That's about 3% in fees - not unreasonable in my opinion.

The decision to accept the terms of these bonds and loans is the responsibility of the leadership of this city. According to the article Mayor Kwame Kilpatrick started the borrowing spree. Where is the outrage against him?

... if big city Mayors can't navigate their way through Wall Street's rip off policies, what chance does the average investor have?

That suffices

But not sentenced yet.

He's in jail to prevent flight before sentencing.


Kwame Kilpatrick Wants Out Of Prison
March 19, 2013 10:51 AM


DETROIT (WWJ/AP) – Imprisoned ex-Detroit Mayor Kwame Kilpatrick is asking a federal judge to reconsider and allow his release on bond so he can visit his wife and children in Texas...

http://detroit.cbslocal.com/2013/03/19/kwame-kilpatrick-wants-out-of-prison/

Lawyer: Kwame Kilpatrick too broke to flee
March 19, 2013

...Kilpatrick is being held at a federal prison in Milan after he was convicted on public corruption charges eight days ago.

Attorney James Thomas said in a court filing Monday that his client can be trusted to remain free on bond, since he has no money left to escape. His mother, former U.S. Rep. Carolyn Cheeks-Kilpatrick, has offered to put up her home on LaSalle Boulevard as collateral to ensure that he shows up for sentencing, according to the filing. The 3,340-square-foot home has an estimated market value of $183,000....

http://www.freep.com/article/20130319/NEWS0102/303190034/Lawyer-Kwame-Kilpatrick-too-broke-to-flee

Thanks for the info. I thought he had gotten the "privileged" convict package.

I don't think so.

The article did not provide any details about the derivatives. It seemed to me that the City swapped a variable rate loan for a fixed rate loan and paid a fee for that. That is not a scam and is very common.

Global, in fact. That's why the banks keep paying settlements. It's a rip-off, designed to fail and gouge the unsophisticated. Works like a charm, too, in the unregulated free-for-all of bankster heaven.

The article gave no details about the derivatives. Do you have inside information or are you just making broad brush generalizations?

That's what we've been doing to other countries who possess resources that our corporations lust after.

The fact that it is commonplace hardly makes it OK.

Banks loan money that they don't actually possess (and in this case to entities that have no ability to pay) knowing that the money has to come from somewhere, also knowing that the amount of money that has to be paid back for all of the loans that are in existence, does not exist at the time that they are loaning it.

The fact that everyone accepts this shell game does not change the fact that it is a scam.

It was fine when we had oversight and monopoly laws and a high (91%) marginal tax rate. It was almost like a legitimate industry, but in this case: we have someone borrowing money knowing that someone else is going to have to pay it back, do you really not see how that's a scam?

Dude that did the borrowing is sitting in a cell, and the people have to pay it back. Where's the scam you ask?

Ask a hard one.

"in this case: we have someone borrowing money knowing that someone else is going to have to pay it back, do you really not see how that's a scam?" - Governments do this all the time to balance cash flow, so do businesses.

"knowing that the amount of money that has to be paid back for all of the loans that are in existence, does not exist at the time that they are loaning it." - Did you ever hear of a mortgage? That is how the vast majority of houses are purchased.

I take it you never have any need to borrow money and either pay cash or never run a balance on a credit card. You're either rich, in which case I congratulate you, or you live a very meager existence.

In any case, you have a veyr warped view of banking

and it is a necessary segment of the economy.

Yes, I have a mortgage. There's a difference between the way banking used to be and the way banking has transformed with the extensive deregulation.

I only borrowed the amount of money that I knew I could afford. The banks were willing to loan me significantly more than I was willing to borrow.

The banking industry loaned money to people when they knew those people wouldn't be able to pay that money back. Yes I have a very warped view of banking. That's because they have warped the view.

This is America's future.

... between where we're going now, and 1970's/early 80's Soviet Union ... all the $$ went to 'the military' and the people were worse than paupers.

Why is it nobody in the US recognizes we're on the exact same path?

As it is said, "Those that fail to remember history, are condemned to repeat it."

That is the path we walk. Those of us that recognize where we are headed are being willfully ignored.

Most people just look at me with a "she's finally fallen into the abyss" look and go on their merry way.

How can people miss the nearly perfect comparisons? We've got it all, from rising prices for increasingly crappy goods and shoddy service to growing poverty, fewer liberties and increased police/military presence.

What's it going to take for people to open their eyes and realize we're the ones that have to take it all back and we have to do it before it's too late? That is the 64,000 dollar question.

