http://www.zerohedge.com/news/2013-08-23/detroit-has-gone-dogs-literally
( Becoming " Dogtown " is just another symbol of the decay of a once proud City... )
Submitted by Tyler Durden on 08/23/2013 19:54 -0400
http://beforeitsnews.com/economy/2013/08/detroit-government-chooses-big-banks-over-the-american-people-once-again-2547028.html
http://www.freep.com/article/20130820/NEWS01/308200142/Detroit-Rosen-mediators-bankruptcy
( Becoming " Dogtown " is just another symbol of the decay of a once proud City... )
Detroit Has Gone To The Dogs... Literally
Detroit may be on its way to becoming a ghost town, but the disappearance of homo sapiens from the streets just means the largest US bankrupt city is about to have a new master - man's formerly best friend, in the form of tens of thousands of stray dogs most of which happen to be a particularly vicious breed of pit bulls. Step aside Motown, and say hello to Dogtown.
Bloomberg reports that as many as 50,000 stray dogs roam the streets and vacant homes of bankrupt Detroit, replacing residents, menacing humans who remain and overwhelming the city’s ability to find them homes or peaceful deaths. Dogs which are becoming ever hungrier, and ever less domesticated. "Dens of as many as 20 canines have been found in boarded-up homes in the community of about 700,000 that once pulsed with 1.8 million people. One officer in the Police Department's skeleton animal-control unit recalled a pack splashing away in a basement that flooded when thieves ripped out water pipes. “The dogs were having a pool party,” said Lapez Moore, 30." Well at least someone is having a party.
With everyone concerned about zombies roaming the streets in the Post-New Normal, it appears everyone forgot about the dogs. And especially the "Highland Park Red" pitbull.
Poverty roils the Motor City and many dogs have been left to fend for themselves, abandoned by owners who are financially stressed or unaware of proper care. Strays have killed pets, bitten mail carriers and clogged the animal shelter, where more than 70 percent are euthanized.“With these large open expanses with vacant homes, it’s as if you designed a situation that causes dog problems,” said Harry Ward, head of animal control....Pit bulls and breeds mixed with them dominate Detroit’s stray population because of widespread dog fighting, said Ward. Males are aggressive in mating, so they proliferate, he added.One type of fighting pit bull has become known as far as Los Angeles as the “Highland Park red,” named after a city within Detroit’s borders, Ward said.Their prevalence was clear as Ward and officers Moore and Malachi Jackson answered calls Aug. 19. On a block where vacant houses and lots outnumbered occupied ones, they found four dogs in an abandoned house -- a male and three females, including a pregnant pit bull with a prized blue-gray coat.
For now the biggest casualty of the dog infestation is the long-suffering, and longer-insolvent, USPS.
Aggressive dogs force the U.S. Postal Service to temporarily halt mail delivery in some neighborhoods, said Ed Moore, a Detroit-area spokesman. He said there were 25 reports of mail carriers bitten by dogs in Detroit from October through July. Though most are by pets at homes, strays have also attacked, Moore said.“It’s been a persistent problem,” he said.Mail carrier Catherine Guzik told of using pepper spray on swarms of tiny, ferocious dogs in a southwest Detroit neighborhood.“It’s like Chihuahuaville,” Guzik said as she walked her route.At two nearby homes, one pet dog was killed recently and another injured by two stray pit bulls that jumped fences into yards, said neighbor Debora Mattie, 49.***Four months ago, a woman sitting on her porch on the east side was attacked by two strays that tore off her scalp, Ward said.“We got those dogs,” he said. “It’s a big difference to that lady that those dogs were gone that day.”* * *Last year, there were 903 dog bites in Detroit, according to Ward, adding that most go unreported to police. He said 90 percent are by dogs whose owners are known.
That was before the rabies spread.
Summarizing the surreal reality of Dog Town best is Kristen Huston, who leads the Detroit office of All About Animals Rescue, a non-profit that obtained the Humane Society’s $50,000 grant last year to feed, vaccinate and sterilize pets.
