Once a perfect image of the American dream, modern Detroit is beginning to look more like a painting of economic nightmare. With billions of dollars in debt and a local government that’s increasingly unwilling to make budget cuts, the city, which was once the automotive hub of America, has filed for bankruptcy.
Detroit’s economic history is a turbulent story of success and failure, and one that’s particularly relevant in the current economic climate. Once America’s fourth-most-populous city, Detroit has suffered from a reduction in demand for American cars, a severe downturn in manufacturing activity, and a major public spending problem.
While there is debate regarding the extent of the city’s debt, officials claim that the troubled metropolis owed between $18 and $20 billion to creditors. The city grew rapidly during the 20th century as the American automotive industry took hold of the country, adding hundreds of thousands of residents within decades.
From a postwar population of 1.8 million, however, Detroit now boasts just 700,000 residents. The city’s downturn isn’t just visible in the empty shopping malls – it’s far from difficult to spot skyscrapers, manufacturing plants, and other buildings with no visible residents or activity.
Detroit city officials admit that the city’s roadmap for recovery is vague, with little in the way of long-term planning or economic reconstruction. Residents voice concern that the city can recover from its current financial state, with many wondering if the bankruptcy filing – the largest of its type in American history – is really feasible.
The bankruptcy comes after months of debate regarding Detroit’s obligations, both to its creditors and to its officials. City officials and unions had reportedly struggled to reach conclusions regarding benefits, while creditors supplying the city with its financing had reportedly refused to accept cut-price repayment deals.
