December 4, 2013
Though a decade ago civil servants and union members would never have believed it could happen, the stark reality of the situation came to pass this morning.
|Image: Detroit (Wikimedia Commons).|
This morning a judge overseeing the City of Detroit’s fiscal sustainability ruled that the City can be afforded bankruptcy protection, meaning that all 100,000 of its creditors now stand to lose a significant portion of monies owed to them.
The most notable victims are the tens of thousands of retirees living off of pensions – many of whom will see an 80% obliteration of the retirement funds they believed they’d receive until they died.
Creditor attorneys have repeatedly speculated they expect Orr’s plan of adjustment to mirror the June 14 proposal he offered creditors to avoid bankruptcy. That deal proposed giving unsecured creditors such as pensioners and bondholders a $2 billion note for $11.5 billion in estimated debts — or less than 18 cents for every dollar owed.Most of those affected assumed the government would simply find a way to borrow more money or fabricate it out of thin air. They were wrong and now they are paying the price:
“Oh my, oh my. Everyone is worried. When we think about what could happen, it’s scary,” said Larsen, 85, who moved to Palm Harbor, Fla., outside of Tampa after he retired in 1976.
“If they take our health insurance? Oh god. Cutting pensions? It’s terrible. The city of Detroit was our pride. Honest to goodness. We loved it.”