“Technically, it’s illegal to let a dog roam, but with the city being bankrupt, who’s going to do anything about it?”
The good news: for now the strays are dogs. How long before humans are forced to hunt other humans, some of them rabid, vicious killers, roaming the streets of whatever the latest and greatest municipal bankrupt casualty is?
http://beforeitsnews.com/economy/2013/08/detroit-government-chooses-big-banks-over-the-american-people-once-again-2547028.html
Government Sides with the Big Banks Every Time
Ellen Brown noted recently that Detroit is yet another example of the government choosing big banks over the American people:
The argument for the super-priority of derivative claims [background] is that nonpayment on these bets represents a “systemic risk” to the financial scheme. Derivative bets are cross-collateralized and are so inextricably entwined in a $600-plus trillion house of cards that the whole financial scheme could go down if the betting scheme were to collapse. Instead of banning or regulating this very risky casino, Congress has been persuaded by the masterminds of Wall Street that it needs to be preserved at all costs.
The same tortured logic has been used to justify the fact that the federal government deigned to bail out Wall Street but not Detroit. Supposedly, the mega-banks pose a systemic risk and Detroit doesn’t. On July 29th, former Obama administration economistJared Bernstein pursued this line of reasoning on his blog, writing:
[T]he correct motivation for federal bailouts — meaning some combination of managing a bankruptcy, paying off creditors (though often with a haircut), or providing liquidity in cases where that’s the issue as opposed to insolvency – issystemic risk. The failure of large, major banks, two out of the big three auto companies, the secondary market for housing – all of these pose unacceptably large risks to global financial markets, and thus the global economy, to a major industry, including its upstream and downstream suppliers, and to the national housing sector.
Because a) there’s not much of a case that Detroit is systemically connected in those ways, and b) Chapter 9 of the bankruptcy code appears to provide an adequate way for it to deal with its insolvency, I don’t think anything like a large scale bailout is forthcoming.
The New York Times Editorial Board writes:
What we do have a problem with is shared sacrifice that does not seem to apply to the big banks that abetted Detroit’s descent into bankruptcy.
Last month, just days before its bankruptcy filing, Detroit reached its first settlement with creditors. The settlement was with UBS and Bank of America, and though the precise terms will not be nailed down until the bankruptcy judge weighs in, Detroit is set to pay an estimated $250 million to terminate a soured derivatives transaction from 2005.
The derivatives, known as interest-rate swaps, were supposed to protect Detroit from rising interest payments on a chunk of its variable rate debt. The banks would pay Detroit if interest rates rose, and Detroit would pay the banks if rates fell. By 2009, both interest rates and the city’s credit rating were falling, forcing Detroit to pay the banks some $50 million a year and to pledge roughly $11 million a month in casino-tax revenue as additional collateral. [Background on how the big banks suckered Detroit]
***
But the haircut doesn’t mean that the banks will suffer. They have already made money on the swaps; the true extent of any discount will not be known until the deal is finalized.
This much is clear:
■ The banks’ 25 percent hit is nothing compared with the city’s suggested 90 percent cut to the pensions’ unfunded liability — which will result in benefit cuts that would be disastrous in both human and political terms and that the State of Michigan must prevent from happening.
■ Municipal officials are prey for Wall Street. The Dodd-Frank financial reform law called on regulators to establish “enhanced protection” for municipalities and other clients in their dealings with Wall Street, but the Securities and Exchange Commission has not yet completed rules, while the Commodity Futures Trading Commission’s rules are so weak as to virtually invite the banks to exploit municipalities.
■ The special treatment banks receive when debtors are in or near bankruptcy is unfair and economically destabilizing. Detroit’s agreement with the two banks requires court approval, but, in general, swap deals by banks are not subject to the constraints that normally apply in bankruptcy cases; in effect, the banks are paid first, even before other secured creditors and certainly before pensioners. That privilege, dating to the heyday of derivatives deregulation in the 1990s and 2000s, is destabilizing because the assurance of repayment fosters recklessness.
