Detroit files for bankruptcy

[philw]

DETROIT has become the largest city in US history to file for bankruptcy.
Kevin Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall and made the filing Thursday in federal bankruptcy court.
A number of factors - most notably steep population and tax base falls - have been blamed on Detroit's tumble toward insolvency.
Detroit lost 250,000 residents between 2000 and 2010.
A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them.
In recent months, the city has relied on state-backed bond money to meet payroll for its approximately 10,000 employees.
Mr Orr was unable to convince a host of creditors, the city's union and pension boards to take pennies on the dollar to help facilitate the city's massive financial restructuring. If the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.
"Only one feasible path offers a way out,'' Governor Rick Snyder said in a letter to Mr Orr and state Treasurer Andy Dillon, approving the bankruptcy.
Gov Snyder determined earlier this year that Detroit was in a financial emergency and without a plan to improve things.
He made it the largest US city to fall under state oversight when a state loan board hired Mr Orr in March. His letter was attached to Mr Orr's bankruptcy filing.
"The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services,'' Gov Snyder wrote.
"The city's creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. 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.''
A turnaround specialist, Mr Orr represented automaker Chrysler LLC during its successful restructuring. He issued a warning early on in his 18-month tenure in Detroit that bankruptcy was a road Detroit and its creditors did not want to tread.
He laid out his plans in June meetings with debt holders, in which his team warned there was a 50-50 chance of a bankruptcy filing. Some creditors were asked to take about 10 cents on the dollar of what the city owed them. Underfunded pension claims would have received less than the 10 cents on the dollar under that plan.
Mr Orr's team of financial experts put together said that proposal was Detroit's one shot to permanently fix its fiscal problems. The team said Detroit was defaulting on about $US2.5 billion in unsecured debt to "conserve cash'' for police, fire and other services.
"Despite Mr. Orr's best efforts, he has been unable to reach a restructuring plan with the city's creditors,'' the governor wrote. "I therefore agree that the only feasible path to a stable and solid Detroit is to file for bankruptcy protection.''
Detroit's budget deficit is believed to be more than $US380 million ($412 million). Mr Orr has said long-term debt was more than $US14 billion and could be between $US17 billion and $US20 billion.
The city joins a growing list of American municipalities that have gone bust, including San Bernardino and Stockton, in California. San Bernadino had debts of $46 million and Stockton 26 million - figures dwarfed by Detroit's liabilities.


Read more: http://www.news.com.au/business/detroit-becomes-largest-us-city-in-history-to-file-for-bankruptcy/story-e6frfm1i-1226681727792#ixzz2ZSTcnU3r

then check this list out
http://www.governing.com/gov-data/municipal-cities-counties-bankruptcies-and-defaults.html

so how long before more go the same way...

[billt]

All of these towns that have these insane pensions, where you can park your ass for the rest of your life after just 20 years service, are going to go the same way. You cannot pay people to sit on their collective asses, while the city paying them produces nothing they can sell to recoup that loss.

This is common business economics. Something liberal, socialist Democrats never heard of. It broke GM, and it's going to do the same for all of these cities carrying these back breaking financial liabilities. Chicago will be next on a long list. Hussein better stock up on paper and ink. He's got more to worry about than China.

[jaybet]

"Fecal freefall"?   OH sorry!  It's "Fiscal freefall". You never know with Detroit.

[Frosty]

It's the beginning of the end or aka: "The Fall of ROME" updated to modern times

[Timothy]

The last republican to run that city left in 1961!

52 years of progressivism and liberal mindset doomed Detroit!  They've lost 1/2 their population in the last decade and there is no one left to pay the light bill let alone the 800,000 people with their hand in the pockets of the taxpayer.

[Sponsor]

[Solus]

Stuff like this just happens when you start to run out of other peoples money.

The list will grow, but it's what the majority of voters wanted to have.

[lhprop1]

The last republican to run that city left in 1961!

52 years of progressivism and liberal mindset doomed Detroit!  They've lost 1/2 their population in the last decade and there is no one left to pay the light bill let alone the 800,000 people with their hand in the pockets of the taxpayer.

The sad thing is, there probably is only one taxpayer left in that mess of a city. 

[billt]

They said last night the real estate market is so bad, people are burning down their homes and collecting the insurance, rather than trying to sell them. Nice place you've got here....Got a match?

The fire dept. is so slow to respond, accelerants are not required, so it's difficult to prove arson.

[crusader rabbit]

Just saw this AM that some azzclown Dummycrap judge has voided the bankruptcy petition because it doesn't honor the president who saved the failing auto industry and it didn't give lien-holders enough time to petition the courts for relief.

This is a truly misguided attempt to salvage something for those retired and soon-to-be retired city workers. 

But, if their ain't any money, ain't nobody gonna get paid.  And that is a very simple economic truth that seems to be beyond the understanding of Dummycrap judges.

If the legality of the Detroit bankruptcy filing is upheld--and I think it ultimately will be--there are at least 10 cities in Kalifornistan that will rapidly follow suit.  This is the result of socialism in practice.  It's great until you run out of other peoples' money.

Crusader Rabbit

[Solus]

That judge is thinking that the whole thing will go away as soon as he is able to find a deeper hole to put his head into.

His delaying tactic is just a desperate attempt to give himself more time to find a hole deep enough.