Saturday, March 24, 2012

moody's downgrades Detroit's debt...,

detroitnews | Moody's Investors Service on Tuesday issued two downgrades to the city's tax debt that illustrate Detroit's weakening fiscal condition as it fights to stave off a stake takeover, The Detroit News has learned.

The city received a downgrade to B2 from Ba3 for its $553.1 million in outstanding general obligation unlimited tax debt and also a downgrade to B3 from B1 for the $486.4 million in outstanding general obligation limited tax debt. Both ratings fell two points.

Moody's also downgraded the Detroit Retirement Systems Funding Trust from Ba3 to B2, the report states.

It is yet another blow to the financially strapped city, which is fast running out of cash as Gov. Rick Snyder is pressuring Mayor Dave Bing and City Council to agree to a consent agreement that would help implement financial structure and stability.

"We changed it because despite some positive steps that the mayor and City Council have done to reduce the city's general fund deficit, the problems have persisted," said David Jacobson, a spokesman for Moody's. "The fiscal year 2011 general fund deficit balance continues to increase. There's been a persistent inability to achieve structural balance despite all the big spending cuts."

Mayor Dave Bing's chief operating officer, Chris Brown, said in a statement Tuesday afternoon that the downgrade "isn't unexpected." The city is taking steps to mitigate any negative financial impact, he said.

"In December, we narrowly averted a downgrade," Brown said. "Since then, we've been concerned about the continued possibility, and we've worked to avoid it."

41 comments:

brotherbrown said...

 The retirement system has issued bonds? 

Many American cities are what I call zombies; they don't know they are dead.  I think San Bernardino, CA is a zombie city as this week's resignation of City Manager Charles McNeely is an example of dead people walking the earth looking for the living to devour.

CNu said...

BB, how long do you think the postpone and extend "strategy" can hold out - and - if you were to bullet point out the fracture lines we should track most closely for governance system vulnerability and susceptibility to collapse, what are the top three datasets you would you have us pay attention to? (lol, what are you paying attention to?)

You know I'm semi-locked in on commodities, (general mills crying like a don't know what)  http://www.zerohedge.com/contributed/2012-12-23/no-inflation-general-mills-begs-differ and on transportation levels and energy consumption.

Ed Dunn said...

I haven't researched but do Gov. Rick Snyder and the state of Michigan have money to bailout Detroit?

brotherbrown said...

Look, except for sports, I don't watch TV, but I happened to come across a fascinating show on, I think, NatGeo about Preppers, those who have taken concrete steps in preparation for the apocalypse.    I caught an episode of a family that moved from Jacksonville, FL to the out-county of Tennessee after having accumulated an astonishing amount of provisions.  Let's me know how I'll prepared I am for prolonged collapse of law and order.

I would agree with your assessment.  I live in an urban sprawl where it's all about gasoline, but a recent trip to NYC reminded me how old and inefficient most of the eastern United States is.  California has it's share of obsolescence and inefficiency, but remember how the blackout of a few years back paralyzed NYC and a large block of the Northeast?

I feel natural gas is the best energy solution for this nation, but I think most of the NG infrastructure is in the west.  I can envision converting my gasoline engine cars to LNG and having the capacity to gas up at home.  For the first time ever, my winter gas bills have been lower than my electricity bills and my consumption of each has remained the same.

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