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Facing Debts of $18 Billion

This afternoon, Kevyn D. Orr, the Emergency Manager appointed by Gov. Snyder, announced…

“Detroit…has filed for bankruptcy…the largest American city ever to take such a course.
Not everyone agrees how much Detroit owes, but Kevyn D. Orr, the emergency manager who was appointed by Mr. Snyder to resolve the city’s financial problems, has said the debt is likely to be $18 billion and perhaps as much as $20 billion.”
 More below the kos kurlique...

…numerous factors over many years have brought Detroit to this point, including a shrunken tax base but still a huge, 139-square-mile city to maintain; overwhelming health care and pension costs; repeated efforts to manage mounting debts with still more borrowing; annual deficits in the city’s operating budget since 2008; and city services crippled by aged computer systems, poor record-keeping and widespread dysfunction.

All of that makes bankruptcy — a process that could take months, if not years, and is itself expected to be costly — particularly complex…”

Both Orr and Mayor Bing spoke to reporters, and sought to reassure citizens that Detroit "will get through it".  Mayor Bing noted that this was not the direction he would have chosen, but now that it is the path chosen, that Detroit "will make the best of it".  Former Mayor Archer and Gov. Snyder are all making positive statements too.  But--despite their positive spin, a major city filing bankruptcy is not a reassuring development, and many Detroiters, and citizens of surrounding cities and counties are processing the impact this will have on them, on city services, etc.

What this will mean for the City and the people who live in it, as well as surrounding counties remains to be seen, but it is a depressing and distressing development for the city and the region.  

“…The nature of Detroit’s situation ensures that it will be watched intensely by the municipal bond market, by public sector unions, and by leaders of other financially challenged cities around the country. Only slightly more than 60 cities, towns, villages and counties have filed under Chapter 9, the court proceeding used by municipalities, since the mid-1950s…

Around this city, there was widespread uncertainty about what bankruptcy might really mean, now and in the long term, though leaders of other cities who have been through court cautioned of lingering effects…

This is a developing story, and no doubt many reports and analyses will be written about the situation as things unfold.

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Comment Preferences

  •  OCP buys Detriot, makes cyborgs (3+ / 0-)

    And we'll be living in the future!

    Obama: self-described Republican; backed up by right-wing policies

    by The Dead Man on Thu Jul 18, 2013 at 04:37:02 PM PDT

  •  i've been wondering why this is getting (7+ / 0-)

    so little coverage here.  

    i heard the news and went right to dK expecting to see something on the front page.

    eclectablog wrote a diary a few hours ago

    but for some reason i expected this to be bigger news

    Politics is like driving. To go backward put it in R. To go forward put it in D.
    Drop by The Grieving Room on Monday nights for support in dealing with grief.

    by TrueBlueMajority on Thu Jul 18, 2013 at 04:45:05 PM PDT

    •  I thnk this is something... (2+ / 0-)
      Recommended by:
      FG, johnny wurster

      ...a lot of people saw as inevitable, from a long ways back.  Besides, it's not the end of Detroit.  Look at it as a fresh start in a sense.

       Now when they have trouble borrowing in the future...

      Warren/3-D Print of Warren in 2016!

      by dov12348 on Thu Jul 18, 2013 at 04:55:26 PM PDT

      [ Parent ]

    •  I wondered the same, so I posted this quick... (2+ / 0-)
      Recommended by:
      3goldens, jennifree2bme

      diary.  For those of us in MI, this is an unsettling, though not totally unexpected, development.  To see the city go from a thriving manufacturing center to a bankrupt city in a few decades is so sad, and disturbing.

      Thanks for the link to eclectablog's diary, which I rec'd, and will go back and read now, as I was looking for him to post something on this, but missed his diary.

    •  It gets little coverage here for the same reason (4+ / 0-)
      Recommended by:
      peregrinus, 3goldens, Zornorph, katiec

      the rising personal bankruptcy rate, under and unemployment, the fact that more people are without health care than before "Obamacare" was passed, and that the surveillance state and MIC are out of control, it reflects badly on the "Blue team."

