# Detroit, Michigan.........Bankrupt



## sags (May 15, 2010)

It is looking like analyst Meredith Whitney was right on huge municipal bankruptcies.........but a little early in her prediction.

Detroit declared bankruptcy and owes an estimated 20 Billion in debt, who will likely receive less than 10 cents on the dollar.

http://www.cnbc.com/id/100764427

For those with Netflix, there is an interesting documentary called Detropolis....which chronicles what happens to a city in decline.


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## none (Jan 15, 2013)

Check some of these houses out, crazy: http://www.zillow.com/detroit-mi/


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## Echo (Apr 1, 2011)

none said:


> Check some of these houses out, crazy: http://www.zillow.com/detroit-mi/


That one for $400 doesn't look too bad.


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## fraser (May 15, 2010)

*Detroit Finally Files for Bankruptcy Protection*

Largest US city ever. What city is next?


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## none (Jan 15, 2013)

Repost.


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## uptoolate (Oct 9, 2011)

Very sad what can happen to a once great city. At one time the 4th largest in the United States. Hopefully they find a way to remake themselves.


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## Nemo2 (Mar 1, 2012)

Beyond Thunderdome.


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## james4beach (Nov 15, 2012)

An important reminder of what can happen if you buy poor quality debt (e.g. municipal bonds).

All the people in these forums who buy junk bonds and other high yield bonds should be paying attention.


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## Jon_Snow (May 20, 2009)

Those are million dollar homes in parts of my city.


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## bgc_fan (Apr 5, 2009)

Jon_Snow said:


> Those are million dollar homes in parts of my city.


Commute would be a killer though.


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## My Own Advisor (Sep 24, 2012)

That zillow link is crazy...

wow....


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## marina628 (Dec 14, 2010)

My Own Advisor said:


> That zillow link is crazy...
> 
> wow....


My friend and I have discussed buying some properties there ,really just for land and forget about it for 20-30 years.The $400 homes may have $20,000 tax liens on them and then you probably have to spend $5000 to take the house down or make it safe or you will get sued when somebody goes in there illegally and hurts themselves.They need to tear down at least 25,000 homes but with their development plans for downtown it could be a good investment in the LONG Term.


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## MoreMiles (Apr 20, 2011)

marina628 said:


> My friend and I have discussed buying some properties there ,really just for land and forget about it for 20-30 years.The $400 homes may have $20,000 tax liens on them and then you probably have to spend $5000 to take the house down or make it safe or you will get sued when somebody goes in there illegally and hurts themselves.They need to tear down at least 25,000 homes but with their development plans for downtown it could be a good investment in the LONG Term.


The catch is always tax issue.

With our Canadian government, you now have to declare foreign property and subject to more paperwork and taxes.

With their USA government, you should read about FIRPTA and FATCA, if you are deemed to be one of their residents because of asset ownership, your worldwide income is taxable by IRS. You don't even need to be an American citizen... scary thoughts.


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## marina628 (Dec 14, 2010)

I bought 3 USA properties already this year ,I am aware of all the tax situations.


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## sags (May 15, 2010)

There are 80,000 abandoned buildings in Detroit...........so I don't think there is any need to rush.

It showed some abandoned properties in the documentary I linked to...........as well as the condition of neighborhoods.

The buildings may look okay from the outside.......but they have been stripped of anything valuable inside. Copper, plumbing, cabinets, light fixtures all ripped out.

Garbage all over the neighborhoods. 

The only value would be in the bare land.

In the documentary, the plan was to shrink the city, bulldoze the houses around the perimeter and grow crops.

The city didn't have any money to do any of that though...........and the plan never got off the ground.


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## sags (May 15, 2010)

Detroit was a pretty rough place though.......even in it's heyday.

I met a guy at a GM baseball tournament one time, who worked in a GM auto plant in Detroit. He told me everyone wore a gun to work, because of all the muggings that happened in the employee parking lots.


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## Barwelle (Feb 23, 2011)

sags said:


> In the documentary, the plan was to shrink the city, bulldoze the houses around the perimeter and grow crops.
> 
> The city didn't have any money to do any of that though...........and the plan never got off the ground.


