It All Started Going Downhill When They Went Politically Correct On Their Menu

Yet another restaurant establishment is going bankrupt and reorganizing due to the effects of our Governor Half-Whit's closure orders.

The Detroit News:  HopCat restaurants sells assets for $17M, under new ownership

 We will note that HopCat had previously caved to progressive pressure to rename their flagship Crack Fries (which were real good) as that was apparently offensive to crack addicts, which must have been a large portion of their customer base - or not as the case may be.

Eater Detroit: HopCat Is Finally Renaming Its Controversial ‘Crack Fries’ 

Only controversial to those with too much time on their hands, really.

Yes, they renamed them Cosmic Fries to get cred with the woo-woo crowd and stop offense of addicts.   Not quite the same ring to it at all, and it was all downhill from there.

Covid and the Governor's overreaching and unconstitutional executive orders just drove the final nail in this tale of "get woke, go broke".

Bankrupt Detroit To Give Union Member Employees Raises

The city is not even out of bankruptcy yet, and the contract they've negotiated gives a 5% pay raise on July 1, 2014, a 2.5% bonus in 2015 and then 2.5% increases in 2016, 17and 18.

The Detroit Free Press: Unions, city of Detroit ink 5-year contracts with 4 annual pay raises

In return for the rather impressive raises given the fact that Detroit is after all, bankrupt, the AFSCME will support the "grand bargain" bailout of Detroit.

Wow. Detroiters truly have learned nothing and forgotten nothing.

Counties Reluctant To Take Opaque Detroit Water Deal

Two articles show Oakland and Macomb Counties fail to be taken in by the latest Detroit offer regarding its Water and Sewer Department:

The Detroit Free Press: Oakland County Executive L. Brooks Patterson on Detroit water deal: 'We're probably going to walk'

The Detroit News: Detroit water deal not close, Oakland County says

Since the opening demand from the city for the Counties to pay $200 million a year to lease the system from Detroit, their latest offer is now down to $47 million per year for 40 years. This seems less a reflection of its actual value than an admitted attempt by Detroit's EFM to get a steady flow of cash heading to the bankrupt city.

Unfortunate, the City and EFM have yet to provide the suburban counties current financials or reports on the state of the system. I expect lots of expensive differed maintenance will be revealed as the Water department since the days of Coleman Young has been run as a source of a slush fun and featherbedding for Democrat politicians in the city at the suburbs' expense. Think pig in a poke.

After all, the recent massive water line breaks causing two foot high floods on some main streets in Detroit hardly boost confidence in the state of the system.

Any suburban official crazy enough to enter into a lease on a system without knowledge of its current state and maintenance requirements would be insane. Oh, Wayne County Exec Ficano is all in favor of the deal, which certainly tells you something.

It tells you Oakland and Macomb County should run, not walk from this latest offer before they and their taxpayers get taken for a very expensive ride.

Detroit Officially Goes Bankrupt

Detroit News: Detroit eligible for bankruptcy

A federal judge has ruled Detroit is eligible to file for the nation’s largest Chapter 9 bankruptcy to help dig out from under $18 billion in debt and that city pension payments can be cut to help make that happen.

Not only that, but the pension plans are also ruled to be fair game, as they

As Instapundit often says, something that won't go on forever, won't. 

Under-funded pension plan obligations that depend on other people's money will stop once they've run out of other people's money.  Detroit has now officially run out of other people's money.

Detroit - When A Gift of $300 Million Is Not A Bailout

Three hundred million bucks don't go as far as they used to.

The Detroit News: Feds to bear gifts, but not bailout

In what other country is $300 million in "gifts" not considered a bailout? Perhaps not when Detroit is 12 Billion in the hole in underfunded liabilities alone.

Still its not all bad, after all Obama got the Detroit vote already, doesn't have the political clout nor money to bail it out further and doesn't really need the city anymore, so instead of a bailout he's offering passion:

An Obama administration official Friday vowed the White House will bring “a lot of passion” to an aggressive effort to help Detroit recover from its economic crisis.

In other words, Obama's administration just offered to stick its tongue in Detroit's ear.

After all, it's nice to have a little passion when you're screwed.

So, How Bad Is It In Detroit?

It's so bad, they're seriously considering replacing the lawn maintenance crews with goats and sheep, that's how bad it is.

The Detroit Free Press: Detroit to look at goats, sheep for trimming grass

That's because nothing says you've got a thriving (yet bankrupt) Democrat-run city like having goats and sheep wandering about eating the bountiful weeds sprouting up amongst the abandoned lots and overgrown parks.

EFM Orr to Bondholders: You F-ed Up. You Trusted Detroit.

