July 18th marks the 1-year anniversary of the announcement by the corporate "Emergency Manager" Kevyn Orr of the filing for Detroit's bankruptcy - a decision that County Judge Rosemarie Aquilina immediately ruled violates the Michigan Constitution and state law and must be withdrawn. I have some very serious concerns because there was this rush to bankruptcy court that didn’t have to occur and shouldn’t have occurred,” Aquilina stated. Orr and Snyder managed to circumvent her ruling and the bankruptcy proceeded. The next few months will determine how successful they will be.
Today the activist community of Detroit put out this call to action:
They called for a rally and march to fight the dictatorship of emergency manager Kevyn Orr, appointed by millionaire Republican Governor Rick Snyder, and backed by Wall Street bankers and the 1%. Under a state-imposed bankruptcy, the City of Detroit workers face severe cuts to their pensions and tens of thousand people face water shut-offs.
Detroit Moratorium Now and Freedom Fridays Coalition
Starting July 15th, the Federal Bankruptcy Court in downtown Detroit will be holding hearings, and the people of Detroit will be speaking out against the Emergency Manager's economic "Plan of Adjustment."
The people of Detroit – 83% African American - know that their crisis was manipulated to force bankruptcy. In 2012, they fought to get a public initiative on the Michigan ballot, which overwhelmingly defeated Public Act 4, the anti-democratic law that granted the Emergency Manager complete authority over local officials, the power to nullify public rulings and bodies, and to strip unions of collective bargaining rights and health benefits.
But so intent was the right-wing legislature and Governor Rick Snyder to subvert the will of the people, that in a lame duck session immediately following the referendum, the legislature issued a newer version of the law, Public Act 436, which they attached to an appropriation bill; a parliamentary trick that eliminated the possibility of another referendum.
Many Detroiters believe that the aggressive foreclosures and water shut–offs are a deliberate scheme to shock the population, drive long-time residents out of the city center, seize property, and gentrify downtown Detroit and the waterfront. This game-plan was played out in Benton Harbor, Michigan, also forced into emergency management, where corporate vultures grabbed a chunk of the city’s waterfront to build a golf course.
Detroit was no more “bankrupt” then many American cities suffering post 2008-loss of their real estate tax base; a crisis caused directly by Wall Street and the very same banks now promoting Detroit’s bankruptcy. Motor City was particularly devastated by the sub-prime mortgage schemes, which targeted African-Americans, who the banks knew could not afford the loans they promoted. Detroit had the largest percentage of sub-prime victims per capita of any city in the U.S. Foreclosures continue at one of the highest rates in the country.
The 2008 Ponzi scheme market collapse also led to $1.5 billion in budget-fix loans foisted on Detroit by a bank consortium led by Bank of America; loans connected to the LIBOR interest rate manipulation crimes, for which the banks were indicted and fined. According to Bloomberg News, these faulty loans were coupled with unnecessary default insurance schemes sold by disreputable brokers to a corrupt Detroit mayor, who saddled the city with over $474 million dollars in default swap costs. The mayor was later convicted and jailed on charges of racketeering and bribery.
But the banks were given a free ride, and now demand full payment. Many cities with almost the same financial red ink as Detroit - like Chicago - renegotiated bad loans with help from their state capitols, but Detroit is being held hostage. After the right-wing takeover of Michigan’s legislature in 2010, and the election of Governor Snyder, the Tea Party-led Republicans repealed the business tax so that the state lost over a billion dollars in revenue in 2013 alone, replacing it with 1.8 billion in cuts to schools. The Statehouse backed out of previously allocated revenue-sharing funds to the city.
The long-term solvency of the city pension obligations was then deliberately confused with short-term cash flow to accentuate the appearance of a financial crisis, according to Tom Barrow, mayoral candidate, CPA and former head of the Michigan Licensing Board of Accountancy.
