The Most Revolutionary Act

Diverse Ramblings of an American Refugee

Dr Stuart Jeanne Bramhall

Dr Stuart Jeanne Bramhall
Location
New Plymouth, New Zealand
Birthday
December 02
Bio
Retired psychiatrist, activist and author of 2 young adult novels - Battle for Tomorrow and A Rebel Comes of Age - and a free ebook 21st Century Revolution. My 2010 memoir The Most Revolutionary Act: Memoir of an American Refugee describes the circumstances that led me to leave the US in 2002. More information about my books (and me) at www.stuartjeannebramhall.com

JANUARY 7, 2014 1:47PM

What Really Happened in Detroit

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detroit

Guest post by Steven Miller

(This is the 4th of 6 posts in which Miller describes how Detroit residents and auto industry pensioners were deliberately swindled by Wall Street, with the help of the state and federal government.)

What Really Happened in Detroit

With Detroit’s financial difficulties, the banksters recognized the opportunity to take the next step forward. At its peak in the Industrial Era, the city’s auto plants produced half of the world’s cars with 350,000 workers. Today the few factories that remain produce even more cars with a workforce of only 20,000. Their job is to mind the robots that actually do the manufacturing.

Wall Street and the state apparatus combined to push the city into bankruptcy so they could go after public worker pensions nationally. Across the US there are more than 22 million public workers, about half of them teachers. (10) The financial industry quickly ensnared public worker pensions in predatory debt. Then their political agents loudly proclaimed that local government could no longer function due to these debts. Detroit, like all city governments also owes huge amounts to the banks, the result of various predatory loans. However, there is never a discussion about not paying these contractual obligations, even though there is abundant evidence that they are grounded in criminality. (11)

From 2004 to 2006, 75 percent of mortgages issued in Detroit were subprime. By 2012, banks had foreclosed on 100,000 homes. This trashed the city’s real estate by 30 percent and caused the flight of almost a quarter million people. These two factors drove the tax base severely downward.

Under both Republican and Democratic governors, the Michigan state government cut $700 million in state revenue sharing. Michigan, however, boasts the largest corporate subsidies per capita in the country – a total of $6.2 billion. (12) Detroit also gives more than $20 million a year in subsidies to local corporations for elite downtown projects.

Then the state jumped in to employ coercion against the people. This took the form of an Emergency Manager, imposed by the Michigan governor, with complete powers over the city’s government, including breaking contracts at will and selling off public property. In 2013, the EM closed over 30 schools as “too expensive”, and then he used the money to build a new ice rink for the Detroit Redwings hockey team. The EM is a modern form of fascism; his dictatorial policies are backed up by the police. Detroit residents lost the civil right to vote.

While city operating expenses fell, the financial costs of debt servicing shot up. The public policy organization, Demos, wrote in 2013, “Detroit’s financial expenses have increased significantly, and that is a direct result of the complex financial deals Wall Street banks urged on the city over the last several years, even though its precarious cash flow position meant these deals posed a great threat to the city.” (13)

The Financial Times reports that Detroit will eventually pay nearly double the principal — in other words, Detroit is effectively paying 100 percent interest. (14) So we see that predatory lending against homeowners begets predatory lending against cities. The city’s, debt servicing could rise from 28% to 65% of the city’s annual budget, effectively making it an ATM for the financial industry.

In December, a federal judge ruled the pension rights, guaranteed by Michigan’s state constitution, were simply a “contractual relation”, rather than a right, and held that federal bankruptcy law, as applied to corporations, determines city bankruptcies, even though few US cities have ever gone bankrupt. This means that the interests of hedge funds and banks have priority over the interests of retired city workers, who must already make due with pensions that average only $19,000.

The betting is that city workers’ pensions will be cut by 84%. At the height of the economic Meltdown, alpha financier and speculator, Lawrence Summers, was asked why the banks used public money to pay exorbitant executive salaries. “A contract is a contract”, he bellowed. Obviously this rule of law no longer applies to public worker contracts.

Just as international banks are demanding that Greece sells off its ports, transport systems, tourist attractions, beaches and other assets in the public domain, so Detroit is now planning to sell the bridge and tunnels to Canada, the Joe Louis Boxing Arena, and the tremendous collection of art in the Detroit Institute of Art. This crime is not too different from the Nazi rape of art from across Europe, nor the US organized destruction of the Iraq Museum after they took Baghdad in 2003.

But it’s all so legit! These items will be bought by billionaires and banks with credit, which the city will then send to the banks to pay off the debt. Detroit becomes a simple pass-through account. This is naked expropriation of the wealth of the public. These are the worst of times.

