Detroit's bankruptcy: Where was the press?
Almost a year ago we asked the question of where was the press as the city of Detroit was in decline and with much corruption and mismanagement for the past ten years or so. Unfortunately we need to ask the same question once again. The city’s bankruptcy was recently wrapped up with the result being the net worth of Detroit declined as a direct result of this legal action. This is not supposed to happen.
Once again, where was the Press? Was the press intimidated by big money? Big money was not on the side of the citizens of Detroit. Big money was on the side of the DIA and the foundations that contributed the art to the city. Big money was on the side of the Governor and other politicians. I found it interesting that Governor Snyder's opponent in last falls election did not raise any concerns about the bankruptcy during his campaign. Was he also influenced by big money at the expense of the city and its citizens?
At the crux of the issue is the art held at the Detroit Institute of Art having a value somewhere between $4.8 and $10 billion dollars. Prior to the bankruptcy it was generally believed to be owned by the city. As a part of the Grand Bargain, which was the centerpiece of the bankruptcy’s Plan of Adjustment, the art was taken from the city and given to a new entity for a net present value of $500 million. The chart below does not take into account the city's surrendering ownership of the Joe Louis Arena as part of inducing creditors to agree with the Plan of Adjustment
The Press is suppose to be the guardian of truth and justice. The local media that failed included the newspapers The Detroit News, The Detroit Free Press, The Michigan Chronicle, The Michigan Citizen, MLive and the Oakland Press. In addition the local public radio stations WDET and Michigan Radio failed to report that Detroit was being stripped of assets and not receiving fair market value in return. The local television stations also failed to report on the fact that the net worth of the city was less after the bankruptcy than before it started.
In addition, I saw no regular media making any attempt to ascertain exactly what the city was giving up in return for the forgiveness of $7 billion in debt. What was the Joe Louis Arena worth? What was future cash flows from the Windsor Tunnel and the parking lots and garages worth? It seems like the local media was playing along with a game of "Don't Ask, Don't Tell."
I can understand the need for secrecy as the process is going on but the citizens of Detroit now deserve an explanation and answers. It just does not make sense to give away up to $10 billion in assets for $500 million in present value terms.
Once again, where was the Press? Was the press intimidated by big money? Big money was not on the side of the citizens of Detroit. Big money was on the side of the DIA and the foundations that contributed the art to the city. Big money was on the side of the Governor and other politicians. I found it interesting that Governor Snyder's opponent in last falls election did not raise any concerns about the bankruptcy during his campaign. Was he also influenced by big money at the expense of the city and its citizens?
At the crux of the issue is the art held at the Detroit Institute of Art having a value somewhere between $4.8 and $10 billion dollars. Prior to the bankruptcy it was generally believed to be owned by the city. As a part of the Grand Bargain, which was the centerpiece of the bankruptcy’s Plan of Adjustment, the art was taken from the city and given to a new entity for a net present value of $500 million. The chart below does not take into account the city's surrendering ownership of the Joe Louis Arena as part of inducing creditors to agree with the Plan of Adjustment
The Press is suppose to be the guardian of truth and justice. The local media that failed included the newspapers The Detroit News, The Detroit Free Press, The Michigan Chronicle, The Michigan Citizen, MLive and the Oakland Press. In addition the local public radio stations WDET and Michigan Radio failed to report that Detroit was being stripped of assets and not receiving fair market value in return. The local television stations also failed to report on the fact that the net worth of the city was less after the bankruptcy than before it started.
In addition, I saw no regular media making any attempt to ascertain exactly what the city was giving up in return for the forgiveness of $7 billion in debt. What was the Joe Louis Arena worth? What was future cash flows from the Windsor Tunnel and the parking lots and garages worth? It seems like the local media was playing along with a game of "Don't Ask, Don't Tell."
I can understand the need for secrecy as the process is going on but the citizens of Detroit now deserve an explanation and answers. It just does not make sense to give away up to $10 billion in assets for $500 million in present value terms.
Are you not from Detroit? Because it sure sounds like you aren't. No one who is remotely familiar with Detroit and is sympathetic to the future of Detroit would write such an article.
ReplyDeleteThey didn't give away the art. The art was never available for sale. Even if it were, it would have gone away and reduced the net worth, which is your big complaint here.
As for making sacrifices in other areas, they had to. The future depended on it. Past administrations had run the city into the ground, making promises it couldn't keep.
Detroit was going bankrupt one way or the other. The question was whether it was going to be managed or not. The outcome is as good as could be expected. It could have been much worse. Technically it was illegal since some creditors (the retirees) got hugely beneficial settlements over other creditors (the actual creditors who had preferred legal status). The creditors could have refused to settle and it could have become a lot worse for the city.
you are incorrect. the art was taken from the city for pennies on the dollar effectively reducing the city's net worth by billions. the powers to be and the press just did a good job of hiding the fact.
ReplyDeleteSorry to disappoint you, but no, the art was not legally able to be sold. It was well known, not hidden.
ReplyDeleteThe assets were not given away. They are still exactly where they have been, and will continue to be.
If you want to go after something, go after the fact that retirees who (through their unions) robbed the city blind got preferential treatment over the other creditors who had a higher claim to the settlement. There are myriads of people at fault here including politicians, but the labor movement and the labor unions bear a large share of it.
The Voice of Detroit at http://voiceofdetroit.net has been extensively covering the bankruptcy in absolute opposition to it. Pull up our front page and put "bankruptcy" in search engine and you will find dozens of articles and analyses.
ReplyDeleteIn particular, read http://voiceofdetroit.net/2014/11/15/detroit-bankruptcy-plan-genocide-in-usas-largest-black-majority-city-rich-get-95-9-poor-get-13-5/.
ReplyDeleteThe ownership of the assets were given away. It is similiar to if I foreclosed on your house. It would still be in the same place but you would no longer own it.
ReplyDelete