Detroit Becomes Largest U.S. City To File Bankruptcy

[xavier]

Might be a good time to buy-to-rent in Detroit. Especially if the USD tanks as that will mean that inland production will go up (imports gets more expensive). The bankruptcy might lead to better financial control and federal money/ local tax breaks etc

If I was in the US and wanted to start up a production facility, Detroit might be a likely location.

From the bottom the only way is up.  

Wow. It would take some real balls to invest in Detroit right now. Well, furthermore, to invest in any business in the USA right now takes balls, IMO.

Btw, anyone notice article today in WSJ talking about the effects of this on the European banks? Seems UBS was involved in lending to the Detroit muni back in the boom years.

http://online.wsj.com/article/SB10001424127887324328904578619993814520624.html?mod=WSJEurope_hpp_LEFTTopStories

[worldinacoin]

I predict more cities will file for Chapter 11.

[CurbsideProphet]

Is anyone really surprised by this?  Detroit has been a ghost town for years.  You can buy actual houses there for $5,000, but why would you want to?  People strip the houses for copper there and probably get away with it.  The city has been abandoning large portions of what used to be part of the city just because a) no one lives there any more and b) it can't afford to keep them up.

The only thing that surprises me about this is that it took them this long to declare bankruptcy.

This.  Pictures don't lie.

http://www.mackinac.org/images.aspx?ID=7453#1961

[Peter Lambert]

Is anyone really surprised by this?  Detroit has been a ghost town for years.  You can buy actual houses there for $5,000, but why would you want to?  People strip the houses for copper there and probably get away with it.  The city has been abandoning large portions of what used to be part of the city just because a) no one lives there any more and b) it can't afford to keep them up.

The only thing that surprises me about this is that it took them this long to declare bankruptcy.

This.  Pictures don't lie.

http://www.mackinac.org/images.aspx?ID=7453#1961

The simple fact is Detroit has high property taxes and a 2.5% income tax, while none of the suburbs have any income tax. So anybody who earns income has an incentive to move out of the city, and the only people left are the ones who don't earn any money. Having a city full of unemployed people is a recipe for disaster.

[wachtwoord]

Is anyone really surprised by this?  Detroit has been a ghost town for years.  You can buy actual houses there for $5,000, but why would you want to?  People strip the houses for copper there and probably get away with it.  The city has been abandoning large portions of what used to be part of the city just because a) no one lives there any more and b) it can't afford to keep them up.

The only thing that surprises me about this is that it took them this long to declare bankruptcy.

This.  Pictures don't lie.

http://www.mackinac.org/images.aspx?ID=7453#1961

The simple fact is Detroit has high property taxes and a 2.5% income tax, while none of the suburbs have any income tax. So anybody who earns income has an incentive to move out of the city, and the only people left are the ones who don't earn any money. Having a city full of unemployed people is a recipe for disaster.

Wow, what brainiac came up with that taxing strategy? 

[DeathAndTaxes]

Is anyone really surprised by this?  Detroit has been a ghost town for years.  You can buy actual houses there for $5,000, but why would you want to?  People strip the houses for copper there and probably get away with it.  The city has been abandoning large portions of what used to be part of the city just because a) no one lives there any more and b) it can't afford to keep them up.

The only thing that surprises me about this is that it took them this long to declare bankruptcy.

This.  Pictures don't lie.

http://www.mackinac.org/images.aspx?ID=7453#1961

The simple fact is Detroit has high property taxes and a 2.5% income tax, while none of the suburbs have any income tax. So anybody who earns income has an incentive to move out of the city, and the only people left are the ones who don't earn any money. Having a city full of unemployed people is a recipe for disaster.

Wow, what brainiac came up with that taxing strategy? 

Governments (all governments) are addicted to your money.

It generally starts like this. Government has a "reasonable" (or at least one accepted by populace) tax rate.  Boom years come and govt doesn't save that excess tax revenue, or pay down debt, or lower rates to assist economic expansion.  No more money means only one thing = MORE MONEYZ TO SPEND!!!!!!!.  Some govt will actually not only spend the surplus loot pouring into coffers but then BORROW even more on top of the peaking tax revenue.  However they get use to this level  of expenditure.  Rather than see it as a windfall it becomes the new baseline.  Never mind that 10 years ago they govt got along fine with half the revenue this is now the absolute minimum that is "necessary" to keep the govt running.

Then the lean years come.  Same rate on less property and income means less tax revenue.  Why is the government going to do?  Cut spending?  HAVE YOU LOST YOUR MIND MAN?  The govt is "barely" surviving on the old tax base (no longer seen as a windfall it is the baseline) many in the govt had already planned to increase taxes or borrow more but this fall in revenue well that means there is no choice.  So rates go up and people leave (or recession continues) so what is the "only" option?  Obviously rates need to go higher and higher and higher and higher and higher.

Chicago is just excessively corrupt.  The exact same thing is happening at the federal level right now. 

[marcus_of_augustus]

I predict more cities will file for Chapter 11.

