Detroit's Last Stand

As you may have heard about or read here in a previous post the City of Detroit is broke. The Mayor and Council have been unable and unwilling to fix the problem. The state review board has certified that Detroit is a hot mess. This started the legal process for Governor Rick Snyder to seek either a consent agreement between the city and state or to impose an emergency manager. The consent agreement is "emergency manager lite". Under a consent agreement the mayor and council would still have some fiscal influence, just not very much. A financial board would be set up to run the city's finances. Members would be appointed by the governor, the mayor and the city council. Union contracts could not peremptorily be thrown out. Under an emergency manager law, the mayor's and council's authority to do anything would be eliminated, not trimmed and union contracts could be reopened or rejected. Detroit has just a few days left before the city is obligated to either be in an consent agreement or the governor must impose an emergency manager. 

As you might imagine, this being Detroit nothing gets done easily or on time. Although the governor has said he doesn't want an emergency manager, he has refused to rule it out. But the Detroit political establishment also doesn't want a consent agreement and has so far refused to sign the agreement offered by the state. They are working on a different document, which they call a financial stability agreement but is a consent agreement by another name. This could come out today. This document pointedly refuses to give any review board final say over finances. So this is, obviously a sticking point. City Council member Kwame Kenyatta said the state-city relationship was akin to a "master-slave" one.


There were public meetings on the process to declare a financial emergency and of course people showed up to comment as is their right. One such person who got some attention was local activist, gadfly and New Black Panther Party member Malik Shabazz who said, well, just listen:

VIDEO INTERVIEW

As you might imagine this didn't go over very well with many people in or outside of Detroit. The general response from outside of the city about threats to burn it down seemed to fall into three categories:

• Go right ahead
• That's how we know you're insane
• How would we tell the difference?

SE Michigan remains one of the more racially divided population tracts in the US. It is what it is.
So after all the shouting, moaning, and testifying is over Detroit is really stuck with a number of unpleasant choices

1. Bankruptcy
2. Consent Agreement
3. Emergency Manager

That's it. Of course this being SE Michigan it is possible that the numbers are all awry and that Detroit actually has enough money to make it for another 3 months or another 6 months or more. It is possible that the state or federal government might create a bailout plan. 
It is possible that some liberal billionaire could write a check to bail the city out. 
It is also possible that I may win the lottery today.


But planning on such things is not how intelligent people organize their life.
There is of course no guarantee that a consent agreement or even an emergency manager will solve the problem. Detroit may be too far gone for that. The unfortunate truth is that there is not enough income and too much out-go. This spiral of higher costs and lower revenue has been obvious for at least the past decade. One needn't sign on to every last single right-wing austerity meme to recognize that unlike the Federal government, Detroit can't print money and can lose high numbers of citizens to areas that have better services, lower taxes and lower levels of crime.


Racism scars people. I understand that. It is extremely unpleasant for Detroiters to consider a future in which their elected officials have their authority trimmed or eliminated. But as I've said before, getting upset about such things now is like getting peeved when the bank decides to repossess the car that you haven't made payments on in 6 months. Sure, you can contact a bank rep and call her all out of her name if you like. It may make you feel better. But it doesn't change the underlying reality. Councilwoman JoAnn Watson can continue talking about what the state owes Detroit. But no one who cares is listening. It's EXACTLY like having a boss who promises you a raise but then the company runs into trouble and your boss leaves for greener pastures. The new boss tells you that not only are you not getting a raise but that pay cuts are imminent. I've been there. Ranting on and on about what you're owed doesn't make a dime's bit of difference. And for what it's worth it's not (just) a race thing. A predominantly white Detroit suburb may be getting an emergency manager as well. Things are tough all over.


QUESTIONS
1) If your city was at the brink, would you rather burn it down than accept an emergency manager/consent agreement?
2) Should the state of Michigan have refused to get involved?
3) Is bankruptcy a better option than state control?

Companies Demand Facebook Passwords!



"We're watching you"

One of the nice things about being a blogger or frequent blog commenter is that you get the opportunity to build an online persona and interact with people literally all over the world. This online persona may be close to your "real life" personality or it may be 180 degrees apart. You may decide to be totally and completely transparent with readers and co-bloggers or you may hold on fiercely to your "secret" or "online identity" and associated privacy.

Now imagine if a would be employer did an online search for you and found your Facebook page. They looked at the public views and didn't find anything objectionable: no racist jokes and calls for bloody revolution, no fond memories (and pictures) of Copenhagen orgies, no five star reviews of Tijuana brothels. You're good to go right? Not so fast. Let's say that the would be employer is not convinced that you're not hiding something. After all EVERYONE is hiding something. And this employer is a watchful, distrustful sort.

