Jeremiah Wright was right!

Rev WrightJust not in the way he intended. As quoted by ABC News:

America’s chickens are coming home to roost…

Yes, I’m taking the Reverend’s comment totally out of context, because in context he’s absolutely wrong. In today’s context however, he couldn’t be more right.

Today’s context is the way we’ve been running our cities. Current case in point is Detroit.

I would argue that Detroit is the face of the affirmative action movement in the US. The people of Detroit have spent the last 40 years electing affirmative action candidates as mayor and city councilmen they’re about to finally pay the price. Let’s hope Detroit serves as an object lesson for the rest of the nation, because the rest of the nation isn’t far behind.

Emergency Manager Kevyn Orr’s plan to suspend payments on $2 billion of Detroit’s debt threatens a basic tenet of the $3.7 trillion municipal market: that states and cities will raise taxes as high as needed to avoid default.

Orr, appointed by Republican Governor Rick Snyder to oversee Michigan’s largest city, proposed a deal last week that included skipping a $39.7 million payment on pension-obligation debt. The city is also set to default on unsecured unlimited-tax and limited-tax general-obligation bonds as it grapples with $17 billion in liabilities to avoid a record bankruptcy.

By calling into question the safety of any security backed by a government’s general obligation to pay what it owes, Orr, 55, imperils similar debt across Michigan …

…across Michigan and the rest of the nation.

Here’s how municipal financing works. Governments borrow money on the municipal bond market at very favorable rates because the interest on the bonds is non-taxable and because no bondholder has ever lost principal on a muni investment.

That dynamic is about to change and the way local governments finance operations is about to forever change.

Paying less than 100 cents on the dollar would “rock the market,” said Tamara Lowin, director of research for Belle Haven Investments in White Plains, New York.

Folks, change is on the way. Real change, not the “HopenChange” kind of thing. Here’s what’s going to happen given the various possibilities:

Scenario I: Detroit defaults on its debt and the bankruptcy court upholds the action.

Bondholders will take a huge principal loss on their investments which will upend the municipal bond market. Bond underwriters will declare open season on all new bond issues and bond guarantors will audit the living daylights out of current issues. It’s likely that any bond requiring either unlimited or limited tax clauses will be priced at near “junk” levels. That will significantly raise the cost of borrowing and reduce the ability of municipalities to borrow money.

The second thing that will happen under this scenario is that every city in the US that is pinched will suddenly go to the Bankruptcy Court for help.

Since the major holders of municipal bonds are retirement funds and retirees, this action will throw seniors in general and most state retirement funds into a real pickle. Retirees who were counting on income from their munis will now be living on Social Security only and the pension funds will instantly be seriously (or more seriously) underfunded. Remember, we’re talking about $3.7 trillion in municipal bonds.

Scenario 2: The Court restructures the pension contracts that the city has with their retirees in order to make the pension fund solvent on an on-going basis.

This is the absolute nightmare scenario for Public Employee Unions. This is a green light for city governments to draw a line in the sand with a backhoe in their union negotiations and could be a death knell for Public Employee Unions. If they can’t keep their members fat at the public trough what’s the point of paying union dues? As we’ve seen in Wisconsin, when given a choice, union members choose not to pay.

You can be sure that some drastic form of both of these things are going to happen when – not if – Detroit files a Chapter 9 bankruptcy. The unions have already said they’re done giving back and they’re ready to go on strike.

I expect, over the next few years, we’re going to see cities begin to privatize every form of service they can. They’ll get a flat price and they will no longer be on the long term hook for retirement and health care. Additionally, you can expect to see Mayors dumping their current retirees into the Obamacare pool for health care which will cause the Obamacare rate structure to implode.

So yes, Jeremiah Wright was indeed right, the chickens are coming home to roost. Except that they’re roosting in the cities that have been run for the past 40 plus years by liberal affirmative action politicians like his former parishioner Barack Obama.

We’re about to see REAL change at the local level, and it’s going to be very ugly.

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  • Commander_Chico

    WTF? There was no “affirmative action” involved in elections in Detroit.

    Those elected got more votes.

    • Brucehenry

      You know what he means.

      • retired military

        Yes. He means that like Obama the least qualified succeeded n getting elected and have taken care of their cronies at the public expense ever since.

        • Brucehenry

          Yeah, sure……..something like that.

        • Commander_Chico

          Are you saying all black people are the least qualified? Because that’s the only thing I can really see in common among Obama and the officials of Detroit.

          • jim_m

            I believe he specified “obama” and not all black people.

            I believe that there is ample evidence of the racism in Detroit politics driving whites and others out of the city. There is also ample evidence of the corruption of the Detroit city council.

            For my part I just think that the voters got the government they deserved. They elected the very kind of racists they wanted. They wanted someone who would blame the white man for the riots that burned the black areas of the city every Halloween. They wanted someone who would pander to their ignorance. And they got all of that.

