(Bloomberg.com) On both sides of Dorothy Wafer’s Detroit home sit rows of crumbling houses among trash-strewn lots. A body was found in a car down the street last month, and there was an attempted rape, she said.
There’s no place like home, though. Wafer, 61, last week planted roses in front of her two-story house, with islands of hostas, lilies and carnations in the yard and icicle lights on her chain-link fence.
“I might live in a ghetto, but I’m not a ghetto person,” said Wafer. “This is what I know, and I don’t want to move.”
Detroit, which filed the largest U.S. municipal bankruptcy on July 18, has almost 150,000 vacant parcels and 700,000 people on 139 square miles (360 square kilometers) after losing more than half its population since the 1950s. Planners envision farms and other nonresidential uses for empty land, and creating population-dense areas where it’s easier to offer services. Yet residents such as Wafer have kept gracious homes, put down roots and don’t want to move.
Exclusive: Porter Stansberry on how and when the U.S. will end up worse than Motor City
Detroit declared bankruptcy a few days ago.
I’ve written for years about how Detroit should serve as a stark warning to Americans who believe in liberal social policies, like highly progressive taxes and expensive social safety nets.
These socialist programs don’t cure income inequality. They merely destroy wealth by reducing incentives for building businesses and encouraging dependency. That’s why societies with lots of government spending typically have few civil institutions and a small middle class.
Here’s the message our politicians on both sides of the aisle seem to miss: Fifty years ago, Detroit was one of the largest and wealthiest cities in the world. Nearly 2 million people lived there, and it enjoyed the highest per-capita income in the United States.
Then, in 1960, everything changed.
Sharon Connor stands to lose upwards of €50,000 after her profits from a house sale remain frozen in a bank on the island
Tragedy first struck Sharon Connor when her husband, Gary, was killed by a heart attack in January last year. He had just turned 54. From running a successful scuba-diving business on Cyprus, the mother-of-two found herself catapulted into a world of grief, unable to even visit the ornate, two-storey villa the couple had bought on the island.
“It took me five months before I could set foot in the place,” said Connor, who was on her own when she found her husband dead in bed. “I still have flashbacks and see it in my head all the time.”
In March the widow decided to put the property on the market. In the space of three days she had found a buyer, located a new home in the UK and a job outside London. “I was trying to move forward with my life,” the 55-year-old told the Observer from Kent, “until I found myself caught up in the nightmare scenario that has befallen Cyprus”.
This weekend the Briton faces the prospect of financial ruin following the shattering news that the proceeds from her house sale – €181,000 (£155,000) – will remain frozen in the Bank of Cyprus as a result of capital controls enforced to contain the crisis.
As the size of Cyprus’s bailout requirements swelled from €17bn to €23bn, she learned that the money, deposited in a special account for the purposes of the transaction, could not be transferred to the UK. Now she lives in fear that, like other depositors with more than €100,000 in Cyprus, she will also fall victim to the raid on savings that the Cypriot government has been ordered to implement as the price of international aid.
“It is totally unfair. My funds should not be frozen, as they are not savings that have been accruing interest,” said Connor, whose misfortune was that the money hit her account two hours before the close of business on 15 March.
“It was money from a real estate sale that was supposed to be in the bank for a single day. The same day it went in, I sent an email instructing the bank to transfer the funds – some of which were in euros and some in sterling – to the UK, but on Saturday morning the news broke that Cypriot banks were in major financial difficulty.”
Ever since then Connor, who was due last week to buy a three-bedroom semi in Kent, has been battling to get her money released. She has written to “everyone who is anyone”, including David Cameron and Angela Merkel, and started a Facebook campaign called “Gary and Sharon v Merkel”.
“Every day is a struggle,” said the widow, who is from Welling in south-east London. “I was set on moving on after Gary passed last year and had everything in motion when, overnight, my world was turned upside down again … it is a scenario that had made me physically ill.”