So the interviewer politely asks you for your various and sundry passwords from your Facebook/disqus/yahoo/gmail/hushmail/google/linkedin/amazon/etc accounts so that they can log on as you and review all of your private pages, emails, instant messages, associates, and what you've been viewing, reading or watching in your personal time.  

• After all, you might be a terrorist or worse, an ACLU member. 
• You might have friends of friends who said something negative about the company two years ago. 
• You might belong to "problematic" political or cultural groups.
• Maybe you've sent naughty instant messages to your spouse, significant other or friend with benefits. 
• You may have neglected to mention certain medical conditions you have.
• Maybe you got a thang going on with Mrs. Jones.

Like I said, EVERYONE is hiding something. But if you're NOT hiding anything then of course you won't mind the company looking, right? RIGHT????

SEATTLE (AP) — When Justin Bassett interviewed for a new job, he expected the usual questions about experience and references. So he was astonished when the interviewer asked for something else: his Facebook username and password. Bassett, a New York City statistician, had just finished answering a few character questions when the interviewer turned to her computer to search for his Facebook page. But she couldn't see his private profile. She turned back and asked him to hand over his login information..

Bassett refused and withdrew his application, saying he didn't want to work for a company that would seek such personal information. But as the job market steadily improves, other job candidates are confronting the same question from prospective employers, and some of them cannot afford to say no...

Back in 2010, Robert Collins was returning to his job as a security guard at the Maryland Department of Public Safety and Correctional Services after taking a leave following his mother's death. During a reinstatement interview, he was asked for his login and password, purportedly so the agency could check for any gang affiliations. He was stunned by the request but complied.
"I needed my job to feed my family. I had to," he recalled,
After the ACLU complained about the practice, the agency amended its policy, asking instead for job applicants to log in during interviews.

Link 

Robert Collins

I think this is just a sad state of affairs. As so many people have been apathetic or quiet about the government invading their privacy without cause whether it be NYPD/FBI spying, FISA or Patriot Act or TSA searches, it only makes sense that companies would want to get in on the act.
I can't imagine working for a company that would even have the nerve to ask me something like this. The answer would be no. I would end the interview.  Of course I'm not currently desperate for a job and I matured before online personas had become so ubiquitous. What would I do were I younger or if I needed to get some money pretty doggone quickly to avoid eviction or repossession? I would still stand on principle and tell them to attempt airborne copulation with a revolving pastry. I've got to be free. But that's just me. How about you? You may need to think about this.

And the sign said "Long-haired freaky people need not apply 

So I tucked my hair up under my hat and I went in to ask him why  

He said "You look like a fine upstanding young man, I think you'll do"  

So I took off my hat, I said "Imagine that. Huh! Me workin' for you!"   

Questions

1) Would you agree to give a company passwords to your Facebook, emails, blogs, etc?

2) Should this be illegal?

3) Do you think a company would ever have any valid reason to ask for this information?

Shutting Detroit Down

What's happening in Detroit?

You may not have noticed with all the national media attention on the Democrat-Republican fracas over the budget, the deficit, the Obama tax cuts, and payroll tax cut political gamesmanship but by some estimates the city of Detroit is on the verge of going belly up as soon as April of 2012. Detroit has a deficit of roughly $150-200 million and accumulated debt of somewhere around $10 billion. Vendors are already waiting in some cases as long as 18 months to get paid.

This has made some of the usual suspects happy but most people are angry or sad. Under the emergency financial manager law (which was given new teeth under the new Republican Governor's administration) the state has the power to appoint a manager who would have the authority to run the city, void union contracts and privatize services and sell assets. 

This being Southeast Michigan (one of the most segregated areas in the US) the race issue is never far from people's minds. Detroit is between 80% and 85% Black. With a few exceptions most suburbs are the reverse image of that demographic.  Detroit has had black political hegemony since the early seventies or so. Within the city there is INTENSE paranoia about the idea of a white governor appointing someone to run Detroit and even more suspicion about white suburbanites taking over Detroit's "jewels". Honestly, some of this is nonsense but some of it is 100% accurate as Detroit and the surrounding suburbs have battled for decades over the Detroit Water Department, (Suburban municipalities have urged greater suburban control over the Detroit water department-a stance greatly at odds with their otherwise anti-regionalism preferences), the Detroit Zoo, the Arts Institute and Library, mass transit, Detroit's income tax on suburban workers, and many other things.


Bottom line is that Detroiters feel it's their city so they get to vote and if you don't like that, quit your whining and move into the city. Otherwise have a nice long drink of STFU. Suburbanites feel that fine if you don't want our say, stop taking our money. We'll take that deal in a heartbeat.