The Detroit News: Lenders take it on the chin in Orr's plan

Emergency Financial Manager Orr just declared that bond holders with limited and unlimited general obligation debt were now unsecured lenders with the debt not backed by the full faith and credit of the city. In other words, from what was a historically safe loan made to a city backed by its power to tax and obligation to pay the lenders back, the lender now holds a piece of paper they'll be lucky to get pennies on the dollar for.

This is known as changing the terms of the loan after you've already received the money.

The reason for this change - well, according to Orr, the lenders should have known better than to lend money to the City of Detroit, promises and contracts for repayment be damned.

“If you lent money to an insolvent city that has been going insolvent as openly and notoriously as possible since 2000, and you don't have a security interest, then you are an unsecured creditor,” he told The Bond Buyer in a recent interview. “This has been building for decades and decades. They understood the risk.”

This reminds me of a similar situation where a good faith lender gets taken to the cleaners by his debtors.

Yep, same thing, just delivered a tad more politely.

Given his statement, where exactly does Orr think he will find a lender for the City now?

This turns the rules of municipal lending on their head, and expect that the bond markets are going to react and start reconsidering their loans to all troubled municipal debtors as a result and not consider Detroit to be an isolated case.

If you hold any municipal bond funds, it is likely time or well past time to get the heck out, as this "safe investment" now unequivocally isn't.

Detroit Goes Into Default, Bankruptcy May Follow

Either EFM Kevyn Orr is trying to pull off the bluff of the century over Detroit's creditors, or the City is truly screwed - or both,

The Detroit News: Orr says bankruptcy decision could come within 30 days: 'We are tapped out'

In a surprise, Orr announced the city is temporarily stopping debt payments, including a $39 million bill due Friday to conserve dwindling city cash.

“We are tapped out,” Orr said.

In a brief meeting with reporters after the meeting, Orr said the session went well and is intended to provide a clear path of the city’s course of action moving forward.

"If we are able to restructure and get a deal in place, then we start paying on the new regime," Orr told reporters. "We can't continue paying with the debt service we have going forward."

In blunt language, Orr highlighted the root cause of the city’s decades-long path to insolvency and blamed the crisis on financial mismanagement that, if unchecked, will have the city spending 60 cents of every tax dollar on legacy costs such as retiree pensions and health care.

“Detroit’s road to recovery begins today,” Orr said. “Financial mismanagement, a shrinking population, a dwindling tax base and other factors over the past 45 years have brought Detroit to the brink of financial and operational ruin.”

And despite earlier fears, Orr did not propose selling beloved city assets such as the Detroit Institute of Arts’ collection or Belle Isle.

The plan calls for shared sacrifice among the city’s creditors, many of whom are being offered less than 10 cents on the dollar. Some unsecured creditors will get less than 10 cents on the dollar for about $2.3 billion in claims that Detroit will soon stop making payments on unsecured debt to save as much as $25 million per month in cash, which will be spent, instead, on essential city services. Employees and vendors will continue to be paid.

The failure to pay the $39 million is one helluva massive default by the city, as is the plan to stop paying to unsecured creditors $254 million each month. Detroit's creditors are paying for the decades-long financial mismanagement of the city's corrupt Democrat leadership. Failure to pay bond holders is a very serious act of default. Indeed, the rating agencies just downgraded the city's bonds to CC which is about as bad as it gets, leaving only grades C and D remaining.

Current and future unsecured creditors - i.e. the city's vendors will have no incentive to continue to do work or provide supplies to the city under these circumstances as they will likely never be paid or at best take a 90% loss on every sale made. That can't bode well for the city's operational stability.

Expect this situation to go downhill fast as this blue state model city's unraveling picks up speed.

In Detroit, Art May Get To Imitate The City's Financial Life

Hot on the heels of the art tax levy on Oakland, Macomb, and Wayne Counties to ensure fund the Detroit Institute of Arts after the City of Detroit has been chronically underfunding it in August 2012, comes the news that the Detroit Institute of Arts' collections, since they are owned by the City of Detroit, may go on the auction block to pay the City's debt's should the city file bankruptcy.

The Detroit News: Like DIA, smaller museums fear their assets are in peril

The prospect of the Detroit Institute of Arts losing its collection to satisfy creditors in a municipal bankruptcy is prompting concern at other city-owned venues with potentially vulnerable assets.

This is why the City of Detroit can't have nice things - it squanders them relentlessly, and any further bailout or tax in support of its institutions may just be the continuation of the greatest con game it has run to date.

Now, this may be just a bunch of posturing to get yet a further bailout of the city, a threat of "Bail us out or the Art gets it", or it may be the natural result of letting this corrupt Democrat-controlled city own such shiny baubles without being able to afford them.

Either way, anyone else in the Tri-County area feeling more than a little played over the tax?

