Detroit, America's forth-most-populous major city, has become the biggest municipal bankruptcy in U.S. history. But don't write its epitaph yet - a burgeoning technology sector, recovering auto industry, immigration and foreign investment are raising its future prospects.
Today, city officials confirmed news reports that the state, which was managing Detroit's finances under an emergency resolution, authorized a bankruptcy filing. Detroit is billions of dollars in debt due to vast population loss, corruption, stagnation, a dwindling , and the city's precarious reliance on the automotive industry.
Emergency manager Kevyn Orr estimates that the city owes creditors as much as US$20 billion, but many will receive pennies on the dollar. Orr, a bankruptcy lawyer, attempted to thwart bankruptcy, but could not bring the city's stakeholders to a consensus. Orr will have substantial influence over how the city is managed and how its debts will be restructured and will oversee the bankruptcy process and recovery.
Orr was appointed by Republican Governor Rick Snyder, but has ties to the Obama administration, having participated in the successful bankruptcy and restructuring of the auto industry. Orr was involved in both John Kerry's and President Obama's campaigns for the White House. He also could become Detroit's hero.
Detroit's financial dire straights are a far cry from its heyday as the wealthiest city in America; great public buildings, hotels, and factories now lay in abandoned ruins. However, some neighborhoods have already begun to gentrify, the city has become a hub of activity for young artists, and it's now the U.S. metro area for technology jobs. Some pundits are even deeming it the Midwest .
Let's not forget the University of Michigan, a leading university, and its highly rated medical centers.
Detroit may be down in the throes of a financial crisis, a popular straw man for political partisans, and even the butt of jokes, but it's not out. It just may end up becoming a very different city than it is today. It's a city in crisis - not a microcosm for America. And its near term troubles should not be viewed as a political triumph by cynics.
(image credit: Vickie Thomas/WWJ Newsradio 950, a local CBS affiliate)
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