How did this happen?
The city of Detroit has 48 different unions. They have generally refused to offer any more concessions, claiming that they've given enough. They blame bad outsourcing and private contractor decisions for this crisis. The unions have offered some ideas on solving the problem, which include such things as cutting Blue Cross Blue Shield out of the medical payment process and eliminating private contractors. The city council has seized upon an unpaid $200 million block of aid that the State of Michigan was supposed to pay Detroit as the proximate reason for the crisis. However the State of Michigan cut back aid to several localities as it is also cash poor. The city also would like the State of Michigan to forgive some of its debt and help the city to do a better job of collecting city taxes-from both residents but especially businesses.

If Detroit collected all of its owed income taxes each year, the city would receive an additional $155 million annually that could wipe out the deficit in a few years and avoid massive service reductions and layoffs. At a time when the state is about to begin dissecting the city's troubled finances, about half of Detroiters and non-Detroiters who work in the city fail to pay their city income taxes. But city officials said to aggressively go after the delinquent taxes would be time-consuming and require more employees and sophisticated technology than the city can afford. That's why Mayor Dave Bing is lobbying state lawmakers to enact a law that would require suburban employers of Detroiters to automatically withhold income taxes and electronically deposit the money into a city account.

STORY

The rising costs of health care for retirees and some bad decisions with the pension fund are an additional problem. In my opinion the primary cause for this is that Detroit simply has too many costs for the population that it supports. Things that could be done when Detroit was home to roughly a million people can't be supported when only about 700,000 live there. The property tax base and income tax base no longer exist to support the current payroll and other items. There is just not enough money coming in. People have left for reasons both good and bad. But at the end of the day, they've left.


All the other race-baiting and political posturing aside that's what it comes down to. It's like trying to make a monthly payment on a new Bentley Arnage when your job description has changed from international rock star to Olive Garden busboy. Eventually, the numbers turn against you. No matter how much you may hate it, you will need to accept (grudgingly and temporarily perhaps) your new reality. To paraphrase Moe Greene from The Godfather  "..the City of Detroit ain't even got that kind of muscle no more!!!"










What happens next?

Council members JoAnn Watson and Kwame Kenyatta

Well that is indeed the million dollar question. The city council, union leaders and Mayor all came together last Friday to announce that although they had not solved the problem they would solve it and didn't need or want any outside help-period. However this was too late as the State Treasurer announced a 30 day review of the city's finances to determine whether an emergency manager would be appointed. The city is of course free to solve the crisis before then but many think this unlikely. Although it would be more symbolic than not the City Council has so far refused to cut its budget by the amounts it wants other departments or workers to accept.


Detroit faces privatization of lighting, waste management the zoo, the water department, parking, parks, Belle Isle, mass transit, fire, police and other normal city services. This looms in the future, whether it be through an unprecedented bankruptcy or the emergency manager process. In short, Detroit would temporarily cease to exist as an independent political entity. Some analysts feel that emergency manager or not bankruptcy is inevitable.


Others think that the both the emergency manager law and its application (most -not all-of the Michigan cities or institutions where the law has been applied or invoked are majority Black) is unconstitutional and therefore the law should be repealed. There is a petition drive to do just that. US Congressman John Conyers has also asked the Justice Department to review (i.e. block) the law.

Washington — U.S. Attorney General Eric Holder is reviewing whether the state of Michigan can legally appoint an emergency manager to oversee the Motor City's finances, Rep. John Conyers, D-Detroit, said late today.Conyers said he spoke to Holder about his request that the government move to block the law."(Holder) said, 'I've got my lawyers working on it right now,' " Conyers said, adding he spoke to the attorney general about 4 p.m. today. "He's trying to find out if my allegations of great constitutional concerns are valid. That's what he's got several hundred lawyers for."The Justice Department confirmed Holder and Conyers spoke — and reiterated that the Justice Department is reviewing the letter.Conyers, the ranking Democrat on the House Judiciary Committee, sent a letter Dec. 1 to Holder asking him to review whether the state's emergency financial manager law is constitutional and to intervene if necessary to block it. "(Holder) told me he got the letter and he's going to act on it."