Jones Day, a Wall Street-connected law firm, which stood to gain $100 million in fees for the bankruptcy, was complicit in the fabrication of Detroit's crisis. The firm's report on behalf of the State, which deviated wildly from a routine municipal budget statement, was rife with subjective, editorializing subheads such as UNSUSTAINABLE RETIREE BENEFITS and HIGH LABOR COSTS AND RESTRICTIVE EMPLOYMENT TERMS. Bond market expert Kate Long indicated that the Detroit pension fund was actually "reasonably well funded according to national standards.”
Emergency Manager Orr, coincidentally also a former Jones Day partner, claimed he only made the “tough decision to file bankruptcy reluctantly after thorough negotiations with creditors, pension trustees and public sector unions.” In fact, Orr, Snyder, Detroit’s Democratic mayor, and the powerful financial interests behind them, had conspired for months to use federal bankruptcy laws to circumvent legal obstacles regarding pensions, according to the leaked emails dating back to January, 2013, provided by Robert Davis, a local political figure associated with AFCSME.
Tom Barrow described how Orr and Snyder surreptitiously rushed to preempt an injunction filed by pension trustees and public-sector unions who were seeking to block bankruptcy on the grounds that it would lead to unconstitutional pension cuts. While in court, attorneys for Snyder asked for a courtesy five-minute delay, during which Orr’s attorneys surreptitiously filed the bankruptcy petition, preempting the injunction.
The bankruptcy continues to slog through the courts, even though it became evident that Detroit's financial “emergency” was as blatant a fabrication as the WMDs - the weapons of mass “distraction” contrived as the rationale for the privatized invasion and occupation of Iraq. Detroiters are witnessing the same "shock" strategy used internationally by right wing ideologues who employ corrupt political, military and police power to advance the so-called "free market reform." This long-term agenda of the Milton Friedman Chicago School of Economics is actually a formula for aggressive public asset seizure.
In her seminal book, Shock Doctrine, Naomi Klein explains how historically a "softening up" process of collective shocks have been employed by the Chicago School internationally to stun the populace, paralyze their democratic process, and force austerity and mass-privatization down their throats through Structural Adjustment Programs (SAP) (see Detroit's Emergency "Plan of Adjustment") that literally sap the lifeblood and wealth of nations.
"Coming unraveled by hyperinflation, and too indebted to say no to demands that came bundled with foreign loans, governments accepted 'shock treatment' on the promise that it would save them from deeper disaster."
Such vulture capitalism attacks were perpetrated in Chile and Argentina with the aid of corrupt dictators. In Russia and China, political suppression “shocks” preceded a privatization of public assets by Russian oligarchs and Chinese Communist Party “Princelings." After the austerity and privatizations, average citizens inevitably found themselves poorer as excessive debt was serviced off their backs, and lacking in basic public services and education.
Now "shock doctrine" has come home to the U.S. Detroit has become Ground Zero for a massive new wave of asset seizures, repression, and corporate exploitation that is beginning to sweep US communities and states; privatizing our schools, water assets and government services. With the end of the Iraq war, and as Latin American democracies reject bank induced debt and austerity, these parasites who prey on civil society have turned their attention from neo-colonialist exploitation, to cannibalism at home.
Many in Michigan believe the city could have managed its financial troubles on its own, but Motown was defamed and derided by repeated newspaper editorials, the outstate right wing, and the controlling majority in the Legislature, as profligate and promiscuous financially. Detroit's citizens were stripped of their right to local political control by democratically elected representatives.
Many Detroiters believe that the August 6, 2013, Mayoral Primary recount uncovered massive ballot box fraud, which was deliberately ignored. The race featured a white carpetbagger candidate connected to the Wayne County political machine and the State's powerbrokers: Mike Duggan was disqualified from the ballot after a judge ruled him ineligible due to residency. But Duggan eventually won with 40% of the vote by waging an historically improbable write-in campaign marred by overwhelming evidence of fraud, including duplication of ballots, and the breaking of a number of ballot box seals. This evidence should have led to an investigation, but it was never conducted by the Wayne County Board of Canvassers during their cursory response to recount petitions from other Mayoral candidates. (The Republican State Attorney General later wrote a letter to the Board, excoriating their failure to comply with their statutory responsibility).One community activist told us, “We do not recognized Duggan as the Mayor, because of the facts uncovered during the recount.”
