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Detroit is completely bankrupt.
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Clinically Insane
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Jul 18, 2013, 04:34 PM
 
They just filed for Ch 9 protection. I think we all saw this coming eventually, WRT large municipalities, but perhaps not this soon and on this scale.

http://jalopnik.com/detroit-just-fil...y-in-829461482
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Jul 18, 2013, 06:09 PM
 
They're f$&@ed.

This is the start of the great unraveling of public pension funds and retirement benefits.
The public workers and unions have managed to kill the goose that lays the golden eggs.

-t
     
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Jul 18, 2013, 07:38 PM
 
Detroit's been bankrupt for months; they've just been trying to put off the inevitable.

Anyone with half a brain saw this coming decades ago. A city controlled by one of the most powerful labor unions in the world isn't going to last forever.
     
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Jul 18, 2013, 07:59 PM
 
I am not sure what, if anything, will happen. One city in California was bankrupt and nothing happened, at least nothing that I could tell (or at least nothing that affected me), and I lived there. Trash was still picked up, electricity was working, etc.
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Jul 18, 2013, 08:19 PM
 
How big was the population and infrastructure?

I think the kicker here is that this is the biggest city to declare bankruptcy in a long time.
     
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Jul 18, 2013, 08:46 PM
 
Originally Posted by Shaddim View Post
They just filed for Ch 9 protection. I think we all saw this coming eventually, WRT large municipalities, but perhaps not this soon and on this scale.

http://jalopnik.com/detroit-just-fil...y-in-829461482
You should buy it.
     
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Jul 18, 2013, 08:48 PM
 
Originally Posted by shifuimam View Post
How big was the population and infrastructure?

I think the kicker here is that this is the biggest city to declare bankruptcy in a long time.
~300,000 people. Not exactly small.
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Jul 18, 2013, 08:49 PM
 
Originally Posted by subego View Post
You should buy it.
Got $36B I can borrow? For that much scratch, I'd rather get something like Wales or Ibiza, TBH. Detroit isn't worth .02 on the buck.
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Jul 18, 2013, 08:52 PM
 
You could flip it. It's a fixer-upper.
     
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Jul 18, 2013, 09:39 PM
 
I suppose the decimation of the manufacturing base and the population loss that ensued over the course of decades had nothing to do with it.

OAW
     
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Jul 18, 2013, 10:15 PM
 
Originally Posted by OAW View Post
I suppose the decimation of the manufacturing base and the population loss that ensued over the course of decades had nothing to do with it.

OAW
LOL, is that the story they tell you ?

What you mentioned was the effect (not cause).
The cause was mismanagement and making promises about future benefits that amounted to a Ponzi scheme. Game's up, Detroit lost.

-t
     
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Jul 18, 2013, 11:01 PM
 
So the privately owned Big 3 auto makers shipped jobs to other cities for decades because of the pensions of public employees? Ok.

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Jul 18, 2013, 11:10 PM
 
Originally Posted by OAW View Post
So the privately owned Big 3 auto makers shipped jobs to other cities for decades because of the pensions of public employees? Ok.

OAW
What's your gripe ? They are private companies, they can ship their jobs to the moon if it pleases them. Stop playing the vicitim.

-t
     
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Jul 18, 2013, 11:31 PM
 
Originally Posted by OAW View Post
So the privately owned Big 3 auto makers shipped jobs to other cities for decades because of the pensions of public employees? Ok.

OAW
Was going to write essentially the same thing. Unions aren't the problem. Gutting production in the states is. Move enough production somewhere else, and a city can't sustain itself without some sort of industry.
     
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Jul 18, 2013, 11:35 PM
 
Originally Posted by knifecarrier2 View Post
Was going to write essentially the same thing. Unions aren't the problem. Gutting production in the states is. Move enough production somewhere else, and a city can't sustain itself without some sort of industry.
Detroit and Michigan did it to themselves.

Do you think South Carolina and Alabama are getting new automotive plants just due to their good looks ?

Besides, Auto is doing just fine outside of Detroit. There are plenty of jobs and high demand of skilled workers outside of the city of Detroit.

-t
     
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Jul 18, 2013, 11:45 PM
 
Originally Posted by turtle777 View Post
Detroit and Michigan did it to themselves.

