Why not? Certainly if the federal government can come in and write unique and precedent-setting bankruptcy rules for General Motors, they can do the same thing for Detroit. For those of you who think Detroit’s problems belong to the city and Michigan, you’re wrong. You’re going to end up paying for it.
Detroit is broke, and as we learned yesterday afternoon, the broken city has filed Chapter 9 bankruptcy. If accepted by the courts, it will allow city leaders to restructure their debt. But who gets to do the restructuring?
Last Friday, the Obama administration issued a “recommendation” to Congress. These reports always seem to come out on a Friday in the hopes, I suppose, that no one is paying attention. This one, much like many other “recommendations”, is a kick in the whatever to the private sector. Read more
Today, San Bernandino, California filed for bankruptcy. This follows on the heels of the June bankruptcy filing for Stockton, California, and the July 4 filing for Mammoth Lakes, California. Read more
We learned today that Government Motors has decided to invest $335 million in a fabulously successful European auto maker. Mercedes, Audi, BMW you guess? Guess again. Read more
Bankruptcy. It is not exactly a pleasant thought, but it could be in your future. Unthinkable? Read on… Read more
We have heard repeatedly from Washington and Hartford that it will take shared sacrifice to solve the fiscal problems facing our states and the nation. But somehow when it comes to the public sector shared sacrifice means taxing the private sector and at most “freezing” spending and reducing already generous benefits in the public sector. Well let’s take a look at some of the sacrifices already made in the private sector. Read more
Those of us who have even a brief history in business economics understand you can’t make promises that are unsustainable. You’d have to be a fool to make a business decision now, that would result in undetermined future liabilities decades in advance. That’s exactly what our municipalities, cities and states have done.
The small Detroit suburb of Hamtramck has asked the state of Michigan for permission to file for bankruptcy. The facts leading up to this request are something you soon may be seeing all across the country.
It seems that the city will run out of money in February. It began running million dollar deficits ten years ago, due, in large part to union contracts.
City workers were entitled to annual wage increases at four times the inflation rate and eight paid weeks of vacation each year. That’s in addition to 15 paid sick days, three paid emergency leave days, three paid personal days and one paid birthday.
With no co-pays or deductibles, the city’s health costs have risen almost 40% this year, and, pension costs have risen 36%. The city is currently paying $600,000 a year in bond payments resulting from Michigan’s earlier attempt to keep Hamtramck out of bankruptcy.
So, the city has cut non-union employees and payroll, and then turned to the unions for concessions to keep it afloat. The unions answer…no.
Well, you might say, I don’t live in Hamtramck, so why should I worry. Read on.
Municipalities nationwide are running a $574 billion unfunded pension liability, on top of $3 trillion in state unfunded liability. Philadelphia’s pension fund is set to run dry in 2015 and Boston’s in 2019. Chicago’s fund will be broke by 2019 when over half the city’s revenue will be dedicated to pensions. [emphasis supplied]
It would appear that while the average American citizen is continuing to tighten his or her belt, the government union employees are oblivious to the impending danger. Even with a dramatic turn around in the economy, bankruptcy may well be the only option for Hamtramck, and, perhaps your city as well.
Steve posted an interesting item recently about the Chrysler dealerships that had been terminated, and, he raised some even more interesting questions about how the terminated dealers were selected. I have no answers, just more questions.
Wednesday’s Orlando Sentinel reported that two Chevy dealerships in the Orlando area received notice Tuesday that their franchise agreements will not be renewed when they expire in October, 2010. Both dealerships are owned by the Holler family.
According to the Orlando Sentinel…
The Holler family has been in the auto business since 1920. Family patriarch Bill Holler was vice president of General Motors and a general sales manager of Chevrolet from 1929 until 1945. The family has sold General Motors products in Orlando since 1938.
As some would say, that’s nice, but what have you done for me lately? Well, the Holler dealerships terminated were the number one and number two sellers of Chevy automobiles in Orlando’s “four county area”.
I don’t know the Hollers’ political affiliation, but, what I do know is that Central Florida is predominately Republican.
All I can glean from this is, either Steve’s post is worth looking into, or, Obama’s car czar is using the dartboard approach to terminate dealerships.
Update by Steve: Thanks to the Sound Off Sister for bringing this up as I’ve been meaning to write about the “top” dealers that are being cut loose.
What it comes down to is profitable dealerships are being shut down. If they are paying their bills, keeping staff employed and making money, why is GM (the Obama administration) cutting them loose?
This is the first question that dealers are asking, and no answers seem to be coming around.
If the dealers really are making money, then the problem is at the corporate level (management and unions) and not at the franchise level.
General Motors has refused to discuss individual dealerships and the reasons behind its franchise cancellations.