Debt ratings drop into dungeon
Council cops pummel protesting pastor
Mayor plans meeting at Council Tues. Dec. 4 10 a.m.
By Diane Bukowski
December 3, 2012
DETROIT – In the wake of debt downgrades by Wall Street and Michigan officials’ denial of $30 million in loans to Detroit, Mayor Dave Bing dutifully went on the air in a CNN interview and denounced the people of his own city Nov. 28.
“We are in an environment, I think of entitlement,” Bing said. “We’ve got a lot of people who are city workers who for years and years, 20, 30 years think they’re entitled to a job and all that comes with it. Nobody wants to go backwards, but in order for us to move this city forward, I think we’re going to have to take a step or two backwards and then I think all of us have to participate in the pain that’s on us right now.”
Bing said this about the people of the poorest city in the country, where unemployment runs over 60 percent in some neighborhoods, and where the state has cut thousands of women and children off cash assistance.
“There are 47 percent of the people who will vote for the president [Obama] no matter what,” Romney said at a secret fund-raiser. “All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them.”
After Detroiters stormed the City Council Nov. 20 to demand that it vote NO on contracts with the EMA Group, which is recommending that 81 percent of the city’s water department workforce be cut, and the Miller-Canfield law firm, which helped draft the now-dead Public Act 4, among others, the Council finally complied to a degree.
But before Council President Charles Pugh dropped the closing gavel, Bing announced that the state was refusing to pay $30 million on a loan to the city due to the vote against the Miller-Canfield contract. He later announced forced furlough days and lay-offs of city workers in the New Year, claiming the city is running out of cash, knowing full well that the lion’s share of its cash in fiscal 2011, $579 million, went to the banks.
Bing called a disastrous special Council meeting for re-consideration Nov. 26, and has now set another session for Tues. Dec. 4 at 10 a.m., to discuss “Detroit’s economic situation.” The Nov. 26 meeting was shut down due to lack of an 18-hour notice required by the state’s Open Meetings Act.
But that was not before a respected pastor, the Rev. Charles Williams, Sr. of Greater King Solomon Baptist Church, had had enough. He called out to Pugh, “You’ve been President for three years, and you still don’t know the meeting requirements?”
He proceeded to leave, but called Pugh a “clown,” on the way out, whereupon a Council cop grabbed him and called in two others to pummel Williams against a wall before literally tossing him out. If Williams resisted, he had a right to do so, under the recent Michigan Supreme Court decision, People v. Moreno. The Court upheld the common-law right to resist illegal police conduct, including arrests.
Rev. Williams’ revolt reflected the widespread anger many Detroiters feel toward Bing and the “Fatal Five” on City Council, including Pugh.
Pugh and Council members Gary Brown, Saunteel Jenkins, James Tate, and Kenneth Cockrel, Jr. voted for a disastrous PA4 “consent agreement” April 4 to ensure that the city’s $16.9 BILLION in debt would be paid. They ignored days of public demands that they wait for the anticipated defeat of PA4.
(Video belows shows beating of Pastor Williams, Sr. by Council cops Nov. 26, 2012.)
(VOD editor Diane Bukowski has sent another letter to Bing and the Council to demand that they comply with the Open Meetings Act Dec. 4 by holding the meeting in the auditorium to allow all the attend. Click on OMA possible violations letter to Mayor Dave Bing et al related to COW meeting 12 4 12.)
The demand for payment of Detroit’s debt, and that of cities and countries across the world, during a period of global economic collapse, is behind attacks on working and poor people everywhere.
Moody’s, the Wall Street investor ratings firm, downgraded debt for the City of Detroit and the Detroit Water & Sewerage Department (DWSD) Nov. 28. City of Detroit General Obligation Unlimited Tax (GOULT) ratings plummeted from B3 to Caa1, while General Obligation Limited Tax (GOLT) fell from Caa1 to Caa2. (Click on Text of Moody Detroit downgrade 11 28 12 tp read full report.)
“These downgrades reflect the city’s ongoing precariously narrow cash position and a weakened state oversight framework following the repeal of Public Act 4 (PA 4),” Moody’s said. “The negative outlook on the . . . ratings is based on the rising possibility that the city could file for bankruptcy or default on an obligation over the next 12 to 24 months, the general uncertainty of state oversight as challenges to Public Act 72 (PA 72) persist following the repeal of PA 4, and the city’s ongoing inability to implement reforms necessary to regain financial stability.”
Despite the fact that DWSD is an enterprise agency not included in the deficit-ridden general fund, and is not itself in deficit, Moody’s went on to downgrade DWSD debt one notch.
Moody’s detailed what measures it wants Detroit to take, the same measures the state and Bing are trying to impose.
Such downgrades make it more costly and difficult for the city to borrow money on its own, and allow lenders to profit greatly from higher interest rates.
Wall Street has run Detroit for years. When city clerical workers, many of whom are eligible for food stamps due to wage concessions made through the years, voted down a 10 percent pay cut in 1992, Wall Street downgraded the city’s debt the next day.
Wall Street was glorying in an orgy of predatory lending in 2004, before the bubble burst in 2008, when Standard and Poor’s and Fitch Ratings came to the Council table in Jan. 2004 to demand that the city borrow an astounding $1.5 BILLION in so-called pension obligation certificates. Detroit defaulted on that debt twice, and now both its state-revenue sharing funds and its income from casino taxes are funneled through the U.S. Bank of North America to ensure the debt gets paid.
Even though Detroit is not alone in this Wall Street-made crisis, its leaders have failed to stand up against its perpetrators to a degree greater than that in many other cities.
The City of Baltimore and other municipalities and states across the U.S. are suing global banks in a massive federal class action related to the LIBOR scandal. Banks, including UBS AG, which was the lender in the 2004 Detroit POC deal, were exposed for taking advantage of their role as part of the U.S. Board for the London-Interbank Offered Rate (LIBOR) panel to criminally manipulate interest rates. Plaintiffs in the LIBOR case are demanding the restitution of hundreds of millions in funds that should have gone to service their people instead.
Detroit’s Mayor Frank Murphy demanded a 10-year moratorium on Detroit’s debt to the banks in the 1930’s, eventually winning national legislation to that effect. When the U.S. Supreme Court overturned the legislation, Detroit’s Common Council voted not to pay the interest on the city’s debt; when that was declared illegal, Murphy at least negotiated with the banks and won lower debt payments.
When will the leaders and people of Detroit decide they have had enough, as did Rev. Charles Williams Sr., and follow Frederick Douglass’ advice 150 years ago:
“Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them, and these will continue till they are resisted with either words or blows, or both. The limits of tyrants are prescribed by the endurance of those whom they oppress.”