Detroit Bankruptcy?
 

Detroit becomes largest US city to file for bankruptcy

http://www.bbc.co.uk/news/world-us-c...73#TWEET826506

So any other cities gone bankrupt and what has it meant for them?

And the figure at the end of the story of the city losing 250K people from 2000-2010...that doesn't sound that bad to me, but I guess it is...

Re: Detroit Bankruptcy?
 

It means that the creditors are going to lose. Expect those who have city pensions and bondholders to take substantial haircuts.

Detroit has to pay to support infrastructure that is meant to serve a population three times its current size. They would better off if they could consolidate what's left of it into a smaller space and turn the remainder into a big empty field.

Re: Detroit Bankruptcy?
 

Aren't they already doing that by flatting out developments on the skirts so that they don't have to provide fire/police etc type of cover to empty areas?

Re: Detroit Bankruptcy?
 

I believe that there have been some modest efforts to do that, but it isn't nearly enough.

Detroit has lost over 60% of its population since 1950. Over that same period, the US population doubled. They have considerable problems, and barring some kind of miracle, the bankruptcy will only slow the bleeding.

Re: Detroit Bankruptcy?
 

San Bernardino, Stockton, and Vallejo California all filed for bankruptcy over the past few years. It is much more unusual for large cities to file for bankruptcy.

When they file for bankruptcy, they can renegotiate with unions and creditors and bond holder take a haircut.

Federal law does not allow states to declare bankruptcy.

Re: Detroit Bankruptcy?
 

Amazing it took this long for someone (administrator not the poster) to state the obvious. This of course paves the way for lots of other places to do the same and get out of over generous public pensions....

The big shame is that money wasn't put into Detroit with the provisio to make some sort of mass market non oil based car/transport for the masses with all the government bail out money. I don't think the Chevy volt is that.

Some innovation might have "retooled" Mo-Town as opposed to all the useless waste of gov money that's been going on.

Detroit could the poster child for the first US city to be in ruins and deserted.

Re: Detroit Bankruptcy?
 

The whole internet is making Robocop jokes right now.

This message brought to you by OCP.

Re: Detroit Bankruptcy?
 

It's not all that easy. Postwar freeways and suburbs began the decline, white flight hastened it, excessive dependence on the car industry entrenched it, and crime and the school system did the rest. It's not as if there's much reason for businesses to start moving en masse to Detroit; you could pay them to move, and it still wouldn't be worth it.

Re: Detroit Bankruptcy?
 

More landfill space for Toronto. :fingerscrossed:

Re: Detroit Bankruptcy?
 

Very true. Its been a slow bleeding.

I suppose the motor industry died sometime ago with off shore plants. Seems sad but that's progress.

Re: Detroit Bankruptcy?
 

Orange County also went through Chapter 9 in the mid 90's and Jefferson County in Alabama is also currently in Chapter 9.

Unlike Chapter 7 and Chapter 11 for corporations Chapter 9 will not let the municipality just run down and liquidate so it's all about restructuring existing obligations.

Re: Detroit Bankruptcy?
 

I believe that ones who decided to do it were Republicans. Right in the middle of the city starting to show signs of a bounce-back.

Re: Detroit Bankruptcy?
 

We don't know if some of the union contracts are way out of kilter or not. As an example when Vallejo filed for bankruptcy, police and firemen salaries were making in excess of $100,000 in a city with a medium income of about $35,000. This couldn't continue unless city and county sales tax, property tax, and any other tax levied by local authorities was significantly increased on the low to middle income families since the city had tapped out it's credit limit and no one would buy their bonds anymore.

An extreme example is air traffic controllers in Spain average about $400,000 per year as compared to about $100,000 per year in the US. How does a population with over 25% unemployment rate and medium income of about $25,000 pay $400,000 salaries?

Re: Detroit Bankruptcy?
 

NYC came close in the '70's but fortunately for it it got a federal guarantee for its debt. That's not going to happen for Detroit.

Re: Detroit Bankruptcy?
 

Detroit has something like 18-20 billion dollars in debt, and just around 700,000 residents. I don't think there is any other possibility for them but to file bankruptcy.

Detroit is not a healthy city in any way shape of form.

Median income in Detroit just keeps dropping, its down to somewhere around 25,000 now, about half the national average.

18% in the city are unemployed.

Median value for an owner occupied home 50,000, in 2007 it was 88,000 and keeps on falling.

35.5% of families live at or below poverty.

57% of children in live in poverty.

Only 13% of residents over 25 hold a bachelors degree , compared to 28% nationwide.

The article is from Sept. 2012, so things may have gotten worse since then.

http://www.mlive.com/news/detroit/in...median_in.html