LINK

Detroit Mayor Dave Bing

My take is that even if we believe that this is a dastardly corporate Republican plan to steal and sell off Detroit's assets for their own gain while disenfranchising thousands of black voters to boot, who let things get to this point in the first place?  Whether or not there is an emergency manager appointed is almost irrelevant given the cash flow needs of the city. Detroit leadership is coming in a day late and a dollar short. I mean seriously, folks. You can't say and believe in your heart of hearts that those folks over there hate us and want to control us and then behave in such a manner that shows that despite all of your protestations to the contrary, you can't successfully run your own affairs. This is not a race thing in my opinion though there are elements of that which must be addressed. It's a pure numbers situation. The costs are too high; the revenue is too low. That's been an obvious problem for at least the past 15 years. Now the bill is coming due. This is of immense personal interest as there are people very dear to me who rely on city pensions. Bankruptcy could-probably would-put some or all of those pensions at risk. This goes into uncharted territory as Michigan law places high (but not insurmountable) protections around pension payments-perhaps The Janitor or Old Guru can speak to the legalities.


I'd like to believe that Detroit will find a way out of this but I really don't think it will. Time will tell. Maybe the state should just say," Fine. You the man. Handle it yourself-go bankrupt -just don't come crying to us."


QUESTIONS
1) Do you think the emergency financial manager law is constitutional?
2) Should public sector unions and outsourcing contracts have automatic spending reductions inserted based on the city's financial health?
3) Do you think bankruptcy is inevitable for Detroit?
4) Why hasn't city leadership been able to craft a plan to solve this issue?

Michigan Cuts Welfare: 11,000 Families Lose Benefits!

Michigan Republicans to welfare recipients: 

Elections have consequences. That is something that people who won the last election like to smugly say to people who lost the last election. This is nowhere more true than in Michigan since the recent election of Republican Governor Rick Snyder, former chairman/coo/president of Gateway, who with the assistance of a Republican majority in the legislature, has instituted some sweeping changes.
The latest change is that there will be an end to cash assistance welfare for families who have received more than four years of help. This starts October 1-just as school is starting up and winter is coming.

Lansing— The state Legislature on Wednesday passed a 48-month lifetime limit on welfare benefits expected to cast more than 11,000 families off the welfare rolls on Oct. 1 — including more than 29,700 children, according to state officials.The cumulative time limit will save $77.4 million in the budget year that starts Oct. 1, but Democrats and child advocates said they fear it will cause a humanitarian crisis as social agencies are flooded with families who can't pay for rent, utilities or other essentials.

Gov. Rick Snyder, who proposed the cap as part of his 2012 budget, is expected to sign the bill into law.

Judy Putnam, spokeswoman for the Michigan League for Human Services, said: "The impact is going to come … when families lose a key source of income and may not be able to pay the rent just as the school year is getting started and kids are settling into classrooms."She added that many nonprofits and charities also have been slammed by the recession.

Wayne County will be most affected, with 6,560 families losing the cash assistance. Genesee County will see 1,533 families come off the rolls, with 600 in Muskegon, 385 in Oakland and 371 in Saginaw.

Statewide, 11,188 adults and 29,707 children will lose their benefits in just over five weeks. By September 2012, there will be 13,789 families to drop off the rolls, said Sheryl Thompson, acting deputy director of field operations for the Department of Human Services.

Thompson was not able to give a breakdown of adults and children by county, but she said the average family includes one adult and two children. DHS Director Maura Corrigan announced earlier this month that the agency would no longer grant extensions to clients who have exceeded the five-year federal limit on cash assistance. Thompson said most of the families who will lose their benefits Oct. 1 have been on the rolls five years or longer.

Republicans said Michigan no longer can afford to allow families to stay on the assistance plan for four years or more. Rep. Kenneth Horn, R-Frankenmuth, noted that food stamps, Medicaid and child care payments will continue for those kicked off cash assistance. "This should be a strong statement for Michigan residents that (cash assistance) should not be a lifestyle," Horn told members of the House before Wednesday's vote. The measure passed largely along party lines in both chambers. Link to Detroit News Article

Now I was prepared to be exceedingly wroth but upon reading the article and doing some more research I learned that the current federal lifetime limit on welfare cash assistance is just five years. States are allowed to exempt up to 20% of their case load for hardship reasons, which Michigan announced it would no longer do. So perhaps moving from five years to four years is no big deal? Perhaps.

However Snyder and his merry band of right-wingers also just recently overhauled the Michigan budget and tax structure. I don't intend to dive down into the nuts and bolts right now but the big picture is that pensions are now taxable, the limit for state unemployment payments was reduced, the Earned Income Tax Credit was cut, business taxes were cut and aid to schools was cut. The only problem is that in the real world where states have to balance their budget, cutting taxes leads to less revenue coming in and that has to be made up somehow. How fortunate then for the Republicans that the amount of money they expect to save from the welfare cuts happens to be the exact amount of the probable budget shortfall from the tax cuts.

What an INCREDIBLE coincidence!!!!!! 

