THE STEW AIN'T SO TASTY NO MORE DETROIT'S BANKRUPTCY

ONLY PO BOYS LEFT HERE NOW

I don’t need to think

wonder or ponder more

upon the gumbo

of my swampland home,

most of the ingredients

are no longer available.

I asked where all the fixins had gone

and found there were few who knew

what I remembered so well.

The curse of tasting the best

is knowing the flavor of everything

that I try after that greatness falls short,

is missing something in the under taste

that made it so spicy, so hot, so fine.

© M Durfee

6.17.2014




Howdy folks. I just want everyone to know that I had a very long nap from the blog, but I was not, not writing. Shit I have probably been writing on the order of 5000 words a day, only it has been all political and meant for Detroit/Michigan consumption. Though I suspect by the time all is said and done the ramifications will affect millions of people who worked for the government at any level. Such are the stakes in Detroit’s bankruptcy.

Though the process started about a year ago, the trial of “America’s largest municipal bankruptcy” does not start until 8/11/14 unless of course there are no more delays. As well as a marginal poet I am a highly political animal, especially in areas regarding equal and civil rights, and lately the shrinking middle class through the transfer of wealth from the middle to the upper classes of 10% wealthy and big corporations receiving federal dollars to keep wars going and the 90% of Americans of every kind losing ground to pay them.

About a decade or so ago our Democratic Governor, Jennifer Granholm signed a law PA 4 that said any financially failing school district could have an Emergency Financial manager relieve the local school board of all power financial and simply took over the role of elected officials, who with no money to spend actually had nothing to do or say. The governor installs the EFM. In every case though powerless the boards remained in place and got paid and their medical benefits and other perks.

Well of course the first EFM was installed into the Detroit district which was about $500,000,000 in the hole. The guy came in cleaned house, found some thieves, closed about 100 schools and began the rush to for profit elementary and secondary schools. Then he left with his $2,000,000 salary and now we are on our fourth EFM for the school board and the debt is just under $200,000,000 now after 8 years of emergency management.

So the new governor, Rick Snyder, a former investment banker and the sole murderer of Gateway computers (sold the proprietary information to China (ACER PC). a republican decided that if he had the power to install and EFM in place of a school board he also had the power to install one over financially troubled municipalities. The law he used was PA 4. An amended version of the school EFM law. His test case was a small predominantly black community named Benton Harbor. BH had a $10,000,000 underfunded municipal pension and a pretty meaningless tax base since Whirlpool Corporation quit town. BUT they did have a beautiful waterfront park that had been deeded to the city’s children in perpetuity. Across the St Joseph River from BH is the town of St. Joseph which wanted that land along the river for high rise development for gentrification of BH.

Well long story short the park was sold, about 1/3 of the debt was retired and BH still has an EFM.

But a curious thing was happening, it seemed as if Snyder’s financial assessment team was able to find that ever city or town of color in Michigan was in poor financial shape and he appointed and EFM to run them. EXCEPT in Detroit, he wasn’t ready to take on the whale yet. He tried negotiating and deadline setting and press pissing, you know politics.

But the citizens of MI kind of thought that the whole concept of an appointed person was a usurpation of peoples votes. So lo and behold 300,000 valid signatures were gathered to put the whole EFM thing up for a binding referendum of the citizens and guess what? PA4 was blown off the books by a large majority. GREAT! Hey governor go fuck yourself and your EFM’s.

No one counted on the term limited lame duck legislature, which had been gridlocked even with a GOP majority to in their last 2 weeks of office to write a new EFM bill, not even bother to take it through committee or debate and send it and 235 other bills to the governor for his signature. In a 2 week period MI went completely red, became a Right To Work state, and had a new EM (minus the F) bill. The EM bill PA 436 gave the governor the right after an assessment to impose an Emergency manager, who not only controlled the money but EVERY aspect of governance. From trash pick up to Police and Fire and everything in between all in the hands of 1 man and whomever he appointed to assist him.

Well then the negotiations with Detroit pretty much stopped and out new king is named Kevyn Orr, formerly of the Jones Day law firm. Both of which stewarded Chrysler through their corporate bankruptcy.

So within 1 month of being appointed the new EM Orr was instructed by Snyder to take us into bankruptcy, rather than look at assets or other ways out of $18,000,000,000 of municipal debt. 2/3 was held by both secured and unsecured bondholders who had purchase Detroit bonds that were rated –bbb (junk). And the other 1/3 was money owed to Detroit’s 2 pension funds, general Retirement system employees and Police and Fire fighters.