To turn parts of a city back into proper farmland would be outrageously expensive. Think of all the pavement, concrete, buildings, utilities, etc that would have to be removed and stockpiled somewhere, and then you'd have to haul in topsoil because you can't really grow crops in the sand and gravel fill they use under pavement, concrete, and buildings. And where would all the topsoil come from...

Urban sprawl really bothers me for this reason. Once you develop farmland into a suburb, it's never going back.


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## Rusty O'Toole (Feb 1, 2012)

This day has been coming for 60 years. Wonder if the politicians and union bosses are finally noticing that their policies are not working.

They remind me of a monkey on a Segway. Hop on and go full blast, straight ahead in your chosen direction. Do not pay any attention to where you are heading, do not turn or slow down for any reason, 1/2 second before you crash into something jump off.


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## Echo (Apr 1, 2011)

Rusty O'Toole said:


> They remind me of a monkey on a Segway. Hop on and go full blast, straight ahead in your chosen direction. Do not pay any attention to where you are heading, do not turn or slow down for any reason, 1/2 second before you crash into something jump off.


Isn't that how the Segway founder died? - http://www.ubergizmo.com/2010/09/segway-founder-dead-rolls-off-cliff-on-two-wheeled-vehicle/


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## Cal (Jun 17, 2009)

What a great way for the city to get out so some of the ridiculous pensions/payments that they had been committed to. Sure makes it easier to renegotiate, when you can either renegotiate or not get anything.


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## HaroldCrump (Jun 10, 2009)

Umm...I am not sure those _ridiculous pensions/payments_ are going away anywhere.
It would be extremely hard, if not impossible, to wiggle out of those commitments.

What is likely to happen (just guessing) is a couple of alternative scenarios - as part of the bankruptcy proceedings, they will raise new capital and funding, part of which will go towards those pension obligations.
The city will have to pay a much higher yield for the new bonds they issue.
As a result, a lot of the new capital raised will go towards interest payments on the new debt (at higher rates) and the legacy pension obligations.
Very little will go towards improving the economy of the region, investing in infrastructure etc.

The other scenario (or in combination with the above) is a federal govt. bailout.
As we all know, the US Fed has unlimited amounts of money.
The US Fed's Q/E III program is buying, what, $85B of treasuries _a month_.
They can easily take 25% of that on a given month and bail out the city of Detroit.
It is a rounding error on the Fed's balance sheet.

That said, Detroit has always been a rat hole, as sags said above.
It has always been built around the auto industry.

Auto industry was the best thing to happen to Detroit; and it was the worst thing to happen to Detroit.


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## sags (May 15, 2010)

We used to go to Detroit Tiger games at Tiger Stadium and Detroit Red Wings games at the old Olympia. They were both in the downtown area.

We always got our tickets from a scalper that lived in a house in the downtown area. One time we arrived to find yellow police tape draped across his front porch.

He said the police shot someone dead on his porch the night before. He seemed quite unperturbed by it all.

After the games, everyone hightailed it out of town...........while the extra cops were still around.

My own recollections of Detroit go way back to when I was a youngster, and I don't remember it ever being "nice".

I wouldn't "invest" in a house in Detroit............if they gave me 20 free ones to go along with it.

If I recall correctly, the great agricultural plan was to build greenhouses to grow the crops, employ local people to work in the greenhouses, and build up local neighborhoods again.

Maybe it would work with enough money poured into it. I don't see what else they are going to do with all those homes and land.

Somebody suggested on the CNN ticker..........."why don't we just move the US/Canada border a little west and Detroit will be Canada's problem"................lol


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## fraser (May 15, 2010)

I read an article a few months ago about their pensions plans-a 'civic' pension plan and a 'police and fire' pension. 