Poverty, Schmoverty! Look at the big picture people!!!

Although it's not national news the way something would be if it were happening in California or New York, the ugly truth is that Michigan has a very serious problem with child poverty. It's risen 64% over the past decade. 

That's right 64%!!! That's a lot of children living in homes with impoverished parents-a lot of people working low pay dead end jobs or unable to find jobs.

More than 36 percent of all Michigan children younger than age 18 were living in a household in 2009 where no parent had full-time, year-round employment, according to the Annie E. Casey Foundation’s annual Kids Count Data Book released today. That compares with 31 percent of children nationally. The report also found that 12 percent or 281,000 children in Michigan had at least one unemployed parent in 2010 compared with 11 percent nationally. And 5 percent of Michigan kids were affected by foreclosures since 2007, compared with 4 percent nationally.
“This report shows with startling clarity how deeply the recession has affected families across Michigan,’’ said Jane Zehnder-Merrell, director of the Kids Count in Michigan project at the Michigan League for Human Services. “Unemployment and foreclosures are adult issues but ones that dramatically affect kids, too. These economic stressors place children at much higher risk of worsening health and education outcomes.”
Some 23 percent of Michigan children lived in poverty last year -- with poverty calculated as two adults and two children living on $21,756 or less, up 64 percent since 2000.

With the news that the Federal COBRA subsidy is ending I guess now would be a particularly bad time to be unemployed in Michigan. The other thing to consider is not only will these welfare cuts hurt some undeserving people but that increasing the labor supply at a time when there is already 9% unemployment is not going to have a particularly good impact on wages. Of course that's if you're an employee. If you're an employer this is good news because your leverage over your current (low-skill) workers just got a little tighter. Don't like your job? Shut up and grin or I'll replace you with a welfare recipient. There is an effort to recall Snyder (it was started well before this latest news) but it doesn't look like it will go anywhere.


Of course to be fair there IS another side to this issue. I don't have much sympathy for it BUT at one point we didn't have federal cash assistance for impoverished people.  A four year lifetime limit is pretty long. If you can't afford kids don't have them. You have no right to other people's money. Some people need a kick in the butt to get them moving. Quit hiding behind your kids and get your tuckus to work. We heard the same doom and gloom predictions when Clinton made changes during the nineties so quit your squawking and get a job.


I have to admit I know some people to whom I would have no problem preaching that last paragraph. But are they the majority of welfare recipients? I don't think so. Not at all.


QUESTIONS:
What's your take?
Is a 4 year lifetime welfare limit too stringent?
Should this wait until there is lower unemployment?
Should this be phased in over a few years?
Is this the morally right thing to do?

The Bundling of Subprime Loans by Asset Managers...Again!

Per the Wall Street Journal, there are at least two private investment firms out there that are still leveraging riskier "subprime" loans: Athas Capital and New Penn Financial. Since the subprime financial collapse of 2008, banks have progressively implemented stricter guidelines for lending, especially on mortgages.  In an attempt to keep this crisis from happening again, Congress passed the Dodd-Frank Wall-Street Reform Act in 2010, but it doesn't appear to have completely stopped investment firms like Athas and New Penn.

Here is where things get pretty interesting and why we should all be concerned. Even though you and I have not taken out a risky mortgage with Athas or New Penn, borrowers of Athas or New Penn have the capability to end up in our retirement funds, credit cards, educational savings plans and even your basic checking accounts. Leading up to the crash of 2008, private investment firms like Athas and New Penn formed partnerships with investment banks, hedge funds and private equity firms. In most cases, all of these entities sit under one roof. In simple terms - lets say you bank with "Jim Bob Bank." Most of us think of "Jim Bob Bank" as a basic bank that handles our checking account, savings account, a few money market or high-yield savings accounts, your credit card accounts and mortgages. This is known as retail banking. 

What sits at the head of most retail banking structures is an investment bank. Investment banks are out to make profit and maintain a strong client base. The best way to do this is to make sure that their institution is a one-stop shop, making sure that you keep all of your business under one roof. Investment banks have many umbrellas and many times you don't realize that your bank is a part of a larger financial institution. Within those umbrellas, in accordance with competition and a profit structure, will be a hedge fund, asset management (private banking or wealth management and institutional investors) and sometimes private equity.

Asset Managers are the major players. They have the capacity to leverage clients on the private wealth side and institutional side, making them the more attractive business line of investment banks to outside private investment firms, private equity funds and hedge funds. According to the promotional video on Athas Capital's website and their CEO Brian O'Shaughnessy, this lending spree is different from the sub-prime lending spree of the past. What Mr. O'Shaughnessy is not telling us or his borrowers is that the old practice of bundling has reemerged to take it's rightful place at the profit table.