I am going to skip over the bondholders because with the exception of the insurance companies that took high premiums to insure those bad bets on bonds most bond holders have agreed to a settlement. Of course the Insurance companies want more than they are being offered but they are not my problem (yet).

One odd thing was that before going into Bankruptcy (BK) Snyder was able to wrest control of Belle Isle away from the city, a 900 acre park sitting right in the river, and make it a state park. That becomes germane later.

Orr had to file a Plan of Adjustment (PoA) with the court detailing settlements with city creditors, with Citibank and Bank of America his first offer was dollar for dollar while cutting pensions to 0.10 on the dollar. The BK judge told him to try again. So now we have the 4^th PoA which apparently is the final one and the one going to trial in Aug.

The two banks settled in the 3^rd PoA which left the 23,000 retired and 7,000 active employees as the largest class of creditors to deal with and we got dealt #4. Together both pension funds have almost $2.500, 000,000 in them. PFRS (police and fire) has $938,000,000 and is 80% funded and GRS (the rest of us) has $1,300,000,000 in it which makes it 73% funded.

So the deals that people are voting on are Police and Fire have no reduction in pension and 1% loss of Cost of Living Adjustment. Not a bad deal over all at least they are not stagnant but they do not pay into SS or Medicare, unless they work another job either while on the force or after they do their 25 years to make them retirement eligible.

Now plan A is GRS loses 4.5% of actual money, all medical care and a lifetime repayment of an annuity overpayment that was paid for three years. That repayment in my case is $2200, which they will not allow me to repay back in a lump sum but they will deduct $21 per month for the life of my pension, if I predecease my wife she continues to pay that $21 because for someone else mistake we have to pay interest on the money we received. Life time interest. Hmm go figure. So GRS employees are going to right off the top take an up to 20% cut on pensions (mine is about 12.5%) but my pension is smaller than average so my $940 per month is reduced to $815.

Now that is the good deal, the best it’s going to get, the one all the newspapers say is the one we NEED to vote for.

If we vote no we get plan B a 27% cut off the top plus the annuity payback and still no medical ins, reducing my pension to $630 per month.

So here is the kicker The state, ($198 million), Philanthropic organizations ($350 million) and the Detroit Institute of Art ($100 million) have said they will throw this money into the GRS if we approve the DIA and all of the art being transferred from city ownership into a nonprofit held organization untouchable forevermore from a loss of assets. Known as the Grand Bargain.

Now plan A sounds pretty good, I would swallow that IF that was the end of it but it is not and the conditions only apply to the GRS fund.

If the $650 million above does not grow through investment to $850 million in 7 years GRS pensions are reduced accordingly.

If the smoothing rate (or average investment rate of return) into the GRS does not equal 6.7% over the next 7 years GRS employees pensions are reduced further.

If the Water department does not or is not able to contribute $47 million every year into the GRS to absolve the city of its debt over 20 years to the pension fund, the GRS pensions are cut even more.

If the city fails to balance its budget in any year of the next 20 the GRS pension fund is liable for the shortfall and pensions are reduced further.

So Snyder by first taking Belle Isle off the table he took what could have been sold for development for about $2 billion and by crafting this Grand Bargain he is saving the Detroit Institute of Art. The odd thing is in Chap 9 municipal BK no assets can be forced by the court to be sold, so after reading 711 pages of a legal document PoA #4 I have come to the conclusion that the two targets of this BK are 1) drain the GRS pension fund by over the course of years transferring it into the city’s general fund and 2) set a legal precedent that Snyder or some future governor can use against ever public employee pension fund in the state including the state of Michigan’s fund which is 40% underfunded. And worse yet seeing as this is a FEDERAL bankruptcy any decision here can and most likely will affect every public employee with a defined pension in the entire country.

One last thing our state constitution says in part that all public employee pensions area contractual obligation with the issuer and shall not be impaired or diminished…11 states have that same guardian written into their constitution, but the federal judge has already ruled that contracts in Ch 9 BK can be changed. That is on appeal at the 6^th circuit. Which is slow walking the decision that says of federal rights trump states rights.


So if you have read this far you can see what I have been doing most of my writing on voicing my concerns and then my decision to vote NO on plan A. I may lose much more but I am not responsible for the city’s 18 billion dollar debt. The majority of it came from the abandonment of the city by industry and mismanagement by the government that employed me. Plan B may still rob the GRS fund but I do not see how in the document but if A gets approved we also give up all rights to the courts for redress for the rest of our lives. All of my postings are on my FB page under my own name.


So given what I have said if you have read this far—how would you vote?