            Detroit was once the 4th largest city in the nation and it is now something like the 18th. The blame is squarely on the dems and the unions and the people of the city. While some of the individuals involved are certainly and obviously racist I would not put the blame on racism, but I would put it on their incompetence and corruption.

          • Commander_Chico

            Nah, the whole thing is slavery still playing out in American society. It takes a few hundred years for things like that to be worked through. It’s only been 150 years since the Emancipation Proclamation, and less than 50 years since the end of Jim Crow in the south. When you consider family legacies only passed down each generation, not much time.

            A bunch of black field hands from the south came up to work in the auto factories back in the 20s, 30s and 40s. They were stripped of their original cultures by slavery, they were fucked up by Jim Crow, and there was family dysfunction and crime which resulted.

            The whites left because they didn’t want to put up with the crime. When the auto industry declined, the economy got worse and more middle class people moved out.

          • jim_m

            Wow. I suspected you were a racist bigot but now I really know. To suggest that this has anything to do with slavery is TOTAL BULLSHIT.

            You’re an irrational bigot and that is that.

            There was a growing black middle class before the dems started with their “Great Society” programs and they have done quite well at their object of destroying that black middle class. Funny how you think that it is the white man’s fault. This is not a racial issue. It is a left vs right issue and the left in this nation has always had a vested interest in oppressing the black people and still does.

            [edit]In the case of Detroit it is the left that has destroyed the city and not the right or the white man. Only ignorant racists think otherwise.

          • retired military

            Ah yes another idiot playing the race card when facts are presented to him about Obama. How original.
            Here Chuckles lets save you some time when you post in the future . Just respond with the appropriate letter below

            a. The oligaphy
            b. It’s Bush;s fault
            c. Racism
            d. Breaking the law is bad unless you are with OWS.

          • jim_m

            You left out

            e. The Jooos

          • retired military

            Thanks Jim I forgot that Chuckles was a jew hater

          • LiberalNightmare

            Are you saying that the city of detroit has been managed successfully, and that its current fiscal crisis is due to racism?

          • retired military

            Don’t go playing racial games with me Chuckles.
            That crap don’t go with me at all.
            They have plenty in common with Obama.
            THeir political party, their political leanings, their way of doing business and their whole belief system.
            Take that racial crap and shove it up your ass where it belongs.
            I have been posting on this board for years. Show me one statement where I have made a racially motivated statement.
            While you are at it remember that I have a biracial daughter as well.

          • Commander_Chico

            So you’ve been gettin’ it on with the exotic? Good for you.

            When you get pissed off, RM, this is who I think of:

            http://static.giantbomb.com/uploads/square_small/0/7383/1813616-cotton.jpg

          • retired military

            Fuck you Chuckles.
            Once again you prove your racism. People are people.
            Unless of course by exotic you mean a human female which I am sure something exotic and unknown to you.
            When you spout your racist crap do you know who I think of Chuckles? People like Farrakan, the KKK, and Obama all rolled up into one.

          • jim_m

            That’s nice. Use a term more often used to describe pets and sports cars to describe someone’s wife.

            Your posts are even more repugnant than usual.

          • http://wizbangblog.com/author/rodney-graves/ Rodney G. Graves

            The mask slips…

          • Commander_Chico

            You’re all so cute when you try to be PC.

      • Commander_Chico

        What, he means that every time a black person gets elected, it’s affirmative action? He can’t mean that.

        • retired military

          Last I checked he didn’t say that. Remember that.
          I also don’t seem to recall him saying anything about affirmative action when writing about
          Steele
          Powell
          Condeleeza rice
          Just to name a few.
          Get off your idiot kick and try something original

  • retired military

    Looks like option 1 to me. Dems will never screw the unions if they have a choice.

    • Commander_Chico

      Well, being on a sweet government pension yourself, you would not want others to lose their pensions, would you?

      • jim_m

        I don’t think I have ever heard RM carry on about his government benefits and certainly never claim that his bene’s were more important than the financial security of the nation like you do.

      • retired military

        Listen here Chuckles. My pension is no more sancrocist than anyone else’s. I did my time and did what needed to be done to collect it. To bad so many of the left don’t want to do that.

        Did I say the unions don’t deserve pensions (even if they are better than people who put their lives on the line to collect it) ?
        I have a lot more problems with the union bosses (aka political cronies of the left) than I do the rank and file union members.

        And I notice that you didn’t deny that my statement was true either.

  • LiberalNightmare

    Living in Mass, Ive already seen this play out with the city of Lawrence.
    The solution is more of the same.

    If you live in Michigan, get ready to dig deeply into your pockets to keep Detroit afloat

  • GarandFan

    People get the government they deserve.

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