I don't think that qualifies as a 'prediction' any longer. It is a mathematical certainty.

It's called "taxing themselves to prosperity" .... prosperity is sufficiently loosely defined that it can mean anything your local socialist politician wants it to mean.

[marcus_of_augustus]

The United Auto Workers and American Federation of State, County and Municipal Employees Council 25, two of the Detroit's public union leader heads organised a news conference on the second half of Monday to discuss the alleged constitutional violations in the Detroit's bankruptcy petition.

"I am outraged at how the city's 20,000 public-sector employees have been treated by the governor and the city's new leadership. I know how bargaining can work in difficult crisis situations," Bob King, united auto workers president said.

"In the auto industry, labour with management, the community and government, we all worked together and look at the industry now."

Streets of the city saw Firefighters yesterday from plenty dozen engine houses who organised rallies across Detroit. These rallies would be followed by a series of such gatherings every day in this week. Participating workers at the protest said that the rallies are not strikes but rather are "a way to send a message to city residents."

http://www.ibtimes.co.uk/articles/493573/20130723/detroit-bankruptcy-hearing-federal-court-workers-protest.htm

Wonder what that message is? ... "the looting is going to get really ugly from here on in" springs to mind.

[jedunnigan]

Might be a good time to buy-to-rent in Detroit. Especially if the USD tanks as that will mean that inland production will go up (imports gets more expensive). The bankruptcy might lead to better financial control and federal money/ local tax breaks etc

If I was in the US and wanted to start up a production facility, Detroit might be a likely location.

From the bottom the only way is up.  

Wow. It would take some real balls to invest in Detroit right now. Well, furthermore, to invest in any business in the USA right now takes balls, IMO.

Btw, anyone notice article today in WSJ talking about the effects of this on the European banks? Seems UBS was involved in lending to the Detroit muni back in the boom years.

http://online.wsj.com/article/SB10001424127887324328904578619993814520624.html?mod=WSJEurope_hpp_LEFTTopStories

http://www.mlive.com/business/detroit/index.ssf/2013/07/dan_gilbert_detroit_bankruptcy.html

Dan Gilbert is dropping billions into Detroit real estate. Apparently the man has vision.

[CurbsideProphet]

Might be a good time to buy-to-rent in Detroit. Especially if the USD tanks as that will mean that inland production will go up (imports gets more expensive). The bankruptcy might lead to better financial control and federal money/ local tax breaks etc

If I was in the US and wanted to start up a production facility, Detroit might be a likely location.

From the bottom the only way is up.  

Wow. It would take some real balls to invest in Detroit right now. Well, furthermore, to invest in any business in the USA right now takes balls, IMO.

Btw, anyone notice article today in WSJ talking about the effects of this on the European banks? Seems UBS was involved in lending to the Detroit muni back in the boom years.

http://online.wsj.com/article/SB10001424127887324328904578619993814520624.html?mod=WSJEurope_hpp_LEFTTopStories

http://www.mlive.com/business/detroit/index.ssf/2013/07/dan_gilbert_detroit_bankruptcy.html

Dan Gilbert is dropping billions into Detroit real estate. Apparently the man has vision.

Well he's certainly buying when there's blood in the streets, people are fearful, and all the other applicable adages.

[xavier]

Might be a good time to buy-to-rent in Detroit. Especially if the USD tanks as that will mean that inland production will go up (imports gets more expensive). The bankruptcy might lead to better financial control and federal money/ local tax breaks etc

If I was in the US and wanted to start up a production facility, Detroit might be a likely location.

From the bottom the only way is up.  

Wow. It would take some real balls to invest in Detroit right now. Well, furthermore, to invest in any business in the USA right now takes balls, IMO.

Btw, anyone notice article today in WSJ talking about the effects of this on the European banks? Seems UBS was involved in lending to the Detroit muni back in the boom years.

http://online.wsj.com/article/SB10001424127887324328904578619993814520624.html?mod=WSJEurope_hpp_LEFTTopStories

http://www.mlive.com/business/detroit/index.ssf/2013/07/dan_gilbert_detroit_bankruptcy.html

Dan Gilbert is dropping billions into Detroit real estate. Apparently the man has vision.

Well he's certainly buying when there's blood in the streets, people are fearful, and all the other applicable adages.

Unfortunately for him, it is quite possible that "all applicable adages" - that would have applied in the past 50 years - are simply not applicable in today's world. For the same reason, I believe many existing successful investors like Warren Buffett - who see the situation in the USA as improving - are totally wrong.

