{"id":19432,"date":"2014-09-08T18:13:24","date_gmt":"2014-09-08T16:13:24","guid":{"rendered":"http:\/\/www.w-t-w.org\/en\/?p=19432"},"modified":"2014-09-10T06:07:37","modified_gmt":"2014-09-10T04:07:37","slug":"what-happens-when-a-us-city-goes-bankrupt","status":"publish","type":"post","link":"https:\/\/www.w-t-w.org\/en\/what-happens-when-a-us-city-goes-bankrupt\/","title":{"rendered":"What Happens When a US City Goes Bankrupt?"},"content":{"rendered":"

Detroit is the largest city ever to seek bankruptcy protection, so its bankruptcy is seen as a potential model for other American cities now teetering on the edge. \u00a0But Detroit is really a model for how wealthier and whiter Americans escape the costs of public goods they\u2019d otherwise share with poorer and darker Americans.<\/p>\n

Judge Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan is now weighing Detroit\u2019s plan to shed $7 billion of its debts and restore some $1.5 billion of city services by requiring various groups of creditors to make sacrifices. \u00a0Among those being asked to sacrifice are Detroit\u2019s former city employees, now dependent on pensions and healthcare benefits the city years before agreed to pay. Also investors who bought $1.4 billion worth of bonds the city issued in 2005.<\/p>\n

Both groups claim the plan unfairly burdens them. Under it, the 2005 investors emerge with little or nothing, and Detroit\u2019s retirees have their pensions cut 4.5 percent, lose some health benefits, and do without cost-of-living increases.<\/p>\n

No one knows whether Judge Rhodes will accept or reject the plan. But one thing is for certain. A very large and prosperous group close by won\u2019t sacrifice a cent: They\u2019re the mostly-white citizens of neighboring Oakland County. \u00a0Oakland County is the fourth wealthiest county in the United States, of counties with a million or more residents.<\/p>\n

In fact, Greater Detroit, including its suburbs, ranks among the top financial centers, top four centers of high technology employment, and second largest source of engineering and architectural talent in America.<\/p>\n

The median household in the County earned<\/span><\/span><\/a> over $65,000 last year. The median household in Birmingham, Michigan, just across Detroit\u2019s border, earned more than $94,000. In nearby Bloomfield Hills, still within the Detroit metropolitan area, the median was close to $105,000.-<\/span><\/p>\n

Detroit\u2019s upscale suburbs also have excellent schools, rapid-response security, and resplendent parks.<\/p>\n

Forty years ago, Detroit had a mixture of wealthy, middle class, and poor. But then its middle class and white residents began fleeing to the suburbs. Between 2000 and 2010, the city lost a quarter of its population.<\/p>\n

By the time it declared bankruptcy, Detroit was almost entirely poor. Its median household income was $26,000. More than half of its children were impoverished.<\/p>\n

That left it with depressed property values, abandoned neighborhoods, empty buildings, and dilapidated schools. Forty percent of its streetlights don\u2019t work. More than half its parks closed within the last five years.<\/p>\n

Earlier this year, monthly water bills in Detroit were running 50 percent higher than the national average, and officials began shutting off the water to 150,000 households who couldn\u2019t pay the bills.<\/p>\n

Buried within the bankruptcy of Detroit is a fundamental political and moral question: Who are \u201cwe,\u201d and what are our obligations to one another? \u00a0Are Detroit, its public employees, poor residents, and bondholders the only ones who should sacrifice when \u201cDetroit\u201d can\u2019t pay its bills? Or does the relevant sphere of responsibility include Detroit\u2019s affluent suburbs \u2014 to which many of the city\u2019s wealthier resident fled as the city declined, along with the banks that serve them?<\/p>\n

Judge Rhodes won\u2019t address these questions. But as Americans continue to segregate by income into places becoming either wealthier or poorer, the rest of us will have to answer questions like these.<\/p>\n

\u00a0\"What<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Detroit is the largest city ever to seek bankruptcy protection, so its bankruptcy is seen as a potential model for other American cities now teetering on the edge. \u00a0But Detroit is really a model for how wealthier and whiter Americans … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[70,13],"tags":[],"class_list":["post-19432","post","type-post","status-publish","format-standard","hentry","category-big-banks","category-finance"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t