At least one Commissioner in Macomb County does: The Macomb Daily: Broken promises — Macomb officials could halt DIA tax

Expressing dismay over false promises provided in 2012 by the Detroit Institute of Arts, Macomb officials are ready to halt the DIA tax money collected in the county if some of the museum’s renowned artwork is sold to pay off the city of Detroit’s massive debts.

A review of audio recordings from Macomb County Board of Commissioners meetings from April 2012 show that DIA officials, ultimately successful at levying a tri-county property tax to rescue the beleaguered museum, repeatedly assured the commissioners that the multibillion-art collection could not be sold off, even if an emergency manager was brought in or the city declared bankruptcy.

The promises from Detroit and its institutions come with expiry dates that kick in right after a check is cashed or a tax approved.

One can only hope that Oakland County's leaders follow Macomb's example and will not stand for their residents being payed for suckers with further wastage of county taxes bailing out Detroit's bad debts.

Detroit Dizzily Dances Round De Drain

As noted by Right Michigan, Detroit is teetering on the edge of Chapter 9 bankruptcy: The Corpse Is Still In The Morgue. Go read it to get a full realization as to how badly messed up the corrupt Democrat dominated city is in reality now that they can't hide the true picture anymore.

Right now, as reported in The Detroit Free Press the EFM is giving it 6 weeks to see if Detroit can be fixed by anything less than filing bankruptcy>

Oh, and the amount of Detroit's outstanding liabilities revealed so far is now up to $15 Billion.

40 years of Democrat corruption and neglect has destroyed a city.

You can read the EFM's Financial and Operating Plan report in all its sobering glory at the Detroit Free Press.

Detroit Heading For Detoilet

Neh State's financial report revealed, to no one's surprise, that Detroit is in a financial emergency situation with $14 billion in debt.

It also revealed that more than half of Detroiters don't pay property taxes and there's been little to no attempt by the city to remedy this loss of around $246 million per year in revenue.

The Detroit News: Half of Detroit property owners don't pay taxes

early half of the owners of Detroit's 305,000 properties failed to pay their tax bills last year, exacerbating a punishing cycle of declining revenues and diminished services for a city in a financial crisis, according to a Detroit News analysis of government records.

The News reviewed more than 200,000 pages of tax documents and found that 47 percent of the city's taxable parcels are delinquent on their 2011 bills. Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library.

Delinquency is so pervasive that 77 blocks had only one owner who paid taxes last year, The News found. Many of those who don't pay question why they should in a city that struggles to light its streets or keep police on them.

But not to worry, Detroit's finance director Cheryl Johnson says with a straight face that that Detroit's "property tax system is not broken."

Denial isn't just a river in Africa, but a part of life in Detroit.

This insanity is furthered by the fact that:

Detroit has the highest property taxes among big cities nationwide and relies on assessments that are seriously inflated. Many houses are assessed at more than 10 times their market price, according to new research from two Michigan professors.

Detroit relies on a shrinking sliver of businesses and neighborhoods to pay the bulk of the bills. The three casinos, General Motors Corp., DTE Energy, Chrysler Group LLC and Marathon Petroleum Corp. paid 19 percent of collected property taxes. Five city neighborhoods, most of them downtown and along the river, paid 15 percent of the city's taxes and represent only 2 percent of the city's total parcels. In all, only 41 percent of the city's parcels produced tax revenues last year because of delinquencies and a large number of tax-exempt land.

Detroit's delinquencies are so pervasive that some owners have been allowed to keep their property even if they don't pay taxes. Wayne County treasury officials are so overwhelmed by foreclosures that they ignored about 40,000 delinquent Detroit properties that should have been seized last year and said they will look the other way on about 36,000 this year.

In short the City is beyond a mess. The review team concluded that just about everything that's possible to break and be dysfunctional in Detroit is indeed broken and dysfunctional. It is so bad the governor may be delaying appointing an EFM because the rot is so pervasive there's no way an EFM, who will be contested in every way possible by Detroiters, will be able to get the situation to a semblance of normalcy in time.

We're watching the end result of over 50 years of Democrat rule and a vivid demonstration of what happens when Democrats run out of other people's money.

Here's hoping Snyder doesn't try to bail the City of Detroit out. Let an EFM be appointed or have it go the city enter Bankruptcy court, but no bailout that permits the idiots and the culture of corruption and incompetence that ran it into the ground in place.

De Rot Of Detroit

Detroit City Council and the denizens of Detroit never miss an opportunity to miss an opportunity.

The City Council decided to reject the state's offer to lease Belle Isle, an offer saving the City over $6 million per year and preserving and upgrading the island. Of course the Council did so without overtly rejecting it by tabling any discussion on the matter, which amounts to the same result.