      The Larry Summers, Wall Street, Geithner economy is failing America and is supported by a President still focused on a failed Washington Consensus economic policy. Federal fiscal policy, excoriated by Ben Bernanke in his latest report to the Congress, is the primary reason that the American economy is still failing, while the President and his staff trumpet falling deficits as some fantastic example of "leadership."

      "Intelligence is quickness in seeing things as they are..." George Santayana

      by KJG52 on Thu Jul 18, 2013 at 05:00:45 PM PDT

      [ Parent ]

    •  Maybe because there appear to be no solutions (0+ / 0-)

      within capitalism.

      "I was a big supporter of waterboarding" - Dick Cheney 2/14/10

      by Bob Love on Thu Jul 18, 2013 at 05:19:07 PM PDT

      [ Parent ]

      •  plenty of cities are thriving. (2+ / 0-)
        Recommended by:
        auapplemac, virginislandsguy

        Detroit made a lot of mistakes.  that doesnt indict capitalism; it indicts Detroit's leadership over the years.

        •  Then what are the solutions for Detroit? (0+ / 0-)

          "I was a big supporter of waterboarding" - Dick Cheney 2/14/10

          by Bob Love on Thu Jul 18, 2013 at 07:36:58 PM PDT

          [ Parent ]

        •  What mistakes? (2+ / 0-)
          Recommended by:
          icemilkcoffee, Bob Love

          I've looked at this pretty hard, and as far as I can tell the quality of the City's leadership is actually irrelevant.

          The problems are three-fold:

          1) Like all rust belt cities, Detroit is surrounded by incorporated suburbs that cannot be annexed and will never die. Grosse Pointe, population 40-50k, for example has five mayors for no reason anyone can explain. This means the number of square feet in Detroit is limited. Since the 50s people have been demanding ever-larger houses.

          2) In the late 60s Detroit's white population ran a particularly stupid, brutal, racist police department. one of it's officers ultimately plead Not Guilty by Reason of Insanity to murdering nine black people. Blacks responded to this in a way that was also brutal and stupid (albeit more understandable): the biggest race riot before Rodney King.

          3) Unlike almost all rust belt cities, white racists in the City had a place to flee to. The guy who thought of the elite police unit Psycho Racist Serial Killer Cop served in was elected Sheriff of Oakland County within a year  of being drummed out of Detroit.

          IMO the mayors who could have saved Detroit served 40-50 years ago. When the City was 29% of the state's population, if a Mayor had said, "Shit, we need more square feet, we have to annex much of Oakland and Macomb Counties" he probably would have gotten his way.

          If he'd integrated the police in 1965 we wouldn't have had the riots.

          In other word: yes Kwame sucked ass, but by the time he got the job there wasn't really anything he could do.

  •  Coming Soon to a City Near You (0+ / 0-)

    Detroit is the future of America.  Too many service clients, too few tax payers.  Michael Moore will do a documentary about it...but this is what America looks like in the next few decades.

    If you are living in a major city...better start shopping the exurban real estate ads.

    Cuz the center cannot hold.

    Cause he gets up in the morning, And he goes to work at nine, And he comes back home at five-thirty, Gets the same train every time.

    by Keith930 on Thu Jul 18, 2013 at 04:54:49 PM PDT

    •  Detroit (4+ / 0-)

      A quick look at the City's largest employers tells you what is going on:  there are almost no large private employers and what is left is made up of public employees who elect reps who get them juicy pensions and benefits.   There is simply no private sector left to tax.  A simple but cruel math problem.

    •  Not really. With gas prices likely to stay high (0+ / 0-)

      exurbs don't exactly look like promised land.

    •  "Detroit bankruptcy would cost suburbs millions... (1+ / 0-)
      Recommended by:
      midwesterner

      7 Action News has learned the suburbs could take a multi-million dollar financial hit

      ...if Detroit goes into a Chapter 9 Bankruptcy...

      Oakland and Macomb Counties have been told their AAA bong ratings could be moved down just by being next door to Detroit.

      Officials in Washtenaw County tell 7 Action News they are meeting with the bond rating agencies this week...

      •  because you only THINK you can get away (0+ / 0-)

        they come after you, no matter where you move to, and ask for money.

