Judge Steven Rhodes has ruled that Detroit is eligible to move forward with its Chapter 9 filing. Via Yahoo – http://finance.yahoo.com/news/judge-detroit-eligible-chapter-9-163331735.html?l=1
The unions of course are crying foul.
“It’s a huge loss for the city of Detroit,” said Sharon Levine, an attorney for the American Federation of State, County and Municipal Employees, which represents half of city workers.
A loss for the city? That’s a self-serving comment to be sure. She meant a loss for union leadership dependent upon dues. The simple math says more city residents leads to more city unionized workers feeding the dues trough. A black eye on pension viability not standing up to bankruptcy protection laws is bad publicity for unions.
How about a loss for union members who were promised unsustainable benefits? There are true victims to any bankruptcy proceeding and pension recipients will suffer as a result just as they would in any other bankruptcy. Even if the Obama Administration were to ride in on their white horse and illegally rewrite bankruptcy law as they did with the GM/Chrysler bankruptcies, there would still be victims.
The takeaway is that unfeasible fiscal, monetary or other related economic policies have their own laws of physics built-in. They all eventually fail and the only unknown is when and who pays the price for it.
Despite the unions objections, there was or is no possible fix for the decades of false promises in order to keep the status quo. They would like to still see future generations still pay it forward and fund the shortcomings, but as with any debt, eventually it gets paid for by somebody.
Today’s ruling clears the way to pay that debt. It will be a mix of victims from retirees to bondholders to city contractors. The question is will there be any push for instituting the changes required so as to not repeat this debacle. Highly unlikely. Unless the city master plan is scrapped along with gutting the city council, chances are that this fresh start will be squandered as is the case with the bulk of bankruptcies across the nation.
A clean slate will likely appear too appetizing for the very same leadership that failed in its half a century progressive experiment. But we can always have hope. Detroit did buck the trend of what was once unthinkable and elect a white mayor. Will its residents see the light as to the real reasons for its failure and demand their elected officials to do so as well? Place your bets!