Connor has calculated that she could lose €50,000 (£42,000) as a result of the emergency levy that Nicosia must now enact to qualify for financial assistance from the EU and the International Monetary Fund. Revelations that the beleaguered Cypriot government will have to find almost double the amount to meet the terms of the €10bn bailout – amid signs that the EU’s wealthy north has tired of rescuing the bloc’s heavily indebted south – have only sharpened her anguish. “Now I live in worry that with the latest news that Cyprus’s bailout requirements are going to be much bigger than thought, depositors will suffer even more,” she said.
Connor had hoped to be exempted from the levy – along with other special cases – but her appeal for dispensation was turned down by the island’s central bank last week. On Friday she was told by the Bank of Cyprus that it was seeking clarification. “I asked my representative at the Bank of Cyprus to put forward my appeal to the central bank, and in turn they asked for the contract of sale and solicitors’ details,” she recalled. “Last week the central bank committee declined the request. I was also told that I cannot transfer any funds from my accounts to the UK.”
In a cruel twist of fate, the sale was due to have been completed a week earlier. “A document was missing from the necessary paperwork that prevented the deal from being closed,” she said. “Had the transaction gone through as originally planned, the funds would now be in my British bank account.”
Connor, who also has five grandchildren, has now been forced to cash in her two private pension schemes to make ends meet. “I have my furniture in storage with no way of knowing when, or if, I can purchase my own property,” she said. “The local council will not put me on their housing register as I have funds from the sale of a house in the bank, albeit I cannot access them.”
Had it not been for the help of friends and family, she says, she might not have got through the ordeal. “If it was not for the goodness of my sister, Theresa, and other family members, I would be homeless,” she said. “I live in hope that common sense will prevail and I will receive what is rightfully mine. This is money that my husband and I have accumulated and worked for our whole lives.”
SOURCE – Associated Press
Published February 20, 2013
DETROIT – The fiscal crisis plaguing Detroit is now in the hands of Michigan’s governor after a state-appointed review team determined the city was in a financial emergency with “no satisfactory plan” to resolve it.
Republican Gov. Rick Snyder has 30 days to decide if Detroit needs an emergency manager to take charge of its finances and spending, and come up with a new plan to get the city out of its financial mess.
After spending weeks looking at the city’s books, the independent review team released a report Tuesday saying Detroit’s deficit could have reached $900 million last fiscal year had it not borrowed enormous amounts of money. The city’s long-term liabilities, including underfunded pensions, are more than $14 billion.
The report also said the city’s bureaucratic structure makes it difficult to solve the financial problems.
Some fiscal experts believe the city’s only way out may be municipal bankruptcy, but state Treasurer Andy Dillon said answers could be found if the city and state work together.
“It’s our hope at the state level that this is a partnership. It doesn’t have to be adversarial,” said Dillon, a member of the review team. “A lot of the ingredients for the turnaround of the city are in place. Now we just need to execute. I do believe strongly that Detroit is fixable.”
But over the last nine months, that relationship has been strained. Detroit Mayor Dave Bing and the nine-member City Council entered into a consent agreement with Snyder in April that allowed some state oversight and help with Detroit’s finances — short of cash infusions — in return for certain fiscal reforms. However, the city often missed deadlines and benchmarks.
The ongoing cash crisis has threatened to leave the city, which has a current budget deficit of $327 million, without money to pay its workers or other bills. Dillon said the city has been running deficits since 2005, and masking over them with long-term borrowing.
“I stand with Detroiters and other stakeholders that the pace of change has been frustratingly slow,” said Gary Brown, City Council president pro-tem. “The political will has often not been there to make the necessary and bold fiscal reforms. … Without a doubt we need the support and accountability that a State of Michigan partnership offers. We cannot address our legacy obligations alone.”
Under state law, Snyder has 30 days following the review team’s finding to decide for himself whether there’s a financial emergency. Bing would have 10 days to request a hearing. The first-term governor could then revoke his decision or appoint an emergency manager.
The emergency manager would be responsible for overseeing all of the city’s spending. Bing and the City Council would keep their jobs, but the manager would decide all financial matters. And only the manager would have the power to authorize the city to take the bankruptcy route.
James McTevia, president of a Michigan-based firm that specializes in turnaround management, said an emergency manager could halt the city’s borrowing, freeze debt and restructure finances, including voiding contracts.
“The checkbook needs to be taken from the politicians,” he said.
