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US Motor city runs out of gas

Once the very symbol of American industrial might, Detroit became the biggest US city to file for bankruptcy Thursday, its finances ravaged and its neighbourhoods hollowed out by a long, slow decline in population and auto manufacturing.


Sputtering to a stop: Once a bustling beacon of industrial might, Detroit is now a poster child for urban decay with a debt of almost $20 billion. Pic/AFP

Kevyn Orr, a bankruptcy expert, who was hired in March to lead Detroit out of a fiscal free-fall, made the filing in federal bankruptcy court yesterday.

Detroit’s budget deficit is believed to be more than $380 million but Orr said long-term debt was more than $14 billion and could be as much as $20 billion.

“The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services,” Governor Rick Snyder wrote in a letter included in the filing.

“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.”

For Detroit, the filing comes as a painful reminder of a city’s rise and fall.

“It’s sad, but you could see the writing on the wall,” said Terence Tyson, a city worker who learned of the bankruptcy as he left his job at Detroit’s municipal building on Thursday. Like many there, he seemed to react with muted resignation about what lies ahead, but not surprise. “This has been coming for ages,” Tyson said.

Detroit expanded at a stunning rate in the first half of the 20th century with the arrival of the car industry, and then shrank away at a remarkable pace. 

Did you know?
In 2011, Jefferson County in Alabama filed for insolvency after it owed $4 billion in debt

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