References and Resources

10)  “How Many Government Employees Are There?

http://www.freerepublic.com/focus/news/2466363/posts

 11)  Matt Taibbi. “The Scam Wall Street Learned From the Mafia”. 6-21-12

 12)  http://systemicdisorder.wordpress.com/2013/08/07/wall-street-plunders-detroit/

 13)  Wallace Turbeville. “The Detroit Bankruptcy. 11-20-2013

 14)  Sender and Foley. “Details of Detroit’s Troubles Come to Light”, Financial Times, 7-25-2013

To be continued.

photo credit: Thomas Hawk via photopin cc

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Miller states the obvious here: that hedge funds and banksters are deliberately pushing US cities into bankruptcy to cancel their pension obligation to public service workers. People forget that public service workers received much of their compensation as pension dollars in lieu of wages. Under fascism, as under slavery, withholding wages from workers who have no real power is a perfectly legitimate form of theft.

If an invading army did something like this, people would be out in the streets fending them off with shovels and brooms. Imagine an unelected fascist city manager closing down 30 schools to build an ice hockey rink for a private sports franchise. The US has been taken over by a fascist occupying force consisting of Goldman Sachs, JP Morgan, Bank of America et al.

Speaking of Bank of America, they now have their own spy team trolling social media to monitor anarchists and other activists (http://www.storyleak.com/email-confirms-bank-americas-social-media-trolling-spy-team/). Hi guys, I hope you’re having a nice day. Feel free to leave a comment.
[r] Stuart, thanks for this. It is so damn, obscenely ugly. There should be a new name for double standardism. besides economic fascism. rabid rat bastards and their politician toadies. Detroit is the template for what will happen to all of us. Just as Katrina and Hurricane Sandy inspired more disaster capitalism exploitation and opportunism and mass suffering. You keep thinking and feeling something has got to give. The bullies/murderers/sociopaths can't keep getting carte blanche for evil, but apparently they will -- domestically and internationally -- mafia might makes right rules. we must keep consciousness raising and demanding honest and law-abiding and peace-accepting and moral people say NO NO NO NO NO NO. best, libby
Weirdness prevails and until it comes home to roost at everyone's doorstep no one will care... R&R ;-)
And, at end, who will benefit from the total wreckage of civilization? Certainly not the financial termites eating away at the basic structure of the house of all mankind. All their financial wealth and power resides in the basic structure of a civilized world and when that disappears, all the wealth dependent upon it vanishes as well. Whom the gods would destroy they first drive mad.
I think civilization needs to collapse, Frank. It's destroying the human species.
great inside story. a macrocosm for the macrocosm. imagine this happening on a larger scale. it seems to be a financialization Petri dish. breeding the next generation of viruses. and this article didnt even point out how much the govt bailed out detroit autocompanies. also heard they declined to reimburse the govt for billions. where did I see that headline? lost in the rushing wash....
This may or may have not anything to do with the dire situation in Detroit, but one of the "too big to fail/jail mega-banks, JP Morgan, recently agreed to a 2.5 million dollar fine for their role in Madoff's ponzi scheme. JP Morgan has agreed to deferred prosecution which basically translates into no JP Morgan higher ups ever be prosecuted. Over the past year, JP Morgan has been involved in over ten scandals resulting in billions in fines which will be absorbed by shareholders, zero prosecutions of JP Morgan executives, and business as usual in Wall Street/Washington DC. I know longer believe it is necessary to make a distinction between the federal government and Wall Street because they have a incestuous relationship that is beyond repugnant.
If it was just the government and one or two financial manipulators it would be bad enough, but the network is far more spread and intricate than that and that is why I am so puzzled by its stumbling stupidity and suicidal motivations.
Dr. Steward.

There is such a grip of greed on all the institutions in America, from the government, banks, unions and even the individual. In the later half of the 20th century we gladly accepted the idea that one could work for 30 or 40 years and live the life of leisure for another 30 years. Now the decades of reckless spending and massive debt has come due and we are discovering that it was all a lie.

Each dirty hand has been washing the other. Public Unions sold the idea that workers could pay less and receive more than the private sector. To do this they had to barrow from the banks. The banks now that they have the government in their pocket are able to plunder their coffers. In the end the few at the top get it all and the bottom get nothing. That is how a ponzi scheme works.

50 years ago that may have been true that public workers received slightly lower wages in return for a slightly higher retirement benefits. That is not true today. While the average private worker pays more and more in SS tax and receives far less than they paid in millions of government workers act like all is well. While private sector workers are seeing reductions in pay and earnings the public sector continues to give "cost of living" raises and even automatic salary increases to their members. How? With borrowed money.