There's an interesting article by Meredith Whitney in the Financial Times today - titled "Detroit aftershocks will be staggering" - about Detroit and how there are a whole collection of states in a similar position, ready to do the whole thing. Anybody read it? It's on pastebin

In my opinion, Meredith Whitney is one of the smartest people on Wall Street right now, and furthermore she has the balls to come out and say what's actually going on in the USA. Which says a lot about Wall Street, since she's a woman.

http://vpaste.net/la3QH

[DPoS]

There's an interesting article by Meredith Whitney in the Financial Times today - titled "Detroit aftershocks will be staggering" - about Detroit and how there are a whole collection of states in a similar position, ready to do the whole thing. Anybody read it? It's on pastebin

In my opinion, Meredith Whitney is one of the smartest people on Wall Street right now, and furthermore she has the balls to come out and say what's actually going on in the USA. Which says a lot about Wall Street, since she's a woman.

http://vpaste.net/la3QH

remember she saw this coming years ago..  most were able to kick the can pretty long but since only the Fed cna print forever that makes the rest have to keep up pn spending but only fall into more debt

its all by design..   suck the wealth out and then the bankers will go east

[jedunnigan]

Unfortunately for him, it is quite possible that "all applicable adages" - that would have applied in the past 50 years - are simply not applicable in today's world. For the same reason, I believe many existing successful investors like Warren Buffett - who see the situation in the USA as improving - are totally wrong.

There's an interesting article by Meredith Whitney in the Financial Times today - titled "Detroit aftershocks will be staggering" - about Detroit and how there are a whole collection of states in a similar position, ready to do the whole thing. Anybody read it? It's on pastebin

In my opinion, Meredith Whitney is one of the smartest people on Wall Street right now, and furthermore she has the balls to come out and say what's actually going on in the USA. Which says a lot about Wall Street, since she's a woman.

http://vpaste.net/la3QH

Good read, thanks. I agree with your first statement, it's either a sham or plain old ignorance. You pick.

[herzmeister]

A house for 5 bitcoins

http://www.reddit.com/r/Bitcoin/comments/1ix0a2/a_house_for_5_bitcoins/

[btceic]

http://www.businessinsider.com/meredith-whitney-on-detroit-2013-7

Meredith Whitney: 'Detroit Will Start A Wave of Municipal Bankruptcies'

There are five more towns like Detroit in Michigan alone. There are many more municipalities across the country in similar positions.

At the root of the problem is the incentive system that elected officials used to face. For decades, across the US, local leaders ran up tabs for future taxpayers; they promised pensions and other benefits for public employees that have strong legal protection. That has been a great source of patronage for elected officials: they can promise all sorts of future perks to loyal supporters (state and local workers) with very little accountability on the delivery of those promises.

[ibminer]

I heard KISS is coming out with a new single:   Detroit Broke City

Sorry, I couldn't resist.

[CurbsideProphet]

Might be a good time to buy-to-rent in Detroit. Especially if the USD tanks as that will mean that inland production will go up (imports gets more expensive). The bankruptcy might lead to better financial control and federal money/ local tax breaks etc

If I was in the US and wanted to start up a production facility, Detroit might be a likely location.

From the bottom the only way is up.  

Wow. It would take some real balls to invest in Detroit right now. Well, furthermore, to invest in any business in the USA right now takes balls, IMO.

Btw, anyone notice article today in WSJ talking about the effects of this on the European banks? Seems UBS was involved in lending to the Detroit muni back in the boom years.

http://online.wsj.com/article/SB10001424127887324328904578619993814520624.html?mod=WSJEurope_hpp_LEFTTopStories

http://www.mlive.com/business/detroit/index.ssf/2013/07/dan_gilbert_detroit_bankruptcy.html

Dan Gilbert is dropping billions into Detroit real estate. Apparently the man has vision.

Well he's certainly buying when there's blood in the streets, people are fearful, and all the other applicable adages.

Unfortunately for him, it is quite possible that "all applicable adages" - that would have applied in the past 50 years - are simply not applicable in today's world. For the same reason, I believe many existing successful investors like Warren Buffett - who see the situation in the USA as improving - are totally wrong.

There's an interesting article by Meredith Whitney in the Financial Times today - titled "Detroit aftershocks will be staggering" - about Detroit and how there are a whole collection of states in a similar position, ready to do the whole thing. Anybody read it? It's on pastebin

In my opinion, Meredith Whitney is one of the smartest people on Wall Street right now, and furthermore she has the balls to come out and say what's actually going on in the USA. Which says a lot about Wall Street, since she's a woman.

http://vpaste.net/la3QH

Whitney has been warning of a muni collapse for years now.  Maybe she was just off on her timing and is now going to be proven correct.  Only time will tell.  We've seen municipalities default before Detroit and we'll see more after, but nothing on the scale of a city like Detroit. 

[herzmeister]

Apparently there are some anarchist / agorist initiatives in Detroit now.

http://thestateweekly.com/with-detroits-bankruptcy-anarchists-have-begun-project-free-detroit-starting-a-community-2/

Time for Bitcoin?

[Bitcoinpro]

they finally filed for bankruptcy, how much longer will GM be headquartered there, maybe its just an empty office building 

[Peter Lambert]

they finally filed for bankruptcy, how much longer will GM be headquartered there, maybe its just an empty office building 

Why would GM move now? It is not like it can get any worse!