The gist of the article was that notwithstanding a few comparatively high pensions the vast majority were not. I believe they stated that the average civic employee pension was $1600. Unlike Canada, I believe that the US Pension Beneficiary system will pick up and deliver on every pension obligation under approx. $48K year- $4K month. So, going the bankruptcy route will be a way for them to move their pension liabilities over to the Federal Gov't. Not sure what happens to health benefits and to pensions in excess of $48K though.


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## humble_pie (Jun 7, 2009)

gosh, that zillow 1927 house on somerset drive for $5,500 is a genuine arts & crafts period piece. Nearly all of its original architectural features are perfectly preserved. There are neighbourhoods in montreal where such a house - in good condition - would sell for $1.5 million.

i didn't look at the neighbourhood but it's almost certain the whole shebang will have to be razed, as marina says. No police or fire services, no schools, nothing to support community life.

flint michigan is another. Many ohio & upstate new york cities look similar. Pennsylvania too, probably. From time to time the media have run articles, over past 5 years, about tiny spots of gentrification in those ruined cities. Brave homesteaders settling fairly close together, on a few city blocks, to lend each other support.

at least until recently, detroit did have an inner-city farm. One woman had collected up 12-15 orphaned kids from the streets, they were farming together & somehow selling their vegetable crops. This may be still functioning. It was an incredible story.

i'm pretty sobered by barwelle's assessment of toxic residue composing most of the detroit land substructure, though. Dreamers can talk about farming, green crops, parks, light industry, new residential neighbourhoods, but how to build that on hundreds of square kilometres of severely polluted rubble?


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## My Own Advisor (Sep 24, 2012)

Very sad. I feel for the local small businesses. You wonder if this will become some sort of ghost town.


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## humble_pie (Jun 7, 2009)

it's far beyond a ghost town. There are no businesses anywhere. There are no citizens anywhere. There are no residents. No police. No fire services. No public transport.

the only people venturing onto these deserted lands would be thugs, vandals & hooligans still trying to find parts of the ruined houses that they can wreck out & remove. Most of the valuable copper plumbing, bathroom fixtures, window sashes, reusable roof shingles, etc would have been stolen already.


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## sags (May 15, 2010)

I remember as a boy, our dad taking us to the CNE in Toronto, and to save money he parked down in the seedy Toronto waterfront area. It wasn't as bad as Detroit became, but it was pretty rough.

Much as we may dislike the glass walled towers of condominiums in that area now, they look a lot nicer than what used to be there.

Personally, I love old heritage buildings restored and modernized. Some towns and cities in Canada have done a very good job beginning to do this.

Our city of London, Ontario is in the midst of a transformation. New buildings, people moving in downtown,........still a long ways to go but it looks great.

Bottom line though..............is the need for employment.

Meredith Whitney, who forecasted the failure of municipalities back in 2010, has written a new book about the changing demographics in the US and how people are de-populating some States and moving to live in what used to be known as "flyover" States. She says this transition of people from one place to another has happened 6 times in the 200 year history of the US.


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## marina628 (Dec 14, 2010)

I have a long time friend and sometimes business partner on ventures who lives in Michigan.He has bought 10 lots there now on one street but after the city removed what was on them.He and everyone else knows removing these abandoned building will be a big improvement and probably help the crime indirectly.Detroit is probably a third of what it use to be so there is bound to be some areas that a flattened and people wont go bad there for decades,dont think it will be turned into farm land but farm land has a chance to be worth something .Either way it is a big expense to clean off each lot ,my friend had no buildings to remove but he still spent about $4000 cleaning up after the houses came off and .Anyway Tampa /Orlando/Atlanta is my focus for now


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## kcowan (Jul 1, 2010)

I lived in Sarnia is the late 60s and Detroit was our "go to" city. Even then downtown Detroit was undesirable. That did not stop us from seeing the Red Wings though. But much of the new growth was outside the core and in places like Pontiac, Dearborn and Flint. It was the decline of the head offices in the city that contributed most to the city's current problems.

New auto manufacturing in the southern states also contributed.


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## Jim9guitars (May 5, 2012)

Echo said:


> That one for $400 doesn't look too bad.


