Au Café de Flore on parle de la banqueroute de la ville de Detroit
Mais que les parisiennes et parisien s'habille avec l'élégance a la mode en été!!
With Detroit bankruptcy,
rulers target unions (front page)
BY BRIAN WILLIAMS
The city of Detroit filed for bankruptcy July 18 in the largest such municipal filing in U.S. history. The move by Emergency Financial Manager Kevyn Orr — appointed with broad powers by Michigan Gov. Rick Snyder in March to run Detroit, effectively replacing the city’s elected officials — involves tearing up all city labor contracts and targeting in particular pensions and health care of public workers.
Of the city’s $18 billion in long-term debt, more than $3.5 billion is owed to the pension fund for 10,000 current employees and 20,000 retirees, along with some $6 billion for retirees’ health care costs. Through bankruptcy proceedings, Orr is seeking to slash funds owed to these workers by more than 90 percent, reported the Wall Street Journal. At the same time, $7 billion in municipal bonds secured by casino profits and utility taxes, held by the propertied rich, are protected.
However, Orr has also threatened to force wealthy general-obligation bondholders — whose $530 million in investments are guaranteed in the state constitution — to take a substantial “haircut.”
Working people in Detroit have been pummeled by the capitalist economic crisis. The official unemployment rate in May was 16.3 percent. The city’s population, currently 700,000, has declined 25 percent since 2000. More than one-third of workers live below the government’s official poverty level, according to the U.S. Census.
The city of Detroit, like all U.S. government bodies, has financed its day-to-day operations through selling municipal bonds. The $3.7 trillion municipal bond market is a prerogative of the very rich. These pieces of paper are guaranteed by the “full faith and credit” of the government agency that issues them.
The fact that Orr threatens to go after some bondholders has evoked a fierce outcry from those who defend the municipal bond market as sacrosanct. Such proposals “would flatten the traditional hierarchy of creditors, putting … a retired librarian on par with an investor holding a general obligation bond,” the New York Times said.
While workers’ benefits are slashed and union contracts torn up by bankruptcy courts, capitalist investors, contractors and others have been preparing to cash in on the backs of the bankruptcy.
Orr and others have made it clear that once the debts are wiped clean and health care, pensions and union contracts gutted, the city will issue new bonds for a round of construction and other projects, promising large profits for those in the know who get in early.
