US city of Detroit files for bankruptcy

[-:Undertaker:-]

http://www.telegraph.co.uk/news/worl...ankruptcy.html

'Motor City' Detroit files for bankruptcy

Detroit has become the largest city in US history to file for bankruptcy after accumulating spiralling long term debt estimated at $18.5 billion.

Bankruptcy marked a new low for the “Motor City” which was once the heart of the country’s car industry, but has seen its population fall by more than half from 1.8 million in 1950 to less than 700,000 today.

In a letter with the filing Rick Snyder, the Republican Governor of the state of Michigan, said he had approved a request from Detroit’s state-appointed Emergency Manager Kevyn Orr to file for Chapter 9 bankruptcy protection.

Mr Snyder said: “It is clear that the financial emergency in Detroit cannot be successfully addressed outside of such a filing, and it is the only reasonable alternative that is available.

“The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services. The only feasible path to a stable and solid Detroit is to file for bankruptcy protection.”

He said it was time to “face the fact that the city cannot and is not paying its debts as they become due and is insolvent.”

Detroit stopped making payments on some of its of debt and obligations last month. The amount of money involved makes it by far the largest municipal bankruptcy ever in the US.

Mr Orr, a state-appointed former corporate bankruptcy expert who helped rescue the Chrysler car company, had released a plan in June to restructure the debt, but had warned he would be forced to see bankruptcy protection if negotiations with creditors failed.

The plan called for city-employed retirees to accept less than 10 per cent of what they were owed under pension plans.

But earlier this week the city’s two pension funds sued Mr Orr in an attempt to stop the cuts in retirement pay. An insurance group also threatened legal action.

The article goes on via the link about Detroit's problems etc etc.

Amazingly I read an article that you could only ever find in the Guardian which had the headline that somehow capitalism had bankrupted Detroit! ..but as I said, that's only something you would find in the low-circulation Guardian newspaper but which sounds like something worthy of The Onion.

Anyway, Detroit often reminds me of my home city of Liverpool - a city that once had heavy industry virtually destroyed by the Labour Party and the Unions who went on strike for wage increase after wage increase, pension raise after raise, high regulation, high taxation - virtually everything you would do if you set out to destroy the economy of a city. Ironically it's always those who claim to care about 'the poor' who keep voting Democrat/Labour and who end up destroying any hope of a job for the poor. But hey, that's the left for you.

Interestingly though, apparently Detroit has been ran by the Democratic Party for 50 or so years - so if you want conceptualise or sum up Detroit in it's present circumstances, think of it as a city that has been run by Obama for 50 years.

Incredibly sad, although proves what I always say - you may think this country is safe from bankruptcy and can keep spending what it wants, but one day those debts will have to be paid back... just as Greece, Argentina, Spain, Portugal and many other countries are finding out right now.

Thoughts?

[Ardemax]

This could actually be a good thing for Detroit. Wipe the slate clean and all that.