Do you think South Carolina and Alabama are getting new automotive plants just due to their good looks ?

Besides, Auto is doing just fine outside of Detroit. There are plenty of jobs and high demand of skilled workers outside of the city of Detroit.

-t
True that, Smyrna TN is rockin'.
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Jul 19, 2013, 08:24 AM
 
Part of the problem has been blatant corruption that, though obvious, was not corrected. Under a number of different city administrations the city employees had negotiated really peachy deals, and even though this mayor or that one wound up run out of office (or town), those fancy deals were never reviewed. I remember way back when I was growing up there were issues with city employees like policemen and firemen who got into trouble for not living within the city limits. To encourage them to live within the city they were protecting, their compensation was bumped up. After a while, this became a pattern, despite the issues that led such public safety workers to not want to live in Detroit proper.

Jobs have been fleeing Detroit for decades. My mom worked for an ad agency that was headquartered pretty much smack in the middle of downtown (the Lafayette Building, if anyone remembers that impressive structure), but they moved north to Troy in the mid-1970s for a number of reasons (the city tax structure was a big one), so instead of a 25-mile-each-way commute, Mom drove 50 miles each way, through the city, to get to Troy. Troy, in fact, drew a lot of business residents out of Detroit, including Volkswagen, K-Mart, and others (both had impressive buildings on I-75 just past 16 Mile Road). The big deal was that, instead of growing with the way manufacturing was evolving, the City of Detroit kept its collective head buried in the sand and just expected manufacturers to come streaming back "any time now," despite evidence that concentration of manufacturing locations was no longer a useful model. The steel plants surrounding Detroit kept going (most of them), but with a different focus. Yet city administration after administration "planned" for the resurgence of massive manufacturing within and near the city. And they kept a pretty nasty tax system in place that actually penalized businesses and individuals for working in Detroit. No wonder people left. Picture the domino effect: high taxes drive people out, reducing tax revenue, driving the need for city bonds, pushing the city deeper into debt. Lather, rinse, repeat.

I just hope that, whatever does come out of this, the fundamental structure of "Detroit city employee" changes radically. No "public service" job should seem like a cushy, guaranteed income, especially in a distressed city like Detroit. Cities like Detroit need people who want to work to improve the city, even if that's hard. The people who still live there need a city government that works to get the still festering scars of 1968 cleared away, to revitalize areas that have essentially been abandoned to decay and criminal activity, and to make the city a place that people and businesses want to move to. This has become a generational issue. My mother, born in Detroit, told me once that she was not worried about criminals in the city, and that "they won't take my city away from me," and she fearlessly went about her business downtown (work, entertainment, etc.). The criminals aren't the ones that are taking Detroit away from the people. At least not the masked thugs. Now it's been at least one full generation of criminal politicians.

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Jul 19, 2013, 09:34 AM
 
The big city in one of the most heavily unionized state in the country (at least until a year ago anyway).

Socialism running its inevitable course like clockwork.

IMHO
     
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Jul 19, 2013, 10:21 AM
 
Yep.

And right now, the Detroit chapter of the AFSCME (that's a whole other thread - the unionization of employees PAID BY TAXPAYERS) is fighting the inevitable cut to those overpaid city employees' benefits.

This is a good thing. Maybe the state can force a benefits cut, and doing so will keep the city afloat, and the outcome just might (long shot here) be enough to prompt the country to realize that massive benefits (SS, Medicare, Medicaid) are plummeting the country further into debt, even if it seems on the surface that the economy is bouncing back.
     
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Jul 19, 2013, 02:41 PM
 
Originally Posted by shifuimam View Post
...that's a whole other thread - the unionization of employees PAID BY TAXPAYERS....
Public sector unions?

The problem with unions is a lot worse in Australia. There's a quote I read around the time M.Thatcher passed away and it went something like..... "Margaret Thatcher saved Britain by driving out the unions; unfortunately they just relocated to Australia".
     
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Jul 19, 2013, 02:56 PM
 
corruption and waste.
     
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Jul 19, 2013, 03:51 PM
 
The "you should buy it" comment got me to thinking. While ridiculous, there's some merit to it, on a smaller scale. The Automotive Hall of Fame in Dearborn is in sad shape, financially. I'm inquiring to see what can be done.
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Jul 19, 2013, 04:00 PM
 
Public sector unions piss me the $@#! off. It was significantly exacerbated when I worked for the federal government doing tech support.

