Detroit is Bankrupt

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strawman

strawman

...and one artist has taken it upon himself to ease the pain of bankruptcy:



While Detroit is only the latest in a long list of bankrupt municipalities across the US, it is the largest with over 18 billion in debt that is to be restructured. It is not expected to be bailed out, like the car companies and banks.

The most difficult target of the bankruptcy judge will likely be the pension and retirement funds set aside for Detroit workers.

It will be an interesting ride, if nothing else.
 
Chad Sexington

Chad Sexington

Yeah, I read about this over the last few days. I don't understand all the implications of municipality going bankrupt, but I mean, Detroit's been in a difficult place for so long, and this step seems like they're not going to move up soon. :\ Poor town.

I will say that Crisco thing is pretty funny, though :D If you don't laugh you'll cry, I guess
 
Espy

Espy

It's really kind of a weird feeling, seeing a behemoth of a city fall. I wonder what will become of it?
 
sixpackshaker

sixpackshaker

They will continue the way that they have been for the last 50 years. Now the retirements are going to be paid out for 10 cents on the dollar.
 
strawman

strawman

Chad Sexington said:
I don't understand all the implications of municipality going bankrupt
Click to expand...
It's the same as if a company goes bankrupt, though the legal process is quite different. They take all the debt and if it's secured they work out a payment plan, and if it's unsecured they work to reduce the debt (usually by saying, "Guess what? We're bankrupt and won't be able to pay you at all. But if you lower the amount we owe you, we might be able to pay it if you agree that this completes the debt obligation..."). They look at all the contracts they are currently held to, usually for ongoing services, and cancel them or renegotiate them.

Pension funds, retirement funds, and some other debts are often unsecured - not insured or backed up with a "we will pay you even if we can't pay anyone else" contract. So many thousands of people - currently working or retired - are facing the reality that their retirement might be reduced or disappear altogether if this bankruptcy goes very roughly.

The city will ultimately come out of it and survive, but a lot of people and companies will be hurt by it.

The lawyers will make hundreds of millions, though.

Keep in mind that only the city of Detroit is bankrupt. It is part of a much larger urban and suburban metropolitan area, and the surrounding communities are doing just fine. People, businesses, etc left Detroit over the years and decades leading up to this point, but they are often still within a 20-30 minute drive of Detroit.

This has significantly eroded Detroit's tax base. Of course the last few decades of poor (and criminal) leadership hasn't helped, but this is like watching a freight locomotive crash at 15 miles per hour. It seems slow and manageable, but the result is inevitable - you simply can't stop even a slow moving machine quickly if it's got so much weight behind it. It just keeps crashing as seconds turn into minutes turn into hours waiting for it to finally grind to a halt.
 
Krisken

Krisken

Pretty much what Stienman said above. Listen to this weekends This American Life podcast and you get a good idea of why Detroit is where it is today.
 
Chad Sexington

Chad Sexington

Ugh, that sounds rough. I knew it was part of a larger area, but nonetheless it seems like such a dreary reality that a metropolis like Detroit is so underwater. I remember seeing many incredible, though also tragic, photos of abandoned buildings in Detroit from a few years ago. It was staggering to think so many buildings became husks in the middle of a large city. It might speak to my ignorance, but damn. I never could have thought that was possible. And with the bankruptcy, I guess my ignorance is removed once again: even a city can drop that low.

stienman said:
this is like watching a freight locomotive crash at 15 miles per hour. It seems slow and manageable, but the result is inevitable - you simply can't stop even a slow moving machine quickly if it's got so much weight behind it. It just keeps crashing as seconds turn into minutes turn into hours waiting for it to finally grind to a halt.
Click to expand...
Not to deviate from the topic at hand, but I like this metaphor and will be stealing it.
 
strawman

strawman

Keep in mind that this is all managed by a judge. If the city chose to cancel contracts without declaring bankruptcy, companies and individuals would sue them for the unpaid debts and obligations.

A bankruptcy is merely a manged way of doing this. Everyone gets treated the same, and they all get their contract/debt/obligation seen and ruled on by a judge in a routine manner, rather than trying to deal with hundreds or thousands of different cases, with the people who came last losing the most.

It is as fair and equitable as it can be, given the circumstances.

Also, note that while ruin porn is enjoyable and quite common when talking about Detroit, that's really just a tiny slice of Detroit, and hardly representative of the city at large. There are efforts to replace that imagery with reality: http://www.huffingtonpost.com/2013/07/27/detroit-is-not-dead-photos_n_3652645.html
 
sixpackshaker

sixpackshaker

I am shocked that they did not hit bankruptcy 25 years ago. Between the riots of the 60's, white flight of the 70's, devil's nights of the 80's... Detroit has been a hellscape for a generation.
 
Chad Sexington

Chad Sexington

Oh I didn't suppose that all of Detroit was like that. I was just shocked; as far as I know no buildings like that exist in the cities I spend most of my time in. Also why is -porn appended to so many things... Like, I don't want my work computer to have logged a search for 'ruin porn,' or 'book porn' or 'space porn'... Anyway, not the point.
 
PatrThom

PatrThom

I spend a lot of time going back and forth between Grand Rapids, MI, and the metro Detroit area. When someone tells me that they're shocked by the conditions in Detroit, and that it will never recover, and it's all disaster, doom, and gloom, I point out that Grand Rapids (which is the second-largest city in Michigan) already had its hardship right around the most recent turn of the century. Now, about a decade later, Grand rapids is an up-and-coming area, chosen by the US Chamber of Commerce in 2010 as "most sustainable midsize city in the U.S." It has a sizeable hipster/artist/progressive (but most importantly, young) population. What Detroit is going through now is just about everything GR went through about a decade ago, and GR is shaping up surprisingly well. Detroit and GR are directly connected; getting between them is a straight shot along I-96 and takes about 2-3hrs depending on traffic, so I expect the population that has been incubating in GR for the last ten years will be ready to swarm back down and reinfect Detroit in a few years once the young-uns raised there get a hankerin' to live on their own. Far away, but not too far away.

You know who's really going to benefit from this? The city of Lansing, MI. Lansing is the State capital (which means it is strategically important) and it is right on the freeway halfway between Grand Rapids and Detroit. If I-96 does eventually become The Great Hipster Highway, Lansing (the city itself, not the MI government) is going to get so much more attention.

--Patrick
 
Krisken

Krisken

Could they do worse than the current crop of assholes in Michigan? I mean, there's a couple states in the Midwest here that have done some crazy shit to piss off their constituents, but only one so far has completely removed any semblance of democracy.
 
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