Whenever I am involved in making major decisions I keep in mind the overlying objective. In the case of Detroit's bankruptcy the major objective should be to put the city in the best possible financial position in order to bring back the vibrancy of the city serving the needs of its citizens and helping the city grow and prosper.
I am having a difficult time understanding how the Grand Bargain by giving away $10 billion of city assets in return for 5¢ on the dollar helps accomplish the above objective. Here is a list of possible reasons and if anyone has additional thoughts please let me know.
1. The decision makers wanted to help the retirees and in order to do this they needed to raise $880 million and the only way they thought they could do this was to surrender the ownership of the art worth $10 billion. In the process of trying to save the art they lost sight of optimizing the financial position of the city.
2. When the major donors of the DIA caught wind of the bankruptcy they were concerned the art would be sold to payoff debts of the city and they wanted to prevent this from happening. Their objective was to save the DIA and the saving of Detroit was secondary. Perhaps these donors were big contributors to politicians and they put the squeeze on these political folks.
If I believed in conspiracy theories I could paint a picture where the major power centers, the Governor, Jones Day and large contributors to the Republican party, all along were more focused on saving the DIA than looking out for the best interest of the city. I am glad I don't believe in conspiracy theories, but I do believe it is easy to lose track of objectives.... http://lstrn.us/1n76snd
Once the Grand Bargain is struck as it is presently structured the city reduces its debts by $7 billion and reduces its assets by $10 billion. In other words the city reduces its net worth by $3 billion. This does not address the other assets being given away to settle the city's debts.