By: Dave Palmer
Detroit’s bankruptcy case is is full swing, and the stakes couldn’t be higher for Detroit. Ultimately, it will be up to one man, Judge Stephen Rhodes, to decide whether to accept Kevyn Orr’s “Grand Bargain” which would require creditors to accept between 0 and 10 cents on the dollar, cut pensions by 4.5% along with some cost of living adjustments, all while providing $1.2 billion for the improvement of public services, or to reject it an require the city to pay the 75 cents on the dollar Syncora is requesting by turning over the Windsor-Detroit tunnel, Detroit’s City Airport, and the Detroit Institute of Arts, no doubt accompanied by more severe cuts to pensions.
It is at this point that I begin to wonder if bankers actually believe that they can get blood from a stone. It would appear they intend to do so by privatizing publicly owned assets, and even assets that are not wholly owned and financed by the city of Detroit, even seemingly expecting people outside the city should help bail them out of their greed, not to mention depriving seniors of their duly earned retirement benefits.
Detroit’s public service retirees agreed to forfeit certain additional compensation in order to provide themselves an income they could live on in their golden years. These are not golden parachutes, mind you. The value of the pensions in question will hold steady at somewhere between $20,000 and $30,000 per year before the 4.5% cut goes into effect. Yet, these people are being required to give up part of what amounts to their retirement savings plan in order to correct the errors in the management of the pension fund. Errors that they did not make, errors they did not ask for, errors in calculation that are wholly the responsibility of the pension fund managers. Somehow, the blame got shifted to the workers.
Damn them for wanting a comfortable retirement, damn them for requesting the full value of their retirement savings, how dare they be so greedy as to not want to have to work for their money, and instead have their money work for them! (Never mind that man in the three-piece suit smoking a cigar behind the curtain doing the exact same thing, except for the fact that when he loses money, he wants everybody else to help him pay for his mistakes)
Of course, the man behind the curtain will not be happy unless the public parts with services and establishments they paid for with their tax dollars are turned over to him. Never mind that old conservative belief that public money should never be used to bail out private interests. Those beliefs obviously do not apply to the billions of dollars the man behind the curtain gambled away and summarily lost.
So, we are expected to part ways with another international border crossing to allow yet another private interest control our only other local connection to Windsor. We are expected to allow Syncora to march in and take over toll collections and tunnel maintenance, all while maintaining a tidy profit margin for their shareholders. (Of course, tolls will no doubt skyrocket as the company claims that the cost of maintaining the tunnel was greater than what they expected and it’s up to us poor waifs to pay for their miscalculation.)
Not only that, but the tri-county area is apparently on the hook for the terrible management of Detroit’s finances as well, considering that Syncora is also demanding we turn over the DIA. Never mind that ballot item we passed a few years ago agreeing to help fund the DIA with some of our tax dollars in exchange for free admission to the museum at any time. Never mind that the art in the museum is technically held in a public trust, and can only be sold or traded for the enhancement or improvement of the collection. The entire tri-county area should summarily turn over their tax dollars to Syncora and allow them to start charging an admission to the museum of top of that so their balance sheets can consistently show numbers in the black.
And of course, the corporate welfare scheme would not be complete without a private airport for Syncora executives and all their uber-wealthy buddies to land their private jets and helicopters. Never mind that the surrounding area will no doubt be bought for a song, gated communities and Hilton hotels built, and property values jacked so high that no one but the .01% will be able to afford to visit, much less live there.
It is at this point that I’ve had quite enough of this nonsense.
It is not the fault of the retirees that the pension fund managers mismanaged their retirement plan. Therefore, we should hold the pension fund managers responsible. We helped fund the DIA, helped fund the tunnel, and helped fund the airport, so all those public assets should be off-limits to private interests. Most of all, we should be holding the banks and bond purchasers responsible for their poor investments.
I can’t get a fourth credit card to pay of the other three I’ve already maxed out. How is it then that Detroit was able to qualify for loan after loan and loans to pay off loans? All the bankers and insurers could see is the piles of money they would be raking in from interest, penalties, and insurance premiums. Never mind that investment technically has two possible outcomes of success or failure. In the mind of bankers, even failure needs to be a success, regardless of the cost to the economy, the general public, or even the nation.
Therefore, we can solve this problem by requiring investors to eat crow and write off their bad investments. If we allow banks to make bad business deals, bad investments, and bad credit decisions and require the public to replace the money they have lost in those deals, what consequences for their actions are they experiencing? The more we continue to require the public to bail out private interests, the more bold they will become in their gambling, the more they will fail, and the more they will come back to the public with their hands out like a child who has spent all of his allowance money on a toy they broke in the first five minutes they played with it. Judge Stephen Rhodes has an opportunity to make big banks and bond insurers have some culpability for their mistakes. It would be most wise for him to use this power to its greatest effect.