When a lender underwrites a mortgage, they make as much money as possible up front with the interest rate and fees. Once the borrowers closes on that loan, to ensure their investment and pull in capital to make more investments, the lender sells the loan to an investment bank to be bundled with other loans and investment products. The investment bank then sells the bundles to their asset management clients. These clients invest their capital into these bundles via funds or products. Essentially money keeps recycling its way through the system.

To have a clear understanding of bundling, imagine if you, as an individual, had the legitimate power to make $1 out of $0.15, literally. Well investment banks have the capability to do so. I took the liberty of mocking up a fictional scenario for our readers. Let's look a Suzy Q:

Suzy Q works and lives in New York City and is in the market to purchase a modest studio in New York City. Suzy earns $91,000 a year as a analyst, she has $75,000 saved for a down payment, a credit score of 760 and her home bank has pre-approved her for a mortgage of $428,000. Suzy finds a nice studio in Greenwich Village with a sticker price of $365,750 and a monthly maintenance fee of $962. Perfect! Suzy closes on her studio with a standard 30-year fixed rate mortgage with a rate of 4.89%; 360 monthly payments of $2445.00. 

So far this example seems like the proper way to go. Suzy had a high credit score, and she had savings which allowed her to put a 20% down payment and a standard 30-year fixed rate loan. However, Suzy's home bank will more than likely bundle her mortgage (unbeknownst to Suzy) with other financial instruments and sell them to investors via investment banks through their one-stop shop. The only difference here between Suzy and the many subprime victims of 2008 is the likely hood of Suzy defaulting on her loan and affecting the bundle that her mortgage is included in.

If we make a few adjustments to Suzy and send her to Athas, we would see a completely different picture and recipe for default and screaming scared investors.

Athas lending rates are a minimum of 8.99%!! (yes I know the average is 4.50 to 4.90%). Let's give Suzy a credit score of 600 and keep everything else in place. According the Athas, they are requiring higher down payments that average 40%. So this now puts Suzy's down payment at $146,300 (as opposed to the $75k she put down in our earlier scenario) and her monthly payments would total $2726.00. Yes, I understand it's only a difference of $281 per month, but keep in mind Suzy had to come forth with a 40% down payment in order for this calculation to work out for a 30-year fixed loan. Since Suzy doesn't have $146,300 to put down towards her apartment in Greenwhich Village, then this must be the end of this story, right?  Wrong. Ladies and Gentleman , welcome to the trickery of the financial services industry - ARM's (adjustable rate mortgages) or ballon payments. Bundling at its finest which equates to profits.

Suzy will be offered a lower interest rate for a period of 3, 5 or 7 years and after that period the rate "adjusts" and can continue to do so for the remainder of the loan, based on the lender and ultimately market conditions. Borrowers were enticed to take these loans with the promise of refinancing the principle balance at the end of the ARM, right before the rate adjusted. The comfortable payment has the potential to sky rocket, giving Suzy a higher chance to default. Investors who've unconsciously purchased portions of Suzy's loan will now begin to see lower returns on their investment and begin running for the hills until the entire thing tanks. In reality, Suzy's original lender Athas has already profited when they sold her loan to an investment bank for bundling.  By the time Suze defaults on this loan they've already moved on to their next victim.

QUESTIONS:
Is this type of activity proof-positive that Americans need the Consumer Protection Agency?
If the CPA does not become an active agency, how can the federal government stop this type of lending?
Should the federal government be able to stop this type of free market lending?
Is Wall Street taking us toward another financial crisis?

President Obama Press Conference: Opening Statement

It’s a sad day in the United States when we have a Congress that refuses to do its job and the President has to take to a podium to remind them how to do it. The President seemed slightly forceful in his delivery and sure that a deal would be reached regarding the raising of the debt ceiling.



Is it just me or does anyone else feel like the Congress is having a misguided debate? Why are we re-debating the budget, wasn’t this resolved in April? To the average American who doesn’t subscribe to the hocus pocus math that the GOP is trying to feed us, it’s simple - raise revenue, reduce the debt. Why can’t they understand the simple concept of mathematics? If you have a 9% unemployment rate, you have less people paying federal, state and local taxes. The economy is not a result of the deficit, the deficit is a result of the economy. We should not be talking about the deficit right now, we should be increasing revenue to the treasury and putting people back to work.