Detroit’s problems are a reminder of broader challenges, identified but still unmet: protecting pensions; protecting municipalities from Wall Street; and, at long last, revoking the obscene privileges of banks that allow them to prosper on the failings of others
Reuters adds some details:
The city is paying its swap counterparties a fixed interest rate of approximately 6 percent and receiving payments back of approximately 0.57 percent (current three month Libor ~0.27 percent + 0.30 percent = 0.57 percent for the floating rate). The city’s swap counterparties cannot take haircuts if bankruptcy is filed, according to a creditor attorney that I spoke to. In fact, they move to the head of the creditor line. The same part of the bankruptcy code that was used in the Lehman bankruptcy (Chapter 11) applies to Detroit (Chapter 9). Swaps are settled (netted and paid) when the entity enters the bankruptcy process. From the Stanford Law Review:
Under the Bankruptcy Code, creditors of a failed entity are stayed or prohibited from seizing that entity’s assets. Since 1978, however, Congress has exempted derivatives counterparties from the automatic stay and permitted the termination of the derivatives contracts.Clearly Detroit’s derivative counterparties will siphon precious cash away from the insolvent city if it were to enter bankruptcy. This cash payment to swap counterparties could likely be in the $400 million range.
The bigger pictures is that the government always chooses the big banks over the little guy:
All of the top independent economists and financial experts (and many bankers) say that we’ve got to break up the big banks to save the economy.
Instead, the government has thrown trillions at the big banks to artificially make themappear profitable.
The bailouts are continuing non-stop … to this very day (and see this).
Indeed, the government chose the big banks over Main Street, the average American … or the economy as a whole. And see this and this.
As such, the government has sucked trillions out of the real economy by pushing policies which destroy jobs (sorry … Obama doesn’t care), redistributed wealth upwards from the broad economy to a handful of the very richest (which trashes the economy .. and Obama iseven worse than Bush), and destroyed savers and Main Street.
In other words, we have thrown many trillions of dollars at the banks, and then suckedtrillions more out of the real economy.
As we noted recently:
The central banks’ central bank – the Bank for International Settlements-warned in 2008 that bailouts of the big banks would create sovereign debt crises … which could bankrupt nations.Given the above – and the fact that we no longer prosecute the big white collar criminals – we no longer have a free market economy … we have fascism, communist style socialism,kleptocracy, oligarchy or banana republic style corruption. As such, the machinery of capitalism – which could generate enough prosperity to dig us out of this budget deficit – has been broken.
That is exactly what has happened.
The big banks went bust, and so did the debtors. But the government chose to save the big banks instead of the little guy, thus allowing the banks to continue to try to wring every penny of debt out of debtors.
Treasury Secretary Paulson shoved bailouts down Congress’ throat bythreatening martial law if the bailouts weren’t passed. And the bailouts arenow perpetual.
Moreover:
The bailout money is just going to line the pockets of the wealthy, instead of helping to stabilize the economy or even the companies receiving the bailouts:Moreover, a large percentage of the bailouts went to foreign banks (and see this). And so did a huge portion of the money from quantitative easing. Indeed, the Fed bailed out Gaddafi’s Bank of Libya, hedge fund billionaires, and big companies, but turned its back on the little guy.
- Bailout money is being used to subsidize companies run by horrible business men, allowing the bankers to receive fat bonuses, to redecorate their offices, and to buy gold toilets andprostitutes
- A lot of the bailout money is going to the failing companies’shareholders
- Indeed, a leading progressive economist says that the true purpose of the bank rescue plans is “a massive redistribution of wealth to the bank shareholders and their top executives”
And as the New York Times notes, “Tens of billions of [bailout] dollars have merely passed through A.I.G. to its derivatives trading partners”.
