Detroit becomes largest US city to file for bankruptcy

[The Puss]

It is in the news so I suppose a city can do this but where does it all lead to?

The US city of Detroit in Michigan has become the largest American city ever to file for bankruptcy, with debts of at least $15bn (£10bn).
State-appointed emergency manager Kevyn Orr asked a federal judge to place the city into bankruptcy protection.
If approved, he would be allowed to liquidate city assets to satisfy creditors and pensions.
Detroit stopped unsecured-debt payments last month to keep the city running as Mr Orr negotiated with creditors.
He proposed a deal last month in which creditors would accept 10 cents on the dollar of what they were owed. Mr Orr suggested at the time there was a 50-50 chance of the city needing to file for bankruptcy.
In a letter accompanying Thursday's filing, Michigan's Governor Rick Snyder, a Republican, said he had approved the request from Mr Orr to file for Chapter 9 bankruptcy.
Gov Snyder said: "Only one feasible path offers a way out," adding that residents needed a clear exit from the "cycle of ever decreasing services".
"The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations.
"It is clear that the financial emergency in Detroit cannot be successfully addressed outside of such a filing, and it is the only reasonable alternative that is available".
Mr Orr has said that the city's long-term debt could actually be between $17bn and $20bn.
The former manufacturing powerhouse's finances have struggled for some time, driven by a number of factors, including a steep population loss.
The city government has also been hit by a string of corruption scandals over the years.
Declining investment in street lights and emergency services have made it difficult to police the city.
The city lost 250,000 residents between 2000-10.

http://www.bbc.co.uk/news/world-us-canada-23369573

[LongBlade]

It *should* lead to cutbacks in the size of government and too many workers taking too much in the way of benefits.

Which will happen right after I clear this pig for takeoff.

[WallysWorld]

If you can, watch the documentary 'Detropia' which was on PBS earlier this year. Gives a very interesting look at the decline of Detroit and how some are trying to renew the city.

Unfortunately Detroit's situation reminds me of the 1987 movie 'Robocop' and OCP taking over the city.

[Greybriar]

It's sad how far Motor City / Motown has fallen.

[Gusington]

Was just talking about this with The Wife...are there any Western European cities comparable to Detroit?

Also if you are really interested in what is going on in Detroit try the book Detroit: An American Autopsy by Charlie LeDuff. Good read.

[besilarius]

Gus, that's a good question.  Offhand maybe Essen in the Ruhr?
Thanks to the Kruppe dynasty, they were the steel and industrial city.  In World War II, the plants were flattened, but the city has climbed back.

[WallysWorld]

To those interested, Wikipedia has a good entry on the decline of Detroit:  http://en.wikipedia.org/wiki/Decline_of_Detroit

[eyebiter]

Wonder if Detroit plans to default on outstanding municipal bonds?

Or are they expecting a bailout from Obama?

[OJsDad]

What's even more interesting is that there is a mayoral election in Detroit this year.  The current mayor is not running.  I think every candidate is promising to get rid of the emergency financial manager that the governor has appointed, even though they don't have the power to do it. 

[LongBlade]

Wonder if Detroit plans to default on outstanding municipal bonds?

Or are they expecting a bailout from Obama?

Yes and yes.

[OJsDad]

Or are they expecting a bailout from Obama?

They've been expecting that since the Obama's reelection, and they haven't got anything yet.

[LongBlade]

Or are they expecting a bailout from Obama?

They've been expecting that since the Obama's reelection, and they haven't got anything yet.

Let them eat wait.

[Gusington]

50 years ago Detroit's population was 2 million. Now it's around 700,000. The urban core is about 25% hollowed out and some lots are used for urban farming. The police and fire departments use equipment that is 40-50 years old and the downtown, while not totally empty, is struggling to attract both businesses and daytrippers.

Bes...so Essen is the Detroit if Europe eh? The Wife and I were trying to think of one European city we would like to go to less than Detroit. I came up with Minsk and Kiev (where my great grandparents are from) but even those places hold a certain amount of romance to them since I know less about them than Detroit.

[GDS_Starfury]

pool our money and send in JH and Mike.

[LongBlade]

pool our money and send in JH and Mike.

Heck, any ten of us here could run that city better than it's been run in decades.