... think were politically aware and informed, it blows my mind just how ignorant most of them are as to the coming shitstorm we are facing. Frankly, I have no doubt we have already gone past the tipping point and it's only a matter of time till it all falls apart. I could be wrong and truly hope with all my heart I am. Maybe some last minute miricle will happen, maybe the good guys will come riding in to save the day.

Oh well, we had a good run.

Most days I'm beyond pessimistic about our future as a country. Occasionally though I dare to hope for a white knight who's waiting for the right moment to rally the proles. Then I feel like a chump, but there it is in all its ridiculousness.

we have become Russia 1950. We are losing our freedom. The patriot act was well planned to strip us of our civil liberties. The entire thing was a scheme to reset our economy once and for all to be what we now have. There will be a few very wealthy people, and 99 % of us, very poor.
Russia, 1950

Wall Street may well have had some impact, but Detroit has suffered from long term demographic trends (population drop and the move of middle and upper class residents to the suburbs) and short term political corruption that created equal damage.

Given them interest free loans? Who would have ponied up $15 billion dollars and risk losing their money for a 0% return?

Now, I am not a proponent of Wall Street per se. However, if you borrow money, of course you are expected to pay interest on it.

It was 'fees' for 'managing' the issuing of those loans.

and $15 billion is a pretty large number. Sorry, this one is not on the banks. The city government ran thier credit to the max and now they're broke. Arguably, the banks should have cut off their credit a long time ago, but if they had, you'd be com[plaining about that.

And I think you'd be very hard pressed to find $10M worth of effort by the banks involved, much less what they actually charged.

And what constitutes a reasonable fee for arranging and syndicating the loans? In any case, $350 million of the $474 million was due to an interest rate swap that went sour. That is not the banks' fault.

It's simple profit-taking.

The real problem here is that Detroit has been run by a bunch a corrupt morons. It's just easier to point fingers at the banks than to accept that the voters got the government they voted for.

If the rates went up and, instead, Wall Street owed Detroit $350 million, would you be singing Wall Street's "generosity?"

"What should Wall Street have done differently?" How about not supporting the various "free-trade" agreements. That would be a start.

Then, how about not supporting the endless wars and occupations in the Middle-East?

Why not support America for a change?

Certainly, not a muli-year loan. Plus, those loans are to cover governmental requirements. The banks have assets in excess of the amount (just not in immediately liquid funds).

You are comparing that with giving a multi-year, interest free loan to an entity with no assets?

Bonds and get a higher interest. We loan them the money and they invest it back in us and make a free difference.

Are you justifying the Fed's actions?

If they don't have the assets, then why is someone loaning them money.

It seems like that's what caused this last economic meltdown. Now the taxpayers of Detroit have pay because banks are loaning money to entities that don't have the resources to pay it back.

The entity that loaned the money just needs to write it as a loss off for making a bad loan.

Why is it always the people who pay when banks are irresponsible in their lending? When is it the bankers turn to suffer for their own irresponsible behavior?

Ya know, when you lie down with dogs, you get fleas.

The city management is corrupt and incompetent. What could possibly go wrong with that combination?

Seriously, derivatives exist for a purpose. Say a company produces a product made of commodities. They want to lock in rates for their product today (say $1 a unit). The price goes up to $2 a unit. The company pays that $2 a unit, but makes money on the derivative, bringing their cost back down to the $1 a unit they decided they wanted to pay (assuming it is a perfectly hedged contract). On the flip side, if the price goes to $0.50 a unit, they pay that, but owe money on the contract to bring the price back up to $1 a unit.

They fact that rates went the wrong way and they owed money is no reflection on who offered the hedge. It was the shitty management's decision they wanted to lock in rates today and they dropped. If it went the opposite way and the city collected $350 million on their contracts, no one would be on here praising the generosity of Wall Street (and rightly so).

When you're already in the hole it's not good to go risky and hedge your bets. Bad decision making on the part of Detroit.

Wall Street pushing car companies to keep maximizing short-term profits--and forget about building quality, fuel-efficient cars--would seem to be largely responsible for the degradation of the U.S. auto industry as a whole and the rust belt as a region from the 1980s up to the bailout.

How many of your posts have complained about Neil Bush, btw?

I wonder if we will even have scraps left to fight over in the end? Probably not.

makes sense.

Don't forget corrupt "leadership," decreasing population, sky-high crime rates, high taxes, etc. As I recall, the former mayor went to prison, which is a rarity for any politician.

Wall Street is certainly not blameless (for a great many catastrophes), but let's not absolve the other guilty parties. As far as Detroit leadership goes, I wouldn't trust any of them to run a snow cone stand.

.