Detroit is not the first predominantly Afro-American city subjected to fraudulent exploitation. Post-Katrina New Orleans (60% Afro American) was also abandoned and exploited by the political class. In Birmingham Alabama (74% minority), JP Morgan was convicted of bribing local power brokers and extracting millions in fees that turned a $250 million dollar sewer project in Jefferson County into a $3 billion dollar debacle. While the county slashed services and laid off almost a thousand workers, JP Morgan settled in court for 1.6 billion, their profits soared, and their municipal-debt underwriting business - over $64 billion dollars, including Detroit - remained mostly unscathed by the scandal.
“Emergency Management” in Detroit just another term for “hostile corporate takeover” whose major targets are:
- The tens of billions of dollars in value represented by the city’s huge water systems infrastructure, which supplies 40 % of Michigan, and sits on 25% of the fresh water supply of the US.
- The billions of dollars in Detroit property that could be gentrified and developed once the cronies of the real estate vultures have pushed out its Afro-American residents.
- An art museum with a collection valued at billions of dollars.
- The hundreds of billions of invested capital that are promised to the city pension plans.
The clear attack on pensions is why many Detroit pensioners are voting “No” to the insidious “grand bargain” being offered right now in the enforced bankruptcy. Pensioners and current employees are being threatened with deeper cuts, if they don’t vote to accept a set of long-term reduction in payments and health benefits, and sign away their right to sue later.
Pensioner Cecily McClellan, sees the struggle for pensions as the battle of a lifetime. “We aren’t getting a ‘sense’ of what they’re doing. We know that’s the move. And Detroit is the template. If they are successful here, then they’re going to use it. They have 90,000 municipalities with pensions in the United States. And they’re going after every one. I think that the pension is going to be a form of new wealth for some people. It’s a new market. Just like we had the mortgage bubble and the dotcom bubble, we’re going to have them exploiting pensions.”
The pawns in this crisis, the impoverished residents of Detroit, have already suffered the globalization of this rust belt region, as corporations took their production south, and then abroad. Motor City’s population has been reduced from 1.5 million at its apex in the 50s, to just over 700,000. Half the housing stock is abandoned or set on fire and looted, while city services operate at a fraction of past accommodations – crippling citizen's ability to work, and care for their children. The last thing they need is to be viciously set upon by the Governor and his “Manager” who now threaten their health by the shutting off of water, often without notice, of any resident who is overdue 60 days, on as little as $150 dollars.
Millions of dollars are still owed to the city water department by golf courses, sports arenas and other businesses, and by thousands of homes foreclosed and now owned by banks or corporations - but these have not been subjected to water shut off, even with bills months or years overdue.
As we write this story, on the 4th of July, we believe the people of Detroit have the right to refuse their "consent" to be governed by a vicious regime foisted on them by an imperialist Governor. They would be well within the bounds of justice to demand their “unalienable rights," starting with water for their families, and to keep their pensions, which are protected by the Constitution of the State of Michigan.
Detroit is part of the heart and soul of America. Its path should be decided by the people of Detroit themselves, who deserve basic respect, human dignity, and enough water to plant and grow the seeds of their future.
All of you out there in the American heartland, in Michigan and the Midwest, in Chicago, Madison, Toledo, we implore you to “do the right thing” - get in your cars, on buses and trains, and come to Detroit on July 18th 2014.
For more info on the Demonstration go to;
Ben Ptashnik is a former State Senator from Vermont, and a lifelong human rights and democracy activist. He and Victoria Collier are co-directors of the National Election Integrity Coalition- www.democracymovement.us