I went into the office of my customer agency's union president, and her entire (might I add, enormous for someone who was not a chief officer or agency administrator) office was plastered in pro-union propaganda. It made me pretty damn angry.

I hate unions, but I don't necessarily have to buy products from a company who supports large unions. It should absolutely not be legal for public employees whose salaries are paid by the taxpayers of the country, state, or municipality to unionize. Public servants are just that - serving their community. It is not supposed to be a goddamn cushy job where you are guaranteed employment, regular salary increases, bonuses, and on top of that get collective bargaining rights. Are you kidding me?! Christ.
     
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Jul 19, 2013, 04:47 PM
 
Originally Posted by shifuimam View Post
Public sector unions piss me the $@#! off. It was significantly exacerbated when I worked for the federal government doing tech support.

I went into the office of my customer agency's union president, and her entire (might I add, enormous for someone who was not a chief officer or agency administrator) office was plastered in pro-union propaganda. It made me pretty damn angry.

I hate unions, but I don't necessarily have to buy products from a company who supports large unions. It should absolutely not be legal for public employees whose salaries are paid by the taxpayers of the country, state, or municipality to unionize. Public servants are just that - serving their community. It is not supposed to be a goddamn cushy job where you are guaranteed employment, regular salary increases, bonuses, and on top of that get collective bargaining rights. Are you kidding me?! Christ.

I think it might be a good idea to be a little more precise in saying that you hate what American unions have become. Unions have accomplished many positive things at various points in the history of this country, and surely others (e.g. Lenin) as well.
     
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Jul 19, 2013, 04:52 PM
 
I think it's a slippery slope to say some workers have rights and others don't. Then I also believe in not abusing those rights.
     
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Jul 19, 2013, 05:27 PM
 
I don't have any issues with voluntary collective bargaining, provided employers have the right to determine who they hire(union/nonunion) and fire as well.
     
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Jul 19, 2013, 05:59 PM
 
Originally Posted by shifuimam View Post
Public sector unions piss me the $@#! off. It was significantly exacerbated when I worked for the federal government doing tech support.

I went into the office of my customer agency's union president, and her entire (might I add, enormous for someone who was not a chief officer or agency administrator) office was plastered in pro-union propaganda. It made me pretty damn angry.

I hate unions, but I don't necessarily have to buy products from a company who supports large unions. It should absolutely not be legal for public employees whose salaries are paid by the taxpayers of the country, state, or municipality to unionize. Public servants are just that - serving their community. It is not supposed to be a goddamn cushy job where you are guaranteed employment, regular salary increases, bonuses, and on top of that get collective bargaining rights. Are you kidding me?! Christ.
I gets even more sticky: Detroit Bankruptcy Fights Begin As Judge Declares It Unconstitutional

It's a local judge and has no bearing on a Federal issue such as bankruptcy, but it does show how nasty this is going to get.
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Jul 19, 2013, 06:33 PM
 
Voluntary unions I'm fine with. Lots of unions have mandatory membership, even if you are diametrically opposed to what the union does and stands for.

WRT unions in the past:

Unions had a very important place in the history of the American workforce. They did. You know, back before OSHA existed and workplace safety standards were both legislated and enforced.

I worked in manufacturing (corporate side, but I worked at a live mfg facility) in college and right out of college. We got random OSHA stings. We had to undergo OSHA training and certification annually, and employees who didn't actually work on the factory floor were given a corporate subsidy for one pair of OSHA-approved safety shoes. Factory workers got three pairs, uniforms, and prescription safety glasses if they needed them.

This kind of stuff wasn't happening at the start of the industrial revolution in the early 1900s. Children were forced to work in factories and there were zero safety standards or requirements. People died on the job. Work environments were incredibly hazardous and the pay did not remotely compensate for the risks works took every day just to scrape by.

This is why unions were formed - to do things like make sure employees weren't being abused, forced to work in hazardous conditions, and made to work sixty hour weeks without any appropriate compensation.

