The economy seems to be on the upswing. Recent job reports are good, interest rates on home loans are rising, home stock is down… things are looking brighter in America, but as it turns out, one major American city isn’t seeing a return to prosperity. That would be the long-suffering city of Detroit, Michigan. Detroit was once the Motor City, but now it has a new nickname: Bankruptcy Village, USA. The city of Detroit has filed for Chapter 9 bankruptcy. The city is at least $18 billion dollars in debt as of right now, and recent cost-cutting measures have failed to stop the city’s slide into insolvency. Detroit is the new largest city in the US to file for bankruptcy, topping Stockton, California by a country mile.
“I really didn’t want to go in this direction – but now that we are here, we have to make the best of it,” admitted Detroit mayor Dave Bing. “Paychecks for our city employees will continue, services will continue.”
Last month, Detroit took the step of cutting payments on unsecured debt, and after initially saying there was a 50/50 shot at avoiding bankruptcy, emergency city manager Kevyn Orr has officially filed for bankruptcy. Under the terms of the bankruptcy, the city could sell off its assets in an attempt to generate income to pay off its debts. A recent offer to major debtors, including pension funds and other union-powered retirement offerings, was 10 cents on every dollar owed by the city. Union bosses dubbed the move a power grab, but I kind of doubt it.
Only a third of Detroit’s ambulances run. The city has 40 percent of its street lights not working. Violent crime is at an all-time high. Only 53 percent of property owners bothered to pay property taxes. The population is at 713,000 and bleeding people on a daily basis as the rats flee the sinking ship that is Detroit, and 78,000 homes are abandoned. It might be time to start demolishing empty neighborhoods and rebuilding a smaller, leaner city.
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