Six crazy ideas for saving Detroit

doctorquant · Sep 26, 2013

wicked said:

Museums saying they'll sell off works never goes over well.

http://www.boston.com/ae/theater_arts/articles/2010/05/16/artists_donors_still_unhappy_with_rose/
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As I recall correctly, the really valuable portions of Detroit's collection can't be sold. They weren't donated so much as they were loaned ... again, that's on quick recall; could be in error.

old_tony · Sep 26, 2013

YankeeFan said:

93Devil said:

So America is eating a shit sandwich for years and new president comes along with a major overhaul of everything that is going on and America is no longer eating that shit sandwich.

Now your counter is we don't really know it was the major overhaul that caused the recovery. What was it? Magic?
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Roosevelt came into office in 1933.

You want to attribute the increase in economic activity in 1939 to the policies of a "new President"?
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Funny, though, how GDP rocketing in the '80s has nothing to do with Reagan in their book.

doctorquant · Sep 27, 2013

Starman said:

YankeeFan said:

Well, this didn't help:

Detroit’s municipal pension fund made payments for decades to retirees, active workers and others above and beyond normal benefits, costing the struggling city billions of dollars and helping push it into bankruptcy, according to people who have reviewed the payments.

The payments, which were not publicly disclosed, included bonuses to retirees, supplements to workers not yet retired and cash to the families of workers who died before becoming eligible to collect a pension, according to reports by an outside actuary and other people with knowledge of the matter.

How much each person received is not known. But available records suggest that the trustees approving the payments did not discriminate; nearly everybody in the plan received them. Most of the trustees on Detroit’s two pension boards represent organized labor, and for years they could outvote anyone who challenged the payments.

nyti.ms/16JCaJR
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Remember, the bunch 'reviewing' the pension funds is hell-bent on the city being able to just wash its hands and walk away and not pay anybody a dime.

Although these days I guess that is considered both completely acceptable and in fact brilliant business.
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LOL ... yes, Detroit's pensioners and their trustees have been hogwashed by those malefactors of great wealth ...

http://www.bloomberg.com/news/2013-09-26/detroit-s-pension-madness.html

I’m kind of naïve. Usually when I see an underfunded pension, I think to myself “poor pensioners -- undone by a combination of stupid tax rules, volatile stock markets and mismanagement by trustees who tried to restore depleted fund assets with an investment approach you might call ‘desperate optimism’." Thus, I was not entirely prepared for the new revelations about the Detroit trustees’ custom of handing out annual holiday “bonuses” to workers, retirees and the City of Detroit. Between 1985 and 2008, they handed out roughly $1 billion this way. Had they been invested, one estimate says those funds would be worth almost $2 billion today -- or more than half the current shortfall in the funds.

These “bonuses” were used to lower the contribution the city was required to make, to give retirees a little something extra around Christmas time, and to fund individual savings accounts that workers are offered along with their pensions. In 2009, when the financial markets were completely frozen and the automakers were shotgunning through the bankruptcy courts, the pension trust paid 7.5 percent interest into those accounts -- which is about 7.5 percent more than they would have gotten at a bank. This while the pension funds were busy losing about a quarter of their value.

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It’s very hard for me to attribute this to something benign, like total economic illiteracy or gross inattention to their responsibilities as pension trustees. I can’t imagine that anyone who can read and do basic arithmetic ever thought that draining off the “excess earnings” in the good years could result in anything other than exactly what it has wrought: a pension fund so disastrously underfunded that it may not be salvageable. No, wait, that’s too kind: they were also draining off … what should we call them? “excess non-earnings”? in years when the economy was melting down, the Dow Jones was trading for less than a Mickey Mantle rookie card and the region’s chief industry was teetering on the brink of extinction. What could they possibly have been thinking?

My best guess is that they were thinking the pensions would have to be paid, one way or another. After all, it’s in the Michigan State Constitution. So they could pay out bonuses, please various constituencies, and then force the city or the state to make them whole when it all came tumbling down. They didn’t reckon with the possibility that the city would simply run out of money, and the state would decline to step in, leaving them with no deep pockets to make up for their mismanagement.
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Six crazy ideas for saving Detroit

doctorquant Well-Known Member

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Six crazy ideas for saving Detroit

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