Except it's in Detroit. I drove through a barren stretch of this city by accident about 8 years ago and I'm not surprised at the news today. I saw block after block of closed, boarded up store fronts, groups of shabbily dressed people standing around burn barrels and handwritten signs advertising .49 cent burgers. It was frightening, I stick to Interstate now.


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## fraser (May 15, 2010)

It is absolutely amazing to see what is happening in the southern states-North and South Carolina, and Georgia (especially the Atlanta area). So many companies, finance, high tech, and medical have moved from the northern states. When you see this, you can understand why people and businesses have left Detroit and other rust belt cities.


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## Rusty O'Toole (Feb 1, 2012)

fraser said:


> It is absolutely amazing to see what is happening in the southern states-North and South Carolina, and Georgia (especially the Atlanta area). So many companies, finance, high tech, and medical have moved from the northern states. When you see this, you can understand why people and businesses have left Detroit and other rust belt cities.


That was more than 50 years ago. Seriously, businesses and people started moving to the south in droves as soon as air conditioning became available. I believe the textile industry went first as their source of cotton was in the south and when the power from the Tennessee Valley Authority came on line they took advantage of it. But this southern migration was one of the big trends of the fifties and sixties.


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## Rusty O'Toole (Feb 1, 2012)

Detroit has been dying on the vine since the sixties. Does anyone remember the Renaissance Center? So named because it was supposed to spark a renaissance of business in downtown Detroit? This was completed in 1977. They knew Detroit was in trouble by 1970 and this was General Motors' attempt to do something about it.

http://en.wikipedia.org/wiki/Renaissance_Center

There are 2 big surprises here. One is that the politicians are just now realizing something is wrong. The other is that they have done nothing for the last 40 years but borrow and spend, while doing nothing about the underlying problems, and are shocked, SHOCKED to find out the city is bankrupt.

It reminds me of a monkey on a Segway. Hop on and go full blast, not turning left or right or slowing for anything, until you crash into something, then jump off 1/2 second before impact.


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## canabiz (Apr 4, 2009)

Jim9guitars said:


> Except it's in Detroit. I drove through a barren stretch of this city by accident about 8 years ago and I'm not surprised at the news today. I saw block after block of closed, boarded up store fronts, groups of shabbily dressed people standing around burn barrels and handwritten signs advertising .49 cent burgers. It was frightening, I stick to Interstate now.


I remember driving through some parts of Detroit in 1999 with some university friends and we saw guys using crowbars to break into cars. We drove right through and never looked back, for fear we might be mistaken for a rival gang. Flowers and teddy bears were a frequent sight at intersections, presumably for the shot and fallen. 

Needless to say, I have never been back since. I am a big sports fan and would like to go see the Lions/Tigers/Red Wings/Pistons play but even then that's not on our schedule anytime soon.

I recently attended a real estate seminar on U.S. properties and the guy told everyone to stay far away from Detroit. There is a difference between *cheap* and *undervalued*. The whole room knows exactly where Detroit fits in.


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## donald (Apr 18, 2011)

Why can't the government and business start anew in Detroit?
I know its way more complicated than some ideas but it could have merit,its not like land is being built.
Concentrate new prisons maybe in Detroit?
Maybe defense contractors like lock head martin?Monsanto?industries cities don't want!
if business and government got together I'm sure they could drive industries to at least start.
there seems to be endless businesses and industries that are not wanted in many cities(despite the employment it brings)concentrate this in Detroit.geographically Detroit is not situated that badly.I can't imagine Detroit forever and also being complete rubble.One would think there has to be solutions.
As a whole geographically speaking of real estate of land how is it that much different than toronto-there has to be some kind of value.


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## crazyjackcsa (Aug 8, 2010)

What seems to be left out of all this doom and gloom is the fact that the suburbs of Detroit like Royal Oak, Bloomfield Hills, Deerborn, Livonia, are fairly prosperous. Not super duper wealthy, but fairly stable. The auto industry struggle is a factor, but so is that fact that if you have money, you moved out to the suburbs, a large part of Detroit's problem is the same urban decay that lots of other cities face, just on a much bigger scale.