- The Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws which rewards mergers in the banking industry (this has caused a lot of companies to bite off more than they can chew, destabilizing the acquiring companies)
***
In other words, through a little game-playing by the Fed, taxpayer money is going straight into the pockets of investors in AIG’s credit default swaps and is not even really stabilizing AIG.
A study of 124 banking crises by the International Monetary Fund found that propping up banks which are only pretending to be solvent often leads to austerity:
Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.
Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.
***All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.In other words, the “stimulus” to the banks blows up the budget, “squeezing” public services through austerity.
Numerous top economists say that the bank bailouts are the largest robbery and redistribution of wealth in history.
Why was this illegal? Well, the top white collar fraud expert in the country says that the Bush and Obama administrations broke the law by failing to break up insolvent banks … instead of propping them up by bailing them out.
And the Special Inspector General of the Tarp bailout program said that the Treasury Secretary lied to Congress regarding some fundamental aspects of Tarp – like pretending that the banks were healthy, when they were totally insolvent. The Secretary also falsely told Congress that the bailouts would be used to dispose of toxic assets … but then used the money for something else entirely. Making false statements to a federal official is illegal, pursuant to 18 United States Code Section 1001.
http://www.freep.com/article/20130820/NEWS01/308200142/Detroit-Rosen-mediators-bankruptcy
Gerald Rosen, chief judge of the U.S. District Court for the Eastern District of Michigan, was appointed mediator in Detroit's bankruptcy case to help resolve disputes between the city and its creditors.
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Chief U.S. District Judge Gerald Rosen today formed a mediation team to help oversee what are expected to be the most heated money disputes in Detroit’s historic bankruptcy.
Rosen, who was appointed as the lead mediator in the case by Bankruptcy Judge Steven Rhodes, tapped federal judges and private mediators from all over the country to help in the mediation process. He said the team will “provide parties with a confidential
, neutral forum to discuss their respective positions,” with a focus on resolving “as many disputes as possible.”
, neutral forum to discuss their respective positions,” with a focus on resolving “as many disputes as possible.”
Rosen noted the mediators face a monumental task.
“There are literally thousands of claims and issues in the case, and the team's initial work will focus on the major issues,” he said in a statement.
Named to the mediation team:
■U. S. District Judge Victoria Roberts, a native Detroiter who was appointed to the bench in the Eastern District of Michigan by President William J. Clinton in 1998. She’s currently an adjunct professor at the University of Michigan Law School.
■U. S. Bankruptcy Judge Elizabeth Perris of the District of Oregon, a bankruptcy judge with almost 30 years experience who has served as a judicial mediator in the municipal bankruptices of Vallejo, Stockton and Mammoth Lakes California. She has served two terms on the Bankruptcy Appellate Panel for the U.S. Ninth Circuit Court of Appeals.
■Senior U.S. District Judge Wiley Daniel of the District of Colorado, a former resident of Detroit who was appointed to the federal bench in 1995 by Clinton.
■Former U.S. Bankruptcy and U. S. District Judge David Coar, who was appointed to the federal bench in Illinois by Clinton in 1994, after serving as a U.S. Bankruptcy Trustee and a federal Bankruptcy Judge in Chicago. He also has served as a private mediator on large high profile cases, including the Mammoth Lakes, Calif. municipal bankruptcy.
■Eugene Driker, a native Detroiter and co-founder of the Barris, Sott, Denn & Driker Detroit law firm. He has has litigated major business and commercial cases for over 50 years. He is considered a leading mediator in Michigan.
How underfunded are Detroit's pensions? City, pension reps meet to haggle
The Police and Fire Retirement System and the General Retirement System have stated through their actuaries that they are underfunded by $640 million; Emergency Manager Kevyn Orr's team has found the number to be closer to $3.5 billion.- Aug. 19, 2013
Dozens of creditors, others file objections to bankruptcy in federal court
Dozens of creditors, unions and retiree groups Monday objected to Detroit's eligibility to file for Chapter 9 bankruptcy, setting up a fierce legal battle that will determine whether the city's bankruptcy case can proceed.- Aug. 19, 2013
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