It was a ponzi scheme and like all ponzi schemes it is failing.
It seems quite strange to me that the decent living wages and pensions of government workers should be blamed for the monstrous misuse of government funds actually due to idiotic wars and frightful overcharges of the unregulated military expenditures and the monstrous puffed up and basically ineffectual surveillance bureaus and the horrendous robbery of the treasury by the financial sector. The misplaced blame is most peculiar.
Jan, It is all things not just out of control pensions. We have sold the idea that you can work for as little as 20 years (military, fire and police) and retire for decades. For example if you enter the military at 18 and retire at 38 you receive 50% of your pay for life. Stay in another 10 and that jumps to 75% of your pay and you are only 48. If you make it to the rank of Sergeant Major you receive a salary of 58,734 a year plus benefits. That means you will receive 1,174,680 dollars in retirement before you reach 65. Plus you will be able to draw SS or another pension if you at 48 take a civilian job or work for the state and retire at 65 AGAIN you receive that retirement on top. Millions and millions of government workers are doing this every year. Who pays the tax payer does not only in taxes but in reduced services as states and local governments try and shore up the loses with reduced services. It is not the only problem in government but it is a big one and it will only get worse.
Public service workers have received better wages than private workers for a long time in many segments be that teachers, unskilled laborers, unskilled workers, generalized college-degreed labor, etc. Often that includes professionally-degreed labor as well. Especially now the the lawyer bubble is collapsing, corporations control doctor salaries and engineering is a forgotten profession in the U.S. And, for non-globalized private sector corporate workers, they have no pensions, no benefits, low wages and the like for decades. So, receiving pensions in lieu of wages is an old paradigm that has long since been obliterated. And, private pensioners have also been obliterated. They were obliterated by the millions as corporations ditched defined benefit retirement plans in droves under Clinton. I know. I was one who lost literally millions in future pension benefits.

Now that the private sector is broke, the aristocracy has been able to turn private sector against public sector by appealing to ego motive. In a world that pits humanity against itself in competition for the scraps, it's easy to topple public worker pensions, benefits and wages. Well, and frankly, because a broken private sector cannot afford a vibrant public sector under this monetary and banking system.

Corporations, corporate capitalism, the profit motive and banks as part of a Darwinian socioeconomic system are indeed at fault. But, it goes back over 30 years with the fall of Detroit. This is just pushing people off the ledge. 20 years ago some of the people in the company I worked for would visit Detroit on business. We had a nice office a burb very close to Downtown. They were jacking cars right out from under people in our office in broad daylight. Detroit was a collapsing madhouse then. Collapsing because private corporations and private banks control access to society's capital so they left in droves for tax abatements and posh digs in the burbs where white executives were relocating too. And a void of poverty and associated crimes were left in its wake.

I dunno that we need civilization to collapse. That would lead to mass and unncessary death. And, we live in a world of great abundance so death, impoverishment and misery are manmade phenomena. But, we need the uncivilized "civilization" of the survival-of-the-predators class-based, Darwinian corporate state and its endless creation of useless manmade sprawl to be replaced with an egalitarian system of social, economic and natural justice. The corporate state and corporate capitalism's never-ending need for rent extraction, natural destruction and the creation of sprawl through its countless inhumane and evil schemes are certainly dying.
Timming, it is all part of the lie sold to the american worker. I have nothing against anyone who pays into a pension plan and they should expect to receive back what they paid into it. SS is a joke (especially for the self employed) who will never see back what they paid into the system. SS has become just another ponzi scheme used to shore up the billions and billions of over spending.

The idea of forced retirement should be a simple what you pay in is what you receive back over time. In my state the average government employee pays in about 4% less than the private sector employee and is able to retire 10 and 15 years earlier. Add the new scheme of buying out retirements and you have workers in their 50s drawing as much as 80% of their salary for life.

It will not last and when it fails everyone goes down.
For a clear analysis of why and how the conventional attempts to bring a decent economy back to the USA has failed Obama and, to a large extent, failed FDR, read

http://www.counterpunch.org/2014/01/08/why-fdr-did-not-end-the-great-depression-and-why-obama-wont-end-this-one/

It is a basic failure of standard capitalism and its standard expectations and the parallel between the 1930's and today is precise and the stumbling stupidities are exactly the same. the old Einstein quote that insanity consists of doing the same thing over and over and expecting a different outcome fits to great precision. Those in charge of our economy are insane.