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## Hawkdog (Oct 26, 2012)

Interestedly enough Detroit is going ahead with plans to build a new hockey arena, how does that work?


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## Nemo2 (Mar 1, 2012)

Hawkdog said:


> Interestedly enough Detroit is going ahead with plans to build a new hockey arena, how does that work?


Wealth distribution?


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## Hawkdog (Oct 26, 2012)

Nemo2 said:


> Wealth distribution?


make work project maybe

AP on SportsNet: The city of Detroit is going through bankruptcy proceeding, but they will build a new arena with tax dollars. Some agree with this, but not all. Some feel it will be a catalyst for more development.
“This is part of investing in Detroit’s future,” Snyder said. “That’s the message we need to get across. … As we stabilize the city government’s finances, as we address those issues and improve services, Detroit moves from a place where people might have had a negative impression — although there are great things already going on — to being a place that will be recognized across the world as a place of great value and a place to invest.”
The estimated cost of the complex is $650 million, 56 percent to be paid for privately, 44 percent public. Completion date is expected to be in 2017.


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## m3s (Apr 3, 2010)

sags said:


> Somebody suggested on the CNN ticker..........."why don't we just move the US/Canada border a little west and Detroit will be Canada's problem"


A new arena and a good NHL team? A new bridge to Windsor? That doesn't sound like a bad idea at all. Most Canadians hug the southern border so maybe they would eventually migrate to the warmer climate. We should play hard and say we'll take it if they throw in Buffalo and that bit of Alaska that borders BC


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## HaroldCrump (Jun 10, 2009)

Blowing money on useless govt. funded projects, and hordes of pensioned govt. workers - they would fit right in.


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## My Own Advisor (Sep 24, 2012)

If this city loses their sports teams (by not investing in them), then Detroit might as well be the biggest ghost town on the planet.


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## uptoolate (Oct 9, 2011)

kcowan said:


> I lived in Sarnia is the late 60s and Detroit was our "go to" city. Even then downtown Detroit was undesirable. That did not stop us from seeing the Red Wings though. But much of the new growth was outside the core and in places like Pontiac, Dearborn and Flint. It was the decline of the head offices in the city that contributed most to the city's current problems.
> 
> New auto manufacturing in the southern states also contributed.


My extended family is from Sarnia so grew up spending summers in the 60s and 70s there as well and working summers in chemical valley in the early 80s. Still a fan of the Tigers and Lions to this day (though never the Red Wings - obviously!). Going to see all of the teams was always a great experience. Great fans and Tiger stadium was a great baseball venue. One can hope that the city can remake itself the way that Pittsburgh has but it seems unlikely.


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## sags (May 15, 2010)

There is a valid argument for the US government not to bail out Detroit, but in reality what choice do they have.

If Detroit creditors don't get their money, lending to any of the other many bankrupt municipalities will dry up completely.

Massive layoffs, chaos in the streets, financial turmoil........the whole economy would collapse......so there will be a bailout here, there, and everywhere.


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## My Own Advisor (Sep 24, 2012)

You start with one city, and there comes another....where does it end?

This could start a massive US unraveling.


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## dogcom (May 23, 2009)

On the sports teams, their great tradition and the location so close to Canada drawing people in does give me pause in thinking of shutting them down.

My Own Advisor the US is already unravelling in so many ways. Economically they have been since their bubble blowing efforts after 911. They are also destroying their constitution as they don't seem to follow it anymore and spying on all their own citizens. There are also unhappy states like Texas that might one day want to go it alone and so on.


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## kcowan (Jul 1, 2010)

The tunnel has also declared bankruptcy. Will Windsor step up to buy it?


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## HaroldCrump (Jun 10, 2009)

Shut it down. Don't need it any more.
Crime rates in Windsor will probably rise.


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## humble_pie (Jun 7, 2009)

HaroldCrump said:


> Shut it down. Don't need it any more.
> Crime rates in Windsor will probably rise.


not clear why the crime rate in windsor would rise if the tunnel were shut down?
ottomh would one not expect the reverse ...


