Detroit files for biggest US city bankruptcy

July 20th, 2013

Governor says, no other way to rescue city from $18.5bn of debts after decades of decline – Published on AlJazeeraEnglish, July 19, 2013 (with video, 1.47 min).

Detroit has become the largest city in United States history to file for bankruptcy after decades of decline and mismanagement rendered the city insolvent.

Michigan’s governor, Rick Snyder, said on Thursday that there was no other option to tackle the city’s $18.5bn of debts.  

“This is a situation that’s been 60 years in the making in terms of the decline of Detroit. From a financial point of view, let me be blunt, Detroit is broke,” Snyder said in a video on the state’s official website.

Once the fourth largest city in the US, Detroit’s population has shrunk from 1.8 million in 1950 to 685,000 today – as crime, flight to the suburbs and the decline of the car-making industry ate away at its foundations and finances.

“The fiscal realities confronting Detroit have been ignored for too long,” Snyder said in a statement accompanying the bankruptcy file.

“I’m making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing.

“The only feasible path to a stable and solid Detroit is to file for bankruptcy protection.”

However, the filing puts the city on an uncertain course that could mean laying off municipal employees, selling assets and scaling back already threadbare basic services.

City emergency: … //

… another video in the text: Expert discusses Detroit bankruptcy, 5.40 min (also on YouTube, uploaded by AlJazeeraEnglish, (with Prof William Black saying: … people have no more the right to vote, the democratic powers have been removed … ) *, July 18, 2013) … //

… Decline and debt:

Snyder listed a number of problems that Detroit’s financial situation had exacerbated.

The murder rate is the highest in nearly 40 years. Police response times to call-outs average 58 minutes, compared with an average of 11 minutes nationwide.

There are 78,000 abandoned buildings in the city, and 40 percent of street lights do not work.

A lack of funds for maintenance and repairs means only a third of the city’s ambulances work and police cars and fire trucks are also in poor condition.

About 38 cents of every city dollar was going to debt repayment and obligations such as pensions, and that was projected to hit 65 cents in the dollar by 2017.

The city’s tax rate has reached its legal limit.

Orr’s team said Detroit was defaulting on about $2.5bn in unsecured debt to “conserve cash” for police, fire and other services. In recent months, the city has relied on state-backed bond money to meet payroll for its 10,000 employees.

(full text).

* (seems be what the 1% of the 1% want)


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