I’m finding it a hard concept to get my head around, but Detroit, Motor City, yesterday filed for bankruptcy, the biggest US city to ever take such action. Its liabilities total $18.5bn (£12.1bn) – a pit of debt that has racked up over 60 years, and which neither the bankers nor city debtors are willing to compromise on.
Visitors to Detroit – and there are many among the automotive fraternity, given its hub as home to the Big Three car makers (Ford, GM and Chrysler) and their support businesses – will perhaps not be surprised. It’s been a long time since it was safe to walk around Detroit at night, or even step from a car in a lot of districts.
This is a city with 78,000 abandoned homes, an unemployment rate that has tripled (from pretty dark depths) since 2000 and which has a murder rate that is spiralling out of control. An estimated 60 per cent of children live in poverty. Many of the abandoned homes are occupied and then set on fire, not by the occupiers but by local residents eager to drive away unwanted visitors.
The police can barely respond, understaffed, under equipped and, I suspect, struggling to scratch out a living. I can’t claim any great first-hand knowledge of Detroit’s troubles, but when we go to the motor show car manufacturers like to employ ex-policeman because they know where and, perhaps more importantly, where not to go. Trouble is, for every one who’s delighted to have made a difference and got out alive, there’s another one happy to take you here, there and everywhere “to have some fun” and, presumably, a cut of the profits.
The irony is that there are already some signs of the city bouncing back. Corrupt city officials have been introduced to prison cells in recent years, there have been major rebuilding projects around the city centre (including, disappointingly, some casinos in an effort to make the city into a Las Vegas-style destination) and, of course, the car makers have dragged themselves up from rock bottom and started to thrive again. Even in its bleakest hour Detroit is the 18th largest city in America, so residents haven’t exactly fled. For many there are strong prospects.
But for others there are no prospects; they are trapped. At one point the city’s emergency manager, Kevyn Orr, planned to bus the debtors (think bankers and pension bond holders) in to some of the poorest parts of Detroit, to try and help them understand the realities of their hard-edged negotiations. They refused to go, or negotiate on their debts. Now, theoretically, they will get nothing (nor, presumably, will they lend again in future). In short, nobody wins.
The hope is that the bankruptcy filing will allow the city a new start. Detroit’s fall from grace has been total. It may have been inevitable, but it’s a pretty sad day for a city with a proud history and an intrinsic, woven-in link to the car industry. Let’s hope the industries that helped it thrive once before can help it do so again.