Excerpts from the original article:
“Stockton, Calif., won court approval of its plan to exit bankruptcy by paying bond investors pennies on the dollar while shielding public pensions, in a case watched by other cities facing heavy retiree costs.”
— Bloomberg News, Oct. 30, 2014
“In Stockton, the officials of the city fought to protect its workers’ pensions and succeeded. In the Detroit case, unions representing pensioners fought vigorously. But they had no allies within state government. It was right-wing Governor Rick Snyder who directed the bankruptcy. The Detroit city government was neutralized by the terms of the pernicious so-called Emergency Management Law.
Grand Bargains of necessity embody Grand Illusions. The orgy of self-congratulation from those who powered through the terms of the bankruptcy is a case-in-point. It lowers yet another layer of fog over the causes of the disparity between low-to-middle-income pensioners as compared to wealthy Detroit art patrons or Wall Street wheeler-dealers.
Pensioners did not invest their careers in what they knew to be a risky asset — retirement benefits. To the contrary, they negotiated pension benefits as part of their total compensation package. And, they quite reasonably expected those core benefits were protected by the plain-as-day language enshrined in the Constitution of the State of Michigan.
In contrast, sophisticated financiers who sold the City of Detroit bonds and credit swaps made a calculated risk. In exchange, they received interest rates as determined by a market whose very purpose, we are told, is to price-in that risk.
Think of it this way: When I exceed the speed limit, I know I risk getting a ticket. No one has any sympathy for me if I actually get one — least of all my insurance company. Even less would I expect or deserve any sympathy if I got in an accident and killed someone while speeding. The shaky condition of Detroit’s finances was not a secret for those making loans and selling credit default swaps to the City. Indeed, Detroit came to the deals in the first place out of desperation.
Ultimately though, what’s most disturbing about the Grand Bargain is not the unfair and illegal cuts imposed on pensioners, bad as those are. It’s how the Grand Bargain perpetuates the system of white supremacy and white advantage. It powerfully reinforces the incredibly self-serving white power idea that the whole thing was about problems that were entirely created by the overwhelmingly African American residents of Detroit. It is baked into the white-man’s burden perspective that the segregationist bankers, “philanthropists,” politicians, businessmen and media that created Detroit’s problems in the first place had to now come to the city’s rescue. …
Let us never forget that as with all the Grand Bargains that came before it, this one rescued the criminals not their victims. Let us never forget that like slavery itself, Grand Bargains will never just disappear of their own accord.
Ironically, Detroit does have a new lease on life. It’s not because of the bankruptcy. It is in spite of it. It is because beneath the high profile financial and political shenanigans, Detroiters are inventing new ways of working and a new culture of cooperation and mutual support.”