Today your average union member is a blue collar redneck who thinks it's "unfair" that outsourcing and automation have made their eight-hour-a-day job moving parts from one conveyor belt to another irrelevant. Other union members are postal workers or government employees, who have relatively cushy jobs (type of work compared to benefits and pay) but think it's "unfair" that pension plans are being removed in favor of employee-contributed 401(k)s and think it's "unfair" that their health insurance is no longer subsidized by the company to an extreme while providing an unnecessarily expensive level of coverage.

Unions destroyed the American auto industry. The politicians in the back pocket of the unions destroyed Detroit.

You are no longer faced with the prospect of no job options except making a dollar an hour in a hazardous work environment where you are expected to put in over 40 hours a week without appropriate compensation. Those jobs don't exist anymore because they are illegal. We don't need unions like we used to. Now, you can anonymously call OSHA to report a workplace safety violation. You can report your employer to DOL if he refuses to pay time and a half for hourly employees over forty hours a week. Federal and state minimum wages ensure that nobody can force you to work for pennies a day.

Unions these days are just corporations run by thugs instead of old white guys. They do things like bully the government into banning any non-union business in the districts where they hold the most power. They do things like blackmail, through vicious strike threats, their employers into meeting their demands, even if meeting those demands will send their employers into bankruptcy - like what we saw happen with the American auto industry.
     
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Jul 21, 2013, 09:17 PM
 
Originally Posted by Shaddim View Post
The "you should buy it" comment got me to thinking. While ridiculous, there's some merit to it, on a smaller scale. The Automotive Hall of Fame in Dearborn is in sad shape, financially. I'm inquiring to see what can be done.
They're soon to be auctioning off part of their exhibits, especially many in storage that were to be restored and shown in the future. Sad.
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Jul 22, 2013, 03:53 AM
 
I would just buy it if I were you
     
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Jul 22, 2013, 12:47 PM
 
Originally Posted by el chupacabra View Post
I would just buy it if I were you
Heh. I'm not that into Detroit muscle.
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Jul 22, 2013, 01:25 PM
 
Originally Posted by knifecarrier2 View Post
Was going to write essentially the same thing. Unions aren't the problem. Gutting production in the states is. Move enough production somewhere else, and a city can't sustain itself without some sort of industry.
The public sector unions, not the UAW. Detroit pays their retirees 80% of their work era salaries, and other bennies. When the populace shrunk the city government didn't. Poor management, and corrupt politicians.
     
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Jul 22, 2013, 01:31 PM
 
Detroit should rent itself out as a giant set for all those Zombie movies since they have all those empty, abandoned buildings.
     
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Jul 22, 2013, 01:46 PM
 
Except they might get attacked by real zombies during the shooting. You never know whats crawling around in some those places.
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Jul 22, 2013, 01:48 PM
 
I'm hoping for live-action Fallout.
     
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Jul 22, 2013, 02:28 PM
 
Read Paul Krugman's column and be cured of your obsession with union excess being to blame. I note that the Boeing CEO recently said that he was laying off the engineers in Seattle who design their airplane software and moving the jobs to SoCal and South Carolina because the engineers in Seattle (unionized) made too much money and could work for Microsoft and Amazon without moving.
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Jul 22, 2013, 02:33 PM
 
LOL, reading Krugman will never cure you, only make you dumber.

-t
     
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Jul 22, 2013, 02:55 PM
 
Krugman is a laughing stock. OF COURSE it's the corrupt political hacks who got elected by UNION THUGS in exchange for those cushy deals. 1962 until now it has been run by DEMOCRATS. They have a pattern as you can see from California, NYC, Chicago etc.
     
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Jul 22, 2013, 05:49 PM
 
LIBS, DEMS, UNION THUGS!

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Jul 22, 2013, 06:52 PM
 
Originally Posted by BadKosh View Post
Krugman is a laughing stock. OF COURSE it's the corrupt political hacks who got elected by UNION THUGS in exchange for those cushy deals. 1962 until now it has been run by DEMOCRATS. They have a pattern as you can see from California, NYC, Chicago etc.
So the current year national deficit is due to social security future growth. I suggest repeating third grade arithmetic for all deniers of evolution as well as those who accept straw man diversions from the looters of our society.
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Jul 22, 2013, 10:02 PM
 
Originally Posted by SVass View Post
So the current year national deficit is due to social security future growth. I suggest repeating third grade arithmetic for all deniers of evolution as well as those who accept straw man diversions from the looters of our society.
Mene, mene, Tekel, upharsin
Sam
WTF ?