The Detroit Free Press: Detroit City Council has more hurdles for Belle Isle lease deal

The city is trying to con the state into: reducing the amount of years of the lease; allow the city to cancel the lease early (once the state makes the repairs and investments in the park naturally;) and to get out of having to pay back any funds the State invests if Detroit unilaterally pulls out early.

In short, the Detroit City Council is trying to bluff and make the state the sucker in the game even as the State holds all the cards.

The Freep also has some of the rather typical inane comments that were made at the meeting that we've come to expect from Detroiters. The race card was played so many times its got creases, folds, and torn edges.

The State has said the deal needs to be made by the end of January, so the City Council is killing the deal by tabling it for two weeks.

Gov. Snyder and the State should call Detroit's bluff and walk away from the deal. Enough already.

Have Detroit either declare bankruptcy or rot, but it is well past time for the State to walk away from the Detroit Mayor and City Council's game of three-card monte.

May the People Of Detroit Enjoy The Government They Elected

Elections, as they say, have consequences, and in the case of Detroit one of those consequences will likely be bankruptcy.

The votes by Detroiters confuse leftist analysts: The Detroit Free Press Nancy Kaffer: Contradictory votes signal bigger budget trouble for city

Partially this is because this particular pundit doesn't understand what contradictory means. The again this is the same pundit that thought the Pyramids were publicly-funded arts projects - yes, really. As such, I didn't really expect all that much deep thought. Sure enough she doesn't offer much in her column.

Talk about mixed messages:

Detroit voters thunderingly defeated Public Act 4, the state's Emergency Manager Law, clearly signaling that they don't want unelected officials mucking about in city business.

At the same time, Detroit voters whompingly approved the city's Proposal C, which gives Detroit's corporation counsel, a mayoral appointee, the ability to act independently of the mayor and the Detroit City Council when she perceives that a violation of the Detroit City Charter is at hand -- a clear signal that Detroiters totally want unelected officials mucking about in city business.

Wait.

No, you didn't miss anything. Like much in Detroit, it's complicated, and destined to get more so. Take away PA4 but add Prop C to the mix, and the result is serious financial and operational hurdles for a city that's already got problems aplenty.

It's only contradictory if you don't realize that Detroiters want: 1) The state to bail out Detroit and 2) They don't want the state to have any say over business as usual in Detroit.

Once you realize that its a simple matter to understand that Detroiters don't want a state appointed emergency manager that could overthrow the lock of the corrupt Democrat-Union alliance that has got them into this mess, and they somehow expect the Corporate counsel to go out and get that sweet state money for them under her legally laughable theories.

It's not contradictory, its simply Detroit.

In short with no EFM law, look to Detroit either filing bankruptcy or Snyder stepping in to bail the city out. There is now no real alternative.

If Snyder does that however, look for Michigan Republicans to sure as heck stay home come his reelection.

Detroit voted for it, now let them live with the consequences of their decision, perhaps Obama will now bail them out as thanks for reelecting him.

In addition, not content to just mess up the city, Detroit is sending a felon to the State House rather than the big house: 8-time felon from Detroit wins state House seat in Michigan. He joins another Democrat felon already in office: State Sen. Bert Johnson, D-Highland Park, pleaded no contest in a 1993 armed robbery.

Considering that Brian Banks may be charged with some new check bouncing felonies allegedly committed this year before he was elected, he might have a short term as a legislator.

From The Detroit News: 8-time felon from Detroit wins state House seat in Michigan

Detroit, the prime example of the result of Democrat policies fully applied.

You Can't Take The Text From Me

Borders’ management opened their books this week and turned to Chapter 11.

When Borders announced it was declaring bankruptcy, it was quick to assure its e-readers that their e-texts that were stored for their Cruz readers would still be available and not affected by the bankruptcy and the reorganization of the company.

There are some definite advantages to e-books: My Droid X is loaded with 20 books, and there is a lot of convenience of having them with me in a small package with an easy-to-read screen with a pleasing font. Thanks to the Baen Free Library, I’ve had the opportunity to read a number of authors I would not have otherwise known about or tried, leading to my purchasing many of their books after the generous free samples of the first few books in a series, and also the chance to load my Droid with books I already had in paper format, leading to convenient transportation of many a good read.

Of course, my eBooks are stored locally on the Droid or my computer, not at the mercies of an entity that instead of filing Chapter 11 could have filed Chapter 7 and disappeared, taking the eBooks with them. Paper books that you purchase offer some permanence – the store going out of business doesn’t result in your books being taken away or failing to work.

Having your data, in this case eBooks, stored with a entity that can go away, leaving you without a copy of the data is a problem, and one that more people will likely face and need to deal with as they begin to depend on applications and data stored in a “cloud” online. Sometimes that cloud is not going to have a silver lining but instead bring a perfect storm to the cloud users.