        Cause he gets up in the morning, And he goes to work at nine, And he comes back home at five-thirty, Gets the same train every time.

        by Keith930 on Thu Jul 18, 2013 at 07:27:36 PM PDT

        [ Parent ]

      •  I'm not too sympathetic. (1+ / 0-)
        Recommended by:
        kurious

        As a Detroiter pretty much every economic development opportunity for the past 40 years has been sabotaged by the local suburbs constantly explaining that Detroit is a massive hell-hole you should not invest in. It never seemed to occur to them that only a total moron builds a new auto plant across the damn street from a hell-hole.

        Don't get me wrong, our tendency to explain that you should ignore those idiots because they're racist was not a great response, but at the moment I'm not really in the mood to be mature about this.

        •  I agree, but the point... (0+ / 0-)

          I'm trying to make is that while the main impact of this will be on the city of Detroit, the impact won't be limited to the city of Detroit--something that those cities, and the county administrations should have been and should be aware of in making economic decisions that affect the economic well-being of entire regions.  It's really in no one's best interest to let our cities fail.

  •  NYC was there in 1975 (4+ / 0-)

    they were saved at the last minute.

    Detroit won't get saved, because, something.

    This Rover crossed over.. Willie Nelson, written by Dorothy Fields

    by Karl Rover on Thu Jul 18, 2013 at 05:04:45 PM PDT

    •  Detroit won't get saved (1+ / 0-)
      Recommended by:
      johnny wurster

      because it is much smaller. If New York had gone bankrupt in '75, it would have taken the US, and maybe the world's economy down with it. That's why president Ford was finally persuaded to do it, after much initial resistance. He did not want to preside over what would have been the worst economic downturn since the depression. Ironic...
      Detroit won't have nearly that sort of impact. If anything, a properly handled bankruptcy might help the overall economy.

  •  This was always going to happen. (6+ / 0-)

    The "Emergency Manager" plan had a perfectly obvious endgame.

    I don't blame Christians. I blame Stupid. Which sadly is a much more popular religion these days.

    by detroitmechworks on Thu Jul 18, 2013 at 05:04:46 PM PDT

    •  If the elected Mayor of Detroit has a problem... (0+ / 0-)

      ..with any of the actions taken by the "Emergency Manager", than that Mayor can propose to reverse them, once the EM has left.

      For example, if the EM decides that the city can save hundreds of millions of dollars by shifting retired city workers into the ACA, the Mayor will have the option of restoring the old health care plan, along with the taxes to pay for it.

      Somehow, I doubt that's going to happen.

      Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

      by PatriciaVa on Thu Jul 18, 2013 at 05:13:31 PM PDT

      [ Parent ]

  •  Just happened on these recently: (2+ / 0-)
    Recommended by:
    auapplemac, kurious

    http://www.weather.com/...
    http://www.neighborhoodscout.com/...

    I wanted to see what these "most dangerous" neighborhoods looked like, so I looked them up on Google street view. I ended up in Detroit, at Helen and Mack, and then onto East Grand Boulevard.

    Seeing the once-beautiful neighborhoods now half empty, with boarded-up still-liveable houses with broken windows, interspersed with houses where people still survive, although much of the community is gone--it brought tears to my eyes.

    •  google street view is likely very out of date (1+ / 0-)
      Recommended by:
      marina

      just look up Detroit fires on youtube and then look at the street view on google earth and you'll come to the horrible truth... many of these houses are gone.

    •  Those houses look good... (1+ / 0-)
      Recommended by:
      marina

      But inside most of them are gutted. Flooring's gone, pipes're gone. Wiring's been sold for scrap. They're basically shells.

      Hell, some aren't shells. It's pretty common for an abandoned building to have large sections of the brick facade gone, because one of the local semi-legal industries is to find somebody with a deed to a useless house, give them $50 for a 2% share of the House, and then loot the bricks. They usually don't bother getting the front, so they'd look OK on Street View. Occasionally the "entrepreneurs" involved in this sort business don't bother getting their names on the deed.

      It's actually a huge problem because Detroit's working class residents are absolutely convinced that if somebody would just hire them to fix those places up, they could learn a trade, and make a bundle. But the fact is that fixing those buildings would cost more then building a new McMansion, because instead of building from the ground up you have to maneuver your way around an 80-year-olf facade; they'd be worth less then the McMansion because they're smaller and in Detroit; and it gets even less workable if you're trying to do it with trainees.

