Seven years of overspending its budget may cause Detroit Public Schools to file for bankruptcy.

It’s a good thing that Michigan sent a state-appointed financial manger to get Detroit Public School’s financial situation in order, because once Robert Bobb got there he started referring to their budget as the worst he’d ever seen.  He said, “They said the sky was falling but they didn’t act.”

Bobb has overseen drastic measures …

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… and low-income individuals.

The article said:

“Scuffles erupted as several thousand Detroit residents jockeyed, pushed and shoved Wednesday to get free money being offered to only 3,500 of the city’s recently or soon to be homeless.

Several received medical treatment for fainting or exhaustion while frantically trying to obtain the applications for federal housing assistance. The long lines and short tempers highlighted the frustration and desperation that Detroit residents …

Tags: Detroit foreclosure Homelessness Poverty

… prices are down 11.3 percent from a year ago, and some cities such as Las Vegas, Phoenix and Detroit are seeing home prices decrease by as much as 30 percent.

Many economists warn that home prices could become further depressed as the foreclosure crisis worsens because of unemployment and the federal tax credit for first-time home buyers expires.  We saw what happened to the auto industry which experienced temporary relief from sagging sales with the “Cash For Clunkers” program; …

… still feels the effects.  The rebound hasn’t arrived, and isn’t expected anytime soon.  Detroit in particular is feeling the pain.  The Wall Street Journal reports that the unemployment rate in Michigan is now 15.2% and 17.7% in Detroit.  To save themselves from bankruptcy, automakers slashed thousands of mid-career jobs.  Tom Boileau, for example, spent 35 years with Chrysler.  When he was laid off, his annual salary was around $110,000.  Now he earns $500 a week as a hockey …

… we don’t get this right, nothing else is going to work,” Henderson said at GM’s Downtown Detroit headquarters. “Business as usual is over at General Motors…As a culture, General Motors needs to be prepared to experiment and adjust.”

New Chairman Edward Whitacre Jr. discussed how challenging GM’s trip through bankruptcy protection had been. “There have been a lot of long hours, there have been a shuttering of plants, there have been painful layoffs.”  He told reporters …

… and we are pleased that Delphi is now positioned to move forward in its restructuring,” the Detroit-based automaker said in its statement.  Should the court not approve this bidding process, Delphi said that it plans to liquidate its assets via a 363 sale.

If the bankruptcy court does approve the creditors’ bid, it would beat out an offer by private Equity firm Platinum Equity.  Creditors are against this bid because it calls for the lowest among three tiers of lenders to be paid …

… or panic, GM has reminded the public that it is still business as usual.

The article said:

The Detroit automaker said warranty coverage, service and customer support will continue uninterrupted, plants will continue to make cars and trucks, and employees and essential suppliers will continue to be paid. GMAC Financial Services said in a statement that it will continue to provide automotive financing to GM and Chrysler dealers and customers.

The GM bankruptcy comes on the heels of an …

… efforts to save the company from bankruptcy and meet government requirements for viability. The Detroit-based automaker’s job losses will slash the company’s U.S.-based white-collar workers by 12 percent. Most of the cuts will take place by May 2009. But this isn’t the first round of job losses GM has experienced, since 2000 job losses at GM have slashed their salaried work force by 33 percent from a high of 44,000 people and the number of hourly workers has plunged by more than half …

… The article said:

GM’s offers, to nearly all its UAW employees, are less lucrative. The Detroit company is offering $20,000 in cash and a $25,000 car voucher for workers who retire early and those who simply leave the company, according to the union official.

So let’s get this right, GM wants to shed union workers and pay them $20,000 (not enough to feed one person for a year let alone a family) and give them a car voucher for a vehicle they won’t be able to afford once …

… but it’s not going to be an easy transition. Although, Dallas- Fort Worth is a long way from Detroit, any bankruptcy filed by GM or the other major automakers could spell serious trouble for the Dallas-Fort Worth economy. More new cars are sold in the Dallas-Fort Worth area than in any other part of the country, to the tune of $15 billion a year, creating jobs for residents and serving as one of the main engines of this economy. Although an injection of cash into these automakers may …