-t
     
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Jul 23, 2013, 12:16 AM
 
Originally Posted by turtle777 View Post
WTF ?

-t
He said the debt went up because the government socked $1T, that we didn't have, into entitlements this year. Basically, it's what happened in Detroit, but on a larger scale (with the same eventual result).
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Jul 23, 2013, 12:14 PM
 
Originally Posted by Shaddim View Post
He said the debt went up because the government socked $1T, that we didn't have, into entitlements this year. Basically, it's what happened in Detroit, but on a larger scale (with the same eventual result).
A DEFICIT has nothing to do with a long term debt. As I said, arithmetic appears to be a stumbling block for those who blame unions. Mismanagement for the sake of short term gains creates deficits. Phony accounting by those same managers leads to bankruptcies. Along the way, they blame the laborer to divert attention while they get away with their loot.
Sam
     
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Jul 23, 2013, 02:44 PM
 
This thread has taken a predictable turn. I'll put some numbers on it to add a bit of perspective:

Detroit’s pension shortfall accounts for about $3.5 billion of the $18 billion in debts that led the city to file for bankruptcy last week. How it handles this problem — of not enough money set aside to pay the pensions it has promised its workers — is being closely watched by other cities with fiscal troubles.
Cries of Betrayal as Detroit Plans to Cut Pensions | NYTimes.com

Public pension debts account for a grand total of 20% of the total debt of Detroit. Yet unsurprisingly they are getting a good 90+% of the blame among our good friends on the right. Imagine that.

OAW
( Last edited by OAW; Jul 23, 2013 at 03:02 PM. )
     
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Jul 23, 2013, 03:31 PM
 
Originally Posted by SVass View Post
A DEFICIT has nothing to do with a long term debt. As I said, arithmetic appears to be a stumbling block for those who blame unions. Mismanagement for the sake of short term gains creates deficits. Phony accounting by those same managers leads to bankruptcies. Along the way, they blame the laborer to divert attention while they get away with their loot.
Sam
So you think both the current defecit as well as long-term debt are absolutely unaffected by past promises and future unfunded liabilities ?

And regarding math: if you talk about phony accounting, cash accounting used by the government should be on the top of that list.
Nothing is more dishonest than that. Obfuscation of future liabilities and current state of affairs is the main reason government hides behind this archaic accounting practice.

-t
     
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Jul 23, 2013, 03:35 PM
 
Originally Posted by SVass View Post
A DEFICIT has nothing to do with a long term debt.
It sure does, they aren't paying it off anytime soon. When you borrow money, it just accrues interest. Since they aren't paying anything on the principle, that remains with us, probably until the wheels fall off this money-grabbing joyride.

As I said, arithmetic appears to be a stumbling block for those who blame unions. Mismanagement for the sake of short term gains creates deficits. Phony accounting by those same managers leads to bankruptcies. Along the way, they blame the laborer to divert attention while they get away with their loot.
Sam
Just because you feel a certain way doesn't mean you're right. You need to sit and read what a deficit is, it means spending money you don't have, regardless of who is doing the spending OR if you can pay off the short in the forseeable future (Detroit couldn't, and neither can the USA). If you have a plan to shore-up a one time charge, it can work, unfortunately Detroit didn't. Over the last 15 years they were deficit spending at a rate of 180%, year-over-year. That's insane. Essentially the way they tried to operate is they were borrowing from Peter to pay Paul, who then makes payments to Mark, to cover Cindy's salary, while skimming 20% off the top along the way to cover Bert's retirement, and it doesn't work.

NO political party is clean, none of them. Every one of them has angles that they work, with the ultimate goal of keeping their people in power as long as they can, while playing a shell game with everyone's tax money. That's reality, don't fool yourself into believing that your guys are different. No career politician is righteous.
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Jul 23, 2013, 03:40 PM
 
Originally Posted by OAW View Post
This thread has taken a predictable turn. I'll put some numbers on it to add a bit of perspective:



Cries of Betrayal as Detroit Plans to Cut Pensions | NYTimes.com

Public pension debts account for a grand total of 20% of the total debt of Detroit. Yet unsurprisingly they are getting a good 90+% of the blame among our good friends on the right. Imagine that.