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## HaroldCrump (Jun 10, 2009)

humble_pie said:


> not clear why the crime rate in windsor would rise if the tunnel were shut down?
> ottomh would one not expect the reverse ...


That is what I meant. If the tunnel isn't shut down, then crime rate could rise.
Best to shut it down.


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## the-royal-mail (Dec 11, 2009)

This place has always been a dump. Just watch the opening scenes of Beverly Hills Cop with all the footage of Detroit in the early '80s. 30 years ago and things were no better then. Blame Toyota for the final nail.


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## HaroldCrump (Jun 10, 2009)

the-royal-mail, can we use your postal services to mail the bill to GM and Chrysler?
Along with the approx. $14B of bailout that they still owe us.


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## Rusty O'Toole (Feb 1, 2012)

Hawkdog said:


> make work project maybe
> 
> AP on SportsNet: The city of Detroit is going through bankruptcy proceeding, but they will build a new arena with tax dollars. Some agree with this, but not all. Some feel it will be a catalyst for more development.
> “This is part of investing in Detroit’s future,” Snyder said. “That’s the message we need to get across. … As we stabilize the city government’s finances, as we address those issues and improve services, Detroit moves from a place where people might have had a negative impression — although there are great things already going on — to being a place that will be recognized across the world as a place of great value and a place to invest.”
> The estimated cost of the complex is $650 million, 56 percent to be paid for privately, 44 percent public. Completion date is expected to be in 2017.


I'll have to remember that if I ever go bankrupt. Build a new tennis court and put in a swimming pool so creditors will have confidence in me and lend me more money. Sounds like a plan.

I used to think the politicians couldn't see the writing on the wall. Now I realize they saw it, they just don't give a damn as long as they get theirs.

When the going gets tough the tough get going. I'm sure when the last dollar is gone they will get going out of town at 70MPH in a chauffeur driven limousine with a trunk stuffed with $100 bills.


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## the-royal-mail (Dec 11, 2009)

Yeah sure, just make sure the red flag is up. Oh wait...


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## sags (May 15, 2010)

Apparently, a lot of people living in Detroit don't have any car insurance (some estimate as high as 60%). 

The rates are three times higher than for the surrounding area (high theft rates and accidents), so those who do pay for insurance register their address as outside the city limits. 

http://ca.autos.yahoo.com/news/the-city-where-no-one-has-car-insurance-220741904.html


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## Eclectic12 (Oct 20, 2010)

sags said:


> Apparently, a lot of people living in Detroit don't have any car insurance (some estimate as high as 60%) ...


I'm surprised it's that low. 

One of the Florida newspaper's survey was that 90% surveyed did not have car insurance. The saying in the park that "if you get hit, hope it's a Canadian - they'll have insurance" made more sense after reading that.


Cheers


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## yupislyr (Nov 16, 2009)

kcowan said:


> The tunnel has also declared bankruptcy. Will Windsor step up to buy it?


No, the tunnel operator declared bankruptcy.

The tunnel itself is jointly owned by Detroit and Windsor. The Detroit half is not for sale as of yet.


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## yupislyr (Nov 16, 2009)

HaroldCrump said:


> That is what I meant. If the tunnel isn't shut down, then crime rate could rise.
> Best to shut it down.





the-royal-mail said:


> This place has always been a dump. Just watch the opening scenes of Beverly Hills Cop with all the footage of Detroit in the early '80s. 30 years ago and things were no better then. Blame Toyota for the final nail.


More fine examples Detroit/Windsor ignorance.

Keep up the good work folks!


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## kcowan (Jul 1, 2010)

yupislyr said:


> No, the tunnel operator declared bankruptcy.


Is the second bridge project going ahead?


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## Spidey (May 11, 2009)

It seems like a city like this could use some creative and possibly controversial ideas. Perhaps somehow let the Chinese set up an industrial zone in the city and let them make use of some of this housing. I'm not sure how it would work but I've found when you've got nothing much left to lose, you may as well swing for the fences.


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