<p>I think we can say that anyone who was honest and sober about this fiasco saw the judge’s ruling coming from a mile away.</p>
<p>And painful though it may be, it’s probably the right course of action. Saw a pensioneer fireman interviewed this morning. He’s disabled, so his 30K pension is his life’s blood. But how do we pick and choose the ultimate losers? No one DESERVES a cut, but Detroit has no money, plain and simple.</p>
<p>And cases like the Susan Muranishi affair in California just add gas to the fire of taxpayer agitation; already upset about the high costs of government. She’s the retiring Administrator of Alemeda County whose pension is over 400K per year. Ouch!!!</p>
<p>Detroit’s pension problem is loss of population not generous benefits. The city has lost well over 1 million people and those who remain are old and poor or minority and poor. While there must be cases of high pensions to the undeserving, the gist is you can’t lose over 60% of your population and not get whacked.</p>
<p>And much of the debt was run up because the city tried to stay current on work and bills. They tried to raise funds and were fleeced by Wall Street with swaps that cost a ton to pay off. They borrowed money to do electrical upgrades but literally didn’t have the people left to do the work. And on and on. Even the storied “13th check” was actually fought by the city but it’s state law - mandating payment if actuarial returns exceed x - and the city lost.</p>
<p>The government is dysfunctional. The City Council still acts as though they can reverse decline. Example: a refusal to lease Belle Isle to the state because they didn’t want to give up control, followed by insistence on their own terms. (State said uh-uh and did it anyway.) So there is a degree of political denial, but the problems are way beyond politics. </p>
<p>The issue of pension benefits is interesting to me because here we have a federal judge tossing out a state’s constitutional provisions and acts of its legislature in favor of federal law … and being applauded for that by “conservatives”. Um, if you’re in favor of state power versus federal power, you should be consistent. This matter will require further litigation. </p>
<p>I note that Illinois just handled their pension issues by, in part, capping salary eligibility to handle those ridiculously high pensions top people earn (and sometimes double up on). Problem with Detroit is they literally can’t afford even the reduced level of some benefits, not so much the actual retirement payments but health costs. </p>
<p>As for cuts, I think anyone who lent money to Detroit should get 1 penny back on the dollar, as has been proposed in some other municipal cases. The problem with doing that has historically been the chilling effect on the municipal bond market. I’m not convinced that wouldn’t be a bad thing given the loans made to places like Harrisburg and Birmingham, AL (Jefferson County) and to numerous authorities whose borrowings are essentially kept off book until they are in serious trouble.</p>
<p>I don’t understand how it’s legal to cut someone’s pension. I on the news last night a former city employer whose pension is currently 3K a month but now he’s going to be getting 16 cents on the dollar, leaving him with $400 a month. </p>
<p>How do we expect people to live on $400 a month? How is that legal? Ethical? Possible in a civilized society?</p>
<p>I speak from personal fear as well. My husband is retired from the military. We stayed in the military in part because of what we were promised in the way of a pension. If they cut our pension down to an unlivable amount, do we get all those years apart back? I don’t think so. Do we get those nine moves in 22 years back so that I could stay in one place and establish a job with benefits of my own? No.</p>
<p>I’m just shocked that this can really happen. It’s so easy to say “well, there’s no money” but impossible to live on $400 a month. Is the price we are willing to pay really throwing people out on the street to fend for themselves like unwanted animals?</p>
<p>BKR you do understand that government employees make mandatory contributions to the pension plan, IN NJ cops pay 10% of their pay and teachers pay 7% of their pay. Why isn’t that saving for their retirement like most others?</p>
<p>The thing is these municipal pensions have gotten out of hand across most of the us not just in Detroit. Illinois just voted to alter theirs reduced the amount it’s underfunded to only 97 million. If not addressed further NO one will get anything. The money just isn’t there. Illinois is in a world of hurt with more than just pensions, schools have not received their payments from the state. The answer is to fund these as you go, because this don’t always go up in the investment world. It is sad. Very sad. But you can’t keep asking hard working Americans for more or you will cause them financial hardship.</p>
<p>these folks are contributing to their retirements. And for those that have “no contribution” retirements, they “are” contributing by getting paid less. It’s a trade-off. </p>
<p>If this sort of thing happened to our military (doubt it would), then the last thing I would be saying to those folks (who put their lives on the line for us, often at a lower pay) is “you should have saved for retirement.”</p>
<p>People who’ve been promised benefits should get them.</p>
<p>My SIL’s husband was in a union for 25+ years …working in the steel mills. Promised a retirement and is getting little or nothing. Heartbreaking</p>
<p>You act like that just happened. Coleman Young told people to leave. And Detroit property tax got jacked to among the highest of any major city and yet revenues have been falling.</p>
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<p>wow- you act like that is no big thing. </p>
<p>Detroit has a ~$200M a year deficit on a budget of $1.1B. Unless someone lends them money how are they supposed to write these checks?</p>
<p>Anyone that criticizes this bankruptcy should have half their net worth in municipal bonds before they talk.</p>
<p>And it had nothing to do with the fact that we were the hardest hit city in the “recession” and that most of the jobs just up and left with no replacements.</p>
<p>Of course it didn’t just “happen”. The jobs left and the people that could went with them. What’s left is the people that couldn’t (and can’t due to abysmal schools, no jobs, etc)</p>
<p>Perhaps creative solutions will emerge to minimize the pain that pensioneers might confront. But, pensioneers need to realize that some contracts are unenforcible…or that circumstances that neither party anticipated can ultimately make a deal/agreement essentially meaningless.</p>
<p>My pretty good guess is the Detroit bonds have been trading at a discount. Many owners of the bonds have bought the bonds at a discount. Probably a pretty good discount. </p>
<p>I dont think the bondholders should be taken out at par. Getting paid back a penny on the dollar looks a little extreme. There are different bonds outstanding. I dont know if some bonds should have better paybacks. How large is the debt? How much debt can Detroit handle?</p>
<p>My 15 percent number is a little low. Most pensioners do not have large pensions.</p>