More people working = More people paying taxes / More people paying taxes = More revenue to the Treasury / More revenue to the Treasury = Lowering the deficit = The possibility for the heinous tax cuts that the GOP is so married to

This Congress promised the American people an economic recovery. They began their session in January and have done NOTHING to promote that recovery. The President listed a number of options that are currently being held up in Congress. A bill to make it easier for entrepreneurs to patent a new product or idea, a bill to put construction workers back on the job rebuilding roads and bridges through loans to private companies, states and local governments, a bill fixing our trade agreements to allow American businesses to sell more goods and services to Asia and South America, and a bill further extending the middle class tax cuts an additional year. All things the President says he is ready to sign immediately should Congress send them to his desk.

Part 2:


Part 3:


Part 4:


Part 5:


Part 6:



Is the debate around the deficit a legitimate debate?
Is Congress broken?
What do you think the Congress should do to further progress the recovery?

Michigan Republicans Attack Democracy

I'm in charge now you see.

Haven't you ever wondered, once a representative who differs politically from you, has said or done something that you find spectacularly stupid or offensive, what a nice thing it would be if the person just wasn't in office any more OR had his authority limited to something more appropriate to his intelligence, say for example asking you "Paper or plastic today?"

You probably have.

Unfortunately the flaw in this here republic is that people get to vote on their elected representatives, no matter how stupid you may think they are or how immoral you may find their political positions. So this means, absent term limits, internal legislative rules or criminal convictions, someone you don't like may hold her elected position with all the authority of that position for as long as she likes, no matter how much damage she may do to her constituency. Bottom line is that the people get to decide on their elected representatives. Period.


Well not so fast. Although much of the conversation about the new Republican governorships and state legislative majorities in the US has focused on Wisconsin, Ohio and Florida, the new Republican governor of Michigan, Rick Snyder, and the Republican state House and Senate majorities have been busy as bees proposing or imposing a host of new changes to how state government works. One of these changes has been the ability for the State of Michigan to grant executive powers to emergency managers for municipalities, not just school boards, which allows the emergency financial managers to eliminate collective bargaining contracts. It also allows earlier appointments of such managers, before a municipality asks for one or declares bankruptcy.

Benton Harbor— In a move believed to be the first under sweeping new state legislation, Emergency Manager Joseph Harris suspended decision-making powers of city officials Friday.
Officials only can call meetings to order, adjourn them and approve minutes of meetings as part of the order issued Friday.

The action is likely the first since Gov. Rick Snyder signed into law in March a new statute that grants more powers to emergency managers appointed by the Treasury Department to take over distressed schools and communities.
At least one elected Benton Harbor official was sanguine about the order. "It doesn't bother me," said City Commissioner Bryan Joseph. "I'm in favor of it."
Joseph said he has watched financial mismanagement for decades, which was one of the reasons he ran for election in 2008.
But the move drew a strong rebuke from the AFL-CIO. The union represents administrative workers, among others. "This is sad news for democracy in Michigan," said Mark Gaffney, president of the Michigan AFL-CIO. "With the stripping of all power of duly elected officials in Benton Harbor … we can now see the true nature of the emergency manager system."

This being Michigan the race element is never far from the surface and one must note that Benton Harbor is over 90% Black. But the other two cities that have emergency financial managers, Pontiac and Ecorse, are not majority Black, although they are getting close. The mayor of Detroit, Dave Bing, is using the threat of an emergency financial manager, to attempt to leverage concessions from city unions.

No one can doubt that these cities are indeed in pretty crappy condition. People can argue over how they got there and what needs to be done to solve their issues. Some people say that this is the obvious end result of a bloated welfare state and union "gimme" mindset that must ruthlessly be eradicated. Others respond that this is late stage capitalism as more workers become superfluous to profit and are shed at ever increasing rates. Other people have even simpler and much uglier theories which are related to the demographics of those cities.

Whatever one's opinion might be, should we agree that the people in a given city should have the ABSOLUTE right to elect whoever they want and run their city how they want? Or is this a quaint notion at a time where Detroit councilwoman (and lovable quack) JoAnn Watson is calling for a city bailout on the scale of what the federal government gave to GM.

What's your take?
Do you think emergency managers are critical to fixing the problems of certain cities?
Is this just a new tool to bash unions?
Are union contracts the problem these cities face or does it have more to do with the collapse of housing and flight of capital overseas? Are these problems related?
Would you be willing to give your city's decision making capacity over to an emergency financial manager if your governor thought it necessary?

School Integration-What's in it for you???

People moving out/People moving in

Why/Because of the color of their skin

Run,Run,Run but you sure can't hide

Ball of Confusion-The Temptations

As you may have heard, Detroit has lost a lot of people.