      So the damn things sit and rot, occasionally being taken over by drug lords for illegal activities, and then burned down by local vigilantes seeking to prevent future drug-lord use (watch 8-Mile if you want an example of this), and since the brick facade facing the street is damn near indestructible everybody goes on thinking the house is just a fixer-upper.

  •  Again, racism is a major cause of the problem (1+ / 0-)
    Recommended by:
    icemilkcoffee

    The 1974 SCOTUS case of Milliken v. Bradley pretty much sealed Detroit's fate by declaring that school integration can be separated into city and suburban areas, thus isolating the suburbs from any segregation planning of the city. White and middle class flight increased dramatically to the suburbs, leaving mostly the poor and unemployable in the city. Businesses left, residents defaulted on property taxes they couldn't afford, etc -- what followed was the predictable events that re-inforce a downward spiral ending in complete dysfunction.
    BTW that lawsuit was brought by the then-governor of Michigan William Millikin ... Michigan has had lots of dick governors before Snyder.

    Ash-sha'b yurid isqat an-nizzam!

    by fourthcornerman on Thu Jul 18, 2013 at 07:29:55 PM PDT

    •  Why were they unemployable. Did they drop out? If (0+ / 0-)

      so, not a really bright move.

      It’s the Supreme Court, stupid! Followed by: It's always the Supreme Court! Progressives will win only when we convince a majority that they, too, are Progressive.

      by auapplemac on Fri Jul 19, 2013 at 03:34:30 AM PDT

      [ Parent ]

  •  Nobody put anything back. (3+ / 0-)
    Recommended by:
    jabney, peregrine kate, lorla

    Nobody put anything back.
    The people did, of course. The people of Detroit put a lot into their city, a thriving, roaring dirty sexy generational love affair of one of the most unique hodge podge of ethnicity and cool unlike anything anywhere else, except, well, New York as it is now. Not then, of course, New York then was a mess, more or less at the same time Detroit was tough muscle and sweet love.
    Of course, Detroit, the whole town, was a back room where deals were cut.
    I know, I was there. I was there. When a major banking institution red lined entire neighborhoods and wouldn't approve a single home loan, and even the FBI couldn't break the bank. When they wanted a Children's Zoo on Belle Isle and the purchase of the animals was double dipped, I was there too. When the sons of the Mob threw a rolling backyard party on the East side with mounds of cocaine all over the women's bathroom, I was there. When a tire manufacturer's plant right smack on the Detroit River opened its' release valves wide straight into the Detroit River turning the water for hundreds of yards bright orange. When a real estate outfit actively promoted 'block busting', moving a black family into a white neighborhood, and the banks subsequently devalued every home on the entire block, making a second fortune on new mortgages over the 'white flight.' When the Detroit Police had the 'Big four', four of the biggest white cops you ever saw, with no precinct, roaming around anywhere, mostly on the thin edge of mayhem. Stood in the offices of the Ambassador Bridge, long before the current owners, while they called down to the bridge authorities on the job to look the other way on this international customs checkpoint. When they plowed under an aging housing project and used toxic dirt as landfill. When Henry Ford II insisted on building the Renaissance Center as a fortified compound, instead of a spread out river walk, I was at those breakfast meetings at the Pontchartrain. When tanks rolled through a burning city.
    The people loved this town, loved Detroit. Loved their sports teams, their brewery, the competing daily newspapers. The Art Institute. The Detroit Symphony Orchestra. Line 'em up, Joe, it's the end of shift, let's have one more round. A tough, dirty city, that wanted to be more, and sometimes, was.
    A very, very special place.
    With too many back rooms, too many deals, and those who took a piece on the way out of town, to Bloomfield, and Birmingham, with a last snort at the Oakland Hills Country Club.
    A toast to you, Detroit, my beautiful, scarred love.

    •  Beautiful (0+ / 0-)

      I'm still here and I love it.
      There are no opportunities here for people. There is no education and no employment.
      The people that are part of the revival will do nothing to change these conditions for the people that have been here all along. But the people who have been here all along already know that.
      The corruption taking place now by the state and business is small potatoes compared to Kwame.

