July 19 - The Governor of Michigan says bankruptcy was the only option for Detroit as that city buckles under $18 billion in debt, but analysts say this is unique and a rash of more U.S. city bankruptcies is unlikely. Conway G. Gittens reports.
The City of Detroit is headed for a fight in the courts after filling the largest government bankruptcy in U.S. history. Remarkable - given Detroit's size and debt load, says Daniel Berger. He's senior market strategist at Municipal Market Data, a unit of Thomson Reuters. SOUNDBITE: DANIEL BERGER, SENIOR MARKET STRATEGIST, MUNICIPAL MARKET DATA (ENGLISH) SAYING: "The significance is that Detroit is the 18th largest city in the country and it has about $18 billion in muni -in total debt outstanding." Fighting to be paid: bond holders and creditors -as well as workers and retirees. And there still needs to be money for day-to-day operations, admits Detroit's emergency manager Kevyn Orr. SOUNDBITE KEVYN ORR, EMERGENCY MANAGER, DETROIT (ENGLISH) SAYING: "Yes there are 9,700 employees and there are 19,700 - 20,000 retirees but there are 700,000 citizens who don't deserve a fifty-five minute response time, who don't deserve endemic blight and crime, who don't deserve no hope and future and just continue debt over debt and debt and borrowing so we have to do this in some fashion, and bankruptcy will allow us to achieve that in some level." There's just no other way to ease the strain, says Michigan Governor Rick Snyder. SOUNDBITE: MICHIGAN GOVERNOR RICK SNYDER (ENGLISH) SAYING: "This is the time to say enough is enough in terms of the downward decline of Detroit. The 700,000 people of Detroit deserve a better answer. What this does by going to bankruptcy court is give us one forum to say let's address these issues in a thoughtful deliberate fashion, and this has been done after going through a very deliberative process to come to that decision and recognize there are no other viable alternatives." Famous as this country's manufacturing hub thanks to General Motors, Ford and Chrysler, Detroit's problems stem from the highs and lows of the auto sector, says Steve Murphy of Standard and Poor's Ratings Services. SOUNDBITE: STEVE MURPHY, MANAGING DIRECTOR, STANDARD AND POOR'S RATINGS SERVICES (ENGLISH) SAYING: "If you look at the facts in Detroit, they've had severe economic dislocation, population loss, very, very difficult real estate conditions. Their taxes are all at their max level - all things specific to Detroit, which have resulted in it transitioning in the direction that it's transition in." And with that six-decade slide specific to Detroit, analysts say America is not headed for a wave of cities going broke.