However, others said that even with an emergency manager, municipal bankruptcy may be the city’s only option.
“Is it imminent? Well, not tomorrow,” said Doug Bernstein, managing partner of the Banking, Bankruptcy and Creditors’ Rights Practice Group for Michigan-based Plunkett Cooney law firm. “You need to give a financial manager the opportunity to formulate a plan and let the plan have a chance to succeed or fail. It may not avoid a bankruptcy, but you don’t need to do a bankruptcy today.”
Bing said Tuesday’s report shouldn’t have surprised anyone.
“My administration has been saying for the past four years that the city is under financial stress,” Bing said in an emailed statement. “If the governor decides to appoint an emergency financial manager, he or she, like my administration, is going to need resources — particularly in the form of cash and additional staff.”
Snyder spokeswoman Sara Wurfel said the governor will carefully review the team’s report.
“He won’t make a determination immediately, but sooner rather than later,” she said. “The governor believes that a strong and successful Detroit is key to Michigan’s continued comeback.”
If Snyder appoints an emergency manager, Detroit would be the sixth and largest city in Michigan to have one. The cities of Benton Harbor, Ecorse, Pontiac, Flint and Allen Park are currently under state oversight. School districts in Detroit, Highland Park and Muskegon Heights also have managers.
A new state law taking effect in late March gives local governments the chance to choose their own remedy when a review team finds a financial emergency exists. However, Detroit loses those options if an emergency manager is put in place before the new law goes into effect, said Department of Treasury spokesman Terry Stanton.
The six-member review team began looking closely at Detroit’s books in mid-December. Another team had done the same about 12 months earlier, but stopped short of declaring a financial emergency. That team’s findings eventually led to the consent agreement in April.
President applying radical 1960s theory
Is Barack Obama consciously attempting to bankrupt the United States?
WND senior staff reporter Jerome R. Corsi, Ph.D., makes this claim in a new ebook just published, “Obama’s Plan to Bankrupt the USA: The Cloward-Piven Theory.”
On May 2, 1966, two Columbia University sociologists, Professor of Social Work Richard A. Cloward and his then-research associate Frances Fox Piven, wrote a pivotal article in The Nation, articulating “a strategy to end poverty.”
The solution to ending poverty, Cloward and Piven argued, required expanding the government welfare state beyond providing Social Security, Medicare, Medicaid, unemployment insurance and food stamps. They sought to establish a “guaranteed annual income” of at least $100,000 a year as a constitutional right.
Having concluded that a capitalist system would never apply capital fairly to fulfill the needs of workers, the two Columbia University-based sociologists concluded that a progressive strategy of voting ever-expanding social welfare programs could push the capitalist system to the breaking point.
Cloward and Piven, who later married, both taught sociology at the Columbia University School of Social Work when Obama was registered as an undergraduate student at Columbia.
“Barack Obama and the radical left activists now in control of the Democratic Party see the Cloward-Piven theory as predicting a welfare state expanded to the point where the accumulated national debt bankrupts the USA,” Corsi said.
“The Cloward-Piven theory predicts capitalism will collapse such that the USA can be reconstructed as a truly socialist state dedicated to the elimination of private property and the creation of ‘social justice’ achieved by redistributing income from the ‘haves’ to the ‘have-nots.’”
Corsi’s new book is a companion to his ebook “Saul Alinsky: the Evil Genius Behind Obama.”
“Saul Alinsky’s tactics of power politics explain why Obama continually fans the flames of class warfare,” Corsi said.
“In his 2012 presidential campaign, Obama followed the Saul Alinsky playbook chapter and verse, campaigning on the theme to ‘tax the rich.’ When the accumulated U.S. debt causes a credit downgrade in Obama’s second term, Obama and the radical left will continue to blame capitalism and ‘the rich.’”
In the last stages of credit default and technical bankruptcy, the Cloward-Piven theory explains why Americans will abandon the U.S. Constitution in favor of establishing a socialist state.
“Understanding Obama’s plan to bankrupt the USA is essential to any plan to return the USA to financial solvency by reducing government spending and containing the expansion of the welfare state,” Corsi emphasized.