18 hole golf courses that are open to the public. Would be a great way to have a get together and golfing party with the long summer daylight.

 

[Moontan]

Perhaps Omni Consumer Products will have a solution. A squad of ED-209 units should be able to provide security without incurring future pension obligations.

I'll buy that for a dollar!

 

[Todd Gack]

The figures you refer to are meaningless. Alaska is full of some of the countries largest military bases. They are the basis of gvt expenditures in Alaska. Russia is only a stones throw away and the polar route is the quickest to Europe. The only benefit Alaskans get are the same as you get, namely self-defense except that some of the bases, like Elmendorf, are so large that they have multiple 18 hole golf courses that are open to the public. Would be a great way to have a get together and golfing party with the long summer daylight.

It's not meaningless to your "conservative" nonsense -- Alaska sucks on the lower 48's teat. It's a fact -- and you're welcome.

 

[Todd Gack]

The "you're welcome" was tongue-in-cheek -- I live in DC. Thanks for the Lincoln Memorial -- she's a beaut.

 

[SWC75]

where do you think the money comes from when you pay a public employees pension?

The employees and the public.

 

[SWC75]

Love the liberal reasoning. Unemployment compensation is the best way to stimulate the economy as per Pelosi, same reasoning as paying exorbitant pensions is good for the economy. Why not tax at 100% and have gvt. allocate all the money as Obama's Father advocated while making a name for himself among UN African radicals.

Investment is how an economy grows. The opportunity to earn a profit drives investment. A gvt that confiscates profit is an economy that does not allocate capital efficiently. It will go broke. Detroit is not an Island. It was part of a competitive US and world economy. Its policies punished investment.

This goes to the crux of the divergent points of view of the liberal and the conservative: Is the economy fueled by those who build the products and then use their salaries or pensions to buy them or by those who speculate on them trying to get rich? I think you can tell which of that i'm on.

 

[realorange]

I don't think DC was speculating -- rather he was putting money into businesses, etc. that didn't pan out. As to Lawrinson's point, in January 2009 Ford stock was at $2 a share -- it went over $17 this week.

DC was putting money into the cities economy by trying to bring back a neighborhood. Whether it was technically speculation, it certainly was in reality. Unfortunately, it turned south on DC.

 

[samspann]

This goes to the crux of the divergent points of view of the liberal and the conservative: Is the economy fueled by those who build the products and then use their salaries or pensions to buy them or by those who speculate on them trying to get rich? I think you can tell which of that i'm on.

I'm neither a liberal nor a conservative (slightly lean right, though not on all topics), but I think it's funny that you jumped right to the "rich" generalization. I'm guessing you did it without thinking, but that goes to show liberal propaganda works. It always comes back to those evil rich people. (No different than conservative propaganda, like those laughable death panels w/ Obamacare, etc)

It's as if rich people just put their cash in a room and swim in it like Scrooge McDuck, instead of buying things...things that are made by the working class (hence providing salaries).

 

[SWC75]

That's assuming that a majority of the pensioners still live in Detroit, and if you figure that more than half of the population of Detroit has moved out over the last 50 years, there's a pretty good chance that more than half of the pensioners also no longer live in Detroit.

If they live in the suburbs, they can still spend money in the Detroit economy.

 

[SWC75]

I'm neither a liberal nor a conservative (slightly lean right, though not on all topics), but I think it's funny that you jumped right to the "rich" generalization. I'm guessing you did it without thinking, but that goes to show liberal propaganda works. It always comes back to those evil rich people. (No different than conservative propaganda, like those laughable death panels w/ Obamacare, etc)

It's as if rich people just put their cash in a room and swim in it like Scrooge McDuck, instead of buying things...things that are made by the working class (hence providing salaries).

The issue is who really fuels the economy. I say it's the workers who create the products and use their salary and pension to buy them. Others would say it's those who essentially bet on what will be produced and bought to see if they can make money off of their bets. To me, that's a sideshow. That's why "caring for" the common people by giving them opportunities to be educated, trained or rehabilitated, eliminating barriers of prejudice, paying them a descent salary for their work and pension to live on after their work career is over and providing them with health care is good economics. It creates productive citizens and consumers with money to spend.

 

[Todd Gack]

DC was putting money into the cities economy by trying to bring back a neighborhood. Whether it was technically speculation, it certainly was in reality. Unfortunately, it turned south on DC.

$20K put into a Domino's is not the same as $20K put into buying the two lots next door.

Good and even smart men put logic aside for the betterment of their community.