The census report states that Detroit is currently home to about 713,000 people.  This means that Detroit stands to lose revenue sharing funds from the State of Michigan as well as from the Federal government. Detroit will also (unless the state legislature rewrites the laws) lose the ability to levy an income tax on non-Detroit workers or add fees to utilities bills or several other Detroit-specific actions. The reasons for the increasing population decline are myriad but are mostly centered on such issues as 1) crime 2) poor public schools 3) high taxes and high insurance costs 4) lack of job opportunity 5) older housing stock.

Of course the local political establishment demanded a recount but it’s rather unlikely to get one or reach the magic ceiling of 750,000 residents, which allow it access to all the items mentioned in the above paragraph. That’s all neither here nor there. Anyone paying attention locally would have seen this coming a long time ago. What IS interesting though is that unlike the initial wave of departures in the fifties or the accelerated exodus in the sixties or seventies, those leaving Detroit in waves now are mostly Black people. In fact proportionately so many Black people left the city that Detroit’s proportion of citizens who are white may have increased.  Again, there are still more reports to be released.

This Black hegira has had some positive and negative results. South East Michigan (Metro Detroit) is no longer the most segregated area in the nation.

We’re number 4. Whoopie. Believe it or not, 3 of the 10 most segregated census tracts are found in Michigan.

Not Mississippi. Not Alabama.

Michigan.

That’s the positive side (the slight decline in segregation) -if you consider integration to automatically be a good thing. This also might mean that in the suburbs at least both major political parties might have to start competing for black swing voters, which could mean a slight decline in race-baiting or in being taken for granted.

The negative side though is that the arrival of large numbers of Black students in suburban public schools has led to increased white parental removal of their students from those schools.  Some white parents are sending their children to public schools further away; some are choosing private schools, charter schools or home schooling.  Although most people are too polite to say why openly, bottom line is that when they have any sort of choice, many whites simply do not want their children attending primary schools with large or even noticeable numbers of blacks.  There is a tipping point and it seems to be somewhere between 5-10% Black enrollment.

Because the housing market is so depressed it gave many Black Detroiters who were so inclined the ability to move to the inner ring of suburbs around Detroit. Many whites can not afford to move out yet but if past events are any predictor of future ones, in roughly a decade or two some of these formerly majority white suburbs will be majority black. With a few notable and laudable exceptions the public schools in Detroit are to the point where one local columnist mused that one way to fix the public schools would be to outlaw private schools, on the assumption that if the better off were forced to attend, then something more would be done.

The trend is particularly notable in Macomb County, which led the state in increase in black population, and where one in 10 students takes advantage of schools of choice, often to study in classrooms that are whiter than their neighborhoods.
The result for many of the more than 13,000 Macomb County students now taking advantage of schools of choice programs is daytime segregation and nighttime integration, said Jason Booza, a demographer at Wayne State University who has studied the racial and spatial dynamics of Metro Detroit for a decade.
"It's the continuing self-segregation of groups," said Booza, an assistant professor of family medicine at Wayne State University. "It's a pattern we've seen in Detroit for 100 years."
The connection between race and schools of choice is a hot potato among educators, who maintain that parents make choices based on quality of education, not the color of their children's classmates.
Kurt Metzger isn't so sure. "This is totally about race," said Metzger, a demographer and director of Data Driven Detroit. "There is a tipping point. When schools reach a certain percentage of African-American (students), whites start looking elsewhere."

Metzger, who has studied the racial makeup of schools, believes schools are not comfortable talking about the racial component of schools of choice.

"I believe the white population is much more willing to stay in schools with an increasing Asian population or a Latino population (than an African-American population)," Metzger said. "You hear code words: It's getting rougher, or the quality has gone down."

In the past, white residents uncomfortable with black neighbors sold their homes, Metzger said. Because of declining home prices, many can't move now — but they can move their children.

The impact is an increasing disparity between rich white districts and poor black districts. As students pull out of increasingly minority districts and take their state aid with them, the schools are forced to cut more programs, making more students decide to leave.

"It's institutional racism, and we need to talk about it," Metzger said. "We can't keep closing our eyes." 

Full Article

         

Again, with the exception of comment boards or when they are among an entirely same-race group, many whites are not willing to speak candidly about WHY they don't want their children going to school with Black children. This is something that needs to be addressed honestly. The other thing that needs to be discussed is how long can this game of musical chairs continue. One can not force someone else to like you but de facto segregation also has larger costs for everyone.

QUESTIONS

So what do you think? What does integration mean to you? Is integration automatically a good thing? Is it important to you?  Do you respect someone who tells you upfront that they don't like you or would you rather people hid their feelings behind politeness or passive aggressive behavior? How do you manage the inherent conflict between freedom and equality? What is the solution to the achievement gap in schools?