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Detroit Orr bust?
Posted: Fri Mar 15, 2013 2:42 am
by Gob
Detroit gets new financial manager Kevyn Orr
An emergency financial manager with wide-ranging powers has been appointed for the troubled US city of Detroit, in the biggest state takeover for years.
Kevyn Orr, a lawyer who worked on restructuring the carmaker Chrysler after bankruptcy, will be able to override elected officials.
Detroit's finances have deteriorated because of the decline in the car industry, mismanagement and corruption.
The city is running a $300m (£200m) deficit and has debts of some $14bn.
Mr Orr was appointed by the Michigan state Governor Rick Snyder, who described the situation as a "crisis" and something that had to be resolved.
He will have the power to override its elected officials, rewrite labour contracts, privatise services and sell assets.
"We can rise from the ashes," Mr Orr told a news conference. "This is a beautiful city and a wonderful state that gave me my start. I feel compelled to do this job."
He added that if his emergency takeover succeeds "it will be one of the greatest turnarounds in US history".
Mr Orr said the city been given 12 to 16 months but said he hoped to finish the job faster.
Once the centre of the automotive industry, Detroit's population has more than halved from its peak of 2 million in the 1950s. It was once the fifth-largest city in the US; now it is the 18th, with 700,000 inhabitants.
At 18.2%, unemployment in Detroit is more than double the US average of 7.7%.
The city has been running a deficit for nearly 10 years, struggling under the weight of its pension and health insurance commitments.
The BBC's Jonny Dymond, in Washington, says the 50-year decline of "Motor City" has reached a new low point.
But he adds this may not be the nadir; bankruptcy still looms if Mr Orr cannot get a grip on Detroit's finances.
This week, a former Detroit mayor, Kwame Kilpatrick, was convicted on charges of corruption and bribery. He was found guilty on 24 charges that included racketeering, fraud and collecting kickbacks for city contracts.
The move was greeted positively by analysts. "I think Snyder will be remembered as the politician who saved Detroit," said Jim McTevia, a specialist in restructuring at the financial consultancy McTevia & Associates.
"Make no mistake, Detroit is bankrupt. In this set of circumstances, there is no downside for the governor."
Re: Detroit Orr bust?
Posted: Fri Mar 15, 2013 7:30 am
by MajGenl.Meade
Kwame Kilpatrick?
Never can trust those Black Irish
Re: Detroit Orr bust?
Posted: Fri Mar 15, 2013 8:26 am
by Gob
Re: Detroit Orr bust?
Posted: Fri Mar 15, 2013 10:41 am
by Crackpot
Leave it to the BBC to miss most of a salient points of the story. But do you expect from a news organization that can't be bothered to get within 500 miles of the story.
Re: Detroit Orr bust?
Posted: Fri Mar 15, 2013 12:46 pm
by rubato
The city has been an open sore for 40+ years. Ever since they tipped into a perpetual population decline which created a perpetual housing surplus which has kept house prices so low, with no hope of recovery that there is no incentive to repair them or even to pay property taxes.
yrs,
rubato
Re: Detroit Orr bust?
Posted: Fri Mar 15, 2013 1:30 pm
by Crackpot
Well the BBC still tops rubato at least
Re: Detroit Orr bust?
Posted: Fri Mar 15, 2013 2:19 pm
by oldr_n_wsr
rubato wrote:The city has been an open sore for 40+ years. Ever since they tipped into a perpetual population decline which created a perpetual housing surplus which has kept house prices so low, with no hope of recovery that there is no incentive to repair them or even to pay property taxes.
yrs,
rubato
So what is your solution for Detroit?
It's sad a once proud middle class hard working city has declined to such a state.
And many suburbs and counties around the country are looking at such a fate.
Re: Detroit Orr bust?
Posted: Fri Mar 15, 2013 2:21 pm
by Rick
Make them Blue, oh wait...
Re: Detroit Orr bust?