OAW
Yeah, I just covered the supposed "only 20%" issue, it works out to be much more "creative" than that.
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Jul 24, 2013, 07:08 AM
 
Originally Posted by SVass
A DEFICIT has nothing to do with a long term debt.
Deficit: the amount by which something, esp. a sum of money, is too small.
Debt: something, typically money, that is owed or due.

Budget: an estimate of income and expenditure for a set period of time.

A budget shortfall is deficit; deficits have to be reconciled by something over and above what is available via income. How? First, try to raise more income (tax revenue) at an oppressive rate that slowly and methodically drives out those able to relocate and borrow the remainder.

Borrow: take and use (something that belongs to someone else) with the intention of returning it.

If this sounds like debt, it's because it is debt. I don't know what motivates people to ignore the patently obvious, but it can't be out of concern for horrible fiscal policy. Annual, accumulating, unfunded liabilities (deficit) in fact have EVERYTHING to do with longterm money-owed. (debt)

This same philosophy is being employed at the Federal level and will inevitably manifest in the exact same manner. Worse, oppressive taxation combined with oppressive regulation leaves the only entities capable of helping them grow out of their mess are growing other States out of theirs by relocating; States with lower rates of taxation and pro-growth fiscal policy.
ebuddy
     
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Jul 24, 2013, 09:31 AM
 
Originally Posted by ebuddy View Post
Deficit: the amount by which something, esp. a sum of money, is too small.
Debt: something, typically money, that is owed or due.
...
A budget shortfall is deficit; deficits have to be reconciled by something over and above what is available via income. How? First, try to raise more income (tax revenue) at an oppressive rate that slowly and methodically drives out those able to relocate and borrow the remainder.
...... Annual, accumulating, unfunded liabilities (deficit) in fact have EVERYTHING to do with longterm money-owed. (debt)
...
Unfortunately, some use an old political "projected" unfunded federal liability and an old federal "current deficit" and Detroit naysayers use the claim by the biased bankruptcy manager for the pension unfunded deficit. All of these projections are political bs. The CBO now admits that if immigration is reformed our future "projected" federal liability will be far lower. The GAO now says that ObamaCare is reducing our current deficit. Greenspan once said that if our annual growth rate were slightly higher, we would run a long term surplus. (Let me use his projections and I can

The original argument about "unions" causing Detroit's failure was nonsense just as is the argument that union demands cause manufacturing companies to outsource or move jobs in order to survive. CEOs move jobs to lower wage states and countries because they get a personal bonus (and a corporate tax break) for short term improvements in the value of their company's stock. Earlier, I pointed out that top Boeing executives have essentially publicly admitted this in defending their move to South Carolina.
sam
     
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Jul 24, 2013, 02:25 PM
 
Originally Posted by SVass View Post
The original argument about "unions" causing Detroit's failure was nonsense just as is the argument that union demands cause manufacturing companies to outsource or move jobs in order to survive. CEOs move jobs to lower wage states and countries because they get a personal bonus (and a corporate tax break) for short term improvements in the value of their company's stock. Earlier, I pointed out that top Boeing executives have essentially publicly admitted this in defending their move to South Carolina.
sam
Apparently it is not OK for companies and cooperation to shop around for the resources with the best value. But when customers exercise their choice of finding the best value when buying products its alright.

If I pay a person to manage my investments(i dont really have any at this point in my life) and they find a way to make me even more, chances are I too would pay them a bonus for doing so. (And if they failed to do so, I would gladly take my investments elsewhere, maybe you are different in this regard? Example: Do you choose the worse performing stocks intentionally?).

Fact is the unions(with the help from politicians) in Michigan did make the labour force in that state grossly uncompetitive. And now that those manufacturing jobs have gone, maybe the unions can create better jobs for their members? Since they are so interested in their member's best interests, of course. (I wonder if there's a union which represents the unemployed).

South Carolina gets the jobs, the income and the increased tax revenue from the newly created jobs from Boeing. Good on them for competing effectively (instead of going in the opposite direction and blaming others).

Cheers
     
 
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