VAPORIZED: Detroit Obliterates Retirement Funds: 80% Cuts to Pensioners: “This Is Going to Affect Everyone”
December 3rd, 2013
Though a decade ago civil servants and union members would never have believed it could happen, the stark reality of the situation came to pass this morning.
We now know the answer to the question: What happens when a government makes promises it can’t keep and borrows so much money it can never be repaid?
This morning a judge overseeing the City of Detroit’s fiscal sustainability ruled that the City can be afforded bankruptcy protection, meaning that all 100,000 of its creditors now stand to lose a significant portion of monies owed to them.
The most notable victims are the tens of thousands of retirees living off of pensions – many of whom will see an 80% obliteration of the retirement funds they believed they’d receive until they died.
Creditor attorneys have repeatedly speculated they expect Orr’s plan of adjustment to mirror the June 14 proposal he offered creditors to avoid bankruptcy. That deal proposed giving unsecured creditors such as pensioners and bondholders a $2 billion note for $11.5 billion in estimated debts — or less than 18 cents for every dollar owed.