  •  Bail. Out. Detroit. (0+ / 0-)

    Congress and the President need to act, and if they don't they must be shamed into doing so.  We can't just let this happen to one of our great cities.  

    "Those who have wrought great changes in the world never succeeded by gaining over chiefs; but always by exciting the multitude." - Martin Van Buren

    by puakev on Thu Jul 18, 2013 at 09:51:54 PM PDT

  •  We need to get immigrants into Detroit (0+ / 0-)

    We should use immigration reform to rescue Detroit. The town has suffered from a severe population flight. We could have a policy whereby immigrants get green cards if they stayed in Detroit for a period of 7 years.  Any immigrant who starts a business in Detroit that hires local employees, could get a green card in one year.

  •  Why isn't the emergency manager (0+ / 0-)

    Responsible for this bankruptcy?

    •  There was no way to save it. The manager was there (0+ / 0-)

      primarily to asses what action to take next. The decision is now in - bankruptcy.

      He hasn't been there that long.

      When taxes are high and still cannot cover standard city services, there is not much you can do.

      How did the city employee benefits and salaries match up to cities of similar size. We're the municipal funds drained by the employees with sweetheart deals along with other city "fathers and mothers" to there own benefit?

      Many Northern cities faced white flight and middle and upper class black flight, but are somehow still surviving - although some just barely.

      For instance Philly. While the school system is deeply in debt, center city is blossoming. It started about 50 years ago.

      Many young middle class families and empty nesters now live there and it's spreading to adjacent neighborhoods. There are a few good schools in the area where parents are involved in their kids education and see that the standards are kept high.

      Detroit  is very saddening. I fear for the people who could not escape.

      It’s the Supreme Court, stupid! Followed by: It's always the Supreme Court! Progressives will win only when we convince a majority that they, too, are Progressive.

      by auapplemac on Fri Jul 19, 2013 at 04:03:45 AM PDT

      [ Parent ]

      •  Detroit employees aren't that well paid... (0+ / 0-)

        And there aren't that many of them. Bing's actually firing hundreds.

        The problem is you have pensions for enough people to govern the 1.8 million strong city of the 50s, but you only have 700k taxpayers, and those taxpayers are incredibly poor.
        Cleveland has some of the same problems, but they haven't lost 60% of their taxpayers, and the ones who remain aren't near-poverty.

        Like all rust belt cities we're in a downward spiral, but we can never pull out because any plan that could work would threaten Oakland County's business model, Oakland County's got a veto, and Oakland County ain't stupid.

  •  Asses!??? Assess. OK? (0+ / 0-)

    It’s the Supreme Court, stupid! Followed by: It's always the Supreme Court! Progressives will win only when we convince a majority that they, too, are Progressive.

    by auapplemac on Fri Jul 19, 2013 at 04:05:08 AM PDT

  •  Detroit is bankrupt, but Truth isn't under a stay (0+ / 0-)

    Facts that the blah blah Media will not report, because they are not reporters.

    1. Detroit's takeover by the "Manager" was suppose to do things such as avoid bankruptcy. Once again, the State of Michigan lies to Detroit.

    2. The duly elected representatives of Detroit could of declared bankruptcy too. But they were told not to, or face dire circumstances by the State. Fucking Republican liars.

    3. Over the years Republican scum from the State forced Detroit into one harebrained 'Free Market' solution after another, starting with the worst freeway damage any American city has ever suffered. (Remember Romney's Daddy was the Governor of Michigan) Included were massive tax cuts for big businesses in Detroit. Every news media report describes Detroit's obligations. Let's see one about Detroit's revenue and lack thereof. And why.

    4. Other American cities have gone into 'bankruptcy' and emerged intact and revitalized. Is the stigma that Detroit is facing racist? You bet it is. Is it something to do with Beltway politics? Yup. Stand by for TBer blaming the President for Detroit's woes.

    5. What about Detroit? Is the imagery all over the media of abandoned house and desperate citizens accurate? The Media??!! You got to be kidding. Go there yourself. It is THE most fascinating city in America. If the clowns in Lansing stop abusing Detroit, it could turn out to be the Model of the American City for the 21st century. In spite of the racist, anti-humanist Michigan Dutch Reformed pirates and their Republican allies that treat Detroit the same way their Afrikaner cousins did South Africa.

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