Posted: Fri Mar 15, 2013 7:50 pm
by MajGenl.Meade
oldr_n_wsr wrote:So what is your solution for Detroit?
The California Solution
Re: Detroit Orr bust?
Posted: Sat Mar 16, 2013 5:50 am
by rubato
That makes no rational sense.
yrs,
rubato
Re: Detroit Orr bust?
Posted: Sat Mar 16, 2013 5:54 am
by rubato
oldr_n_wsr wrote:rubato wrote:The city has been an open sore for 40+ years. Ever since they tipped into a perpetual population decline which created a perpetual housing surplus which has kept house prices so low, with no hope of recovery that there is no incentive to repair them or even to pay property taxes.
yrs,
rubato
So what is your solution for Detroit?
It's sad a once proud middle class hard working city has declined to such a state.
And many suburbs and counties around the country are looking at such a fate.
Part of the solution is to bulldoze all unoccupied or derelict housing which would support home values for the remaining stock of housing and make it worth while to repair and pay taxes on housing. But the city should not be blamed for what happened to it; it is not a problem anyone had a 'playbook' on how to fix it.
yrs,
rubato
Re: Detroit Orr bust?
Posted: Mon Mar 18, 2013 1:05 pm
by oldr_n_wsr
No mention of jobs, no mention of where the money to bulldoze those houses is coming from.
Falsely push up home values to support the few remaining neighborhoods? HOW? You can tear down all the housing you want, if there are no jobs, no one will go there and those remaining will leave. Keep bulldozing until there is nothing left.
Also, no tax base (aka money coming in from private sector working people) thus no money to tear down those abandoned neighborhoods.
People will go where the opportunities are. Opportunities to work, to have a home, to raise a family.
Opportunities = employment = making money = digging roots in community = larger tax base = better quality of living (although not always).
Anywhere else starts the slow decline (sometimes fast). Which is my biggest fear for Long Island. It's already happening and no one has come up with a solution.
Re: Detroit Orr bust?
Posted: Mon Mar 18, 2013 1:12 pm
by Crackpot
There is little question that Detroit is too big for it's population. Problem is how do you shrink it?
Re: Detroit Orr bust?
Posted: Mon Mar 18, 2013 1:47 pm
by Crackpot
Also you have the problem with the fact that these neighborhoods aren't totally abandoned what do you do about those still living there?
Any solution costs money money that no one has or is willing to put up.
All that aside over the past few years the city center has been growing and improving in many ways unfortunately no amount of growth in the city center will make up for the rot in the city as a whole.
Re: Detroit Orr bust?
Posted: Mon Mar 18, 2013 2:04 pm
by Rick
Not everything stands the test of time, Detroit will be another example.
IMHO that's probably better for Michigan overall.
Reduce city services by reducing the city margins and let the chips fall where they may...
Re: Detroit Orr bust?
Posted: Mon Mar 18, 2013 3:00 pm
by Crackpot
Who will take up the remainder?
Re: Detroit Orr bust?
Posted: Mon Mar 18, 2013 7:08 pm
by oldr_n_wsr
But the city should not be blamed for what happened to it; it is not a problem anyone had a 'playbook' on how to fix it.
yrs,
rubato
Attracting/keeping jobs may have helped. Taxing the public and businesses may have played a part. Either way, one cannot say the city is not to blame. Maybe not fully to blame, but I am sure part of the departure is the cities fault. I see it here on LI. Where is Grumman going? To greener pastures in Fla and Ca. Property costs, lack of cheaper housing (notice I didn't say "cheap") for the young'uns, high taxes (mostly schools taxes) high energy costs (2nd in the nation) will cause businesses, jobs and the population to move elsewhere. The city can "entice". Otherwise the only people you have left are city employees and that is unsustainable.
Re: Detroit Orr bust?
Posted: Tue Mar 19, 2013 2:48 am
by Rick
Crackpot wrote:Who will take up the remainder?
Prolly nobody and they move, again where the chips may fall, I doubt they're getting much as it is they would never know the difference...
