Skip to content
Catholic Online Logo

By Catholic Online (NEWS CONSORTIUM)

7/19/2013 (9 months ago)

Catholic Online (www.catholic.org)

Detroit files for bankruptcy.

Detroit filed bankruptcy Thursday, hopefully ending a long, terminal slide into insolvency. The city has been long beset by lost jobs, urban decay, and massive liabilities for public employees. Despite the inherent problems, Obama pledged to keep Detroit afloat. Today, that pledge failed.

Large areas of Detroit are almost entirely abandoned.

Large areas of Detroit are almost entirely abandoned.

Article Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

7/19/2013 (9 months ago)

Published in Business & Economics

Keywords: Detroit, Obama, bankruptcy, failed, bonds, pensions


DETROIT, MI (Catholic Online) - With the stroke of a pen, Gov. Rick Snyder approved the Detroit's plan to file bankruptcy. Detroit is now the largest metropolitan center in the nation to make such a declaration. The city has been approaching insolvency for years.

The slid into bankruptcy has been a long one, with Obama pledging in 2012 that he would not allow Detroit to go bankrupt. That promise apparently only applied to the auto industry.

The city faces more than $18 billion in debt, accrued over years of lost jobs, high public wages and benefits, and urban blight. The city has the highest murder rate in over 40 years, and at least 78,000 abandoned buildings. Some areas are almost entirely deserted.

Creditors are understandably upset at the decision. It is very possible that municipal bonds could be affected by the filing, which the possibility alone makes the national municipal bond market weaker. After all, if Detroit can reduce its bond obligations, then so might other cities in financial troubles.

This could in turn, lead to higher borrowing rates for distressed cities, pushing some cities over the edge.

Other creditors, such as the public pension fund will also be drawn into the fight. Public pensions have been called out as one of the major burdens affecting the city.

The details of the bankruptcy filing remains secret, but it is expected that the city will try to work out individual deals with creditors that are willing to negotiate.

"There were no other viable alternatives," Snyder told reporters during a press conference when he authorized the filing.

City officials say they hope the city will emerge from  bankruptcy quickly, hopefully next year.

Meanwhile, city Mayor, Dave Bing, who had no power in the bankruptcy decision because of a change in state law, said "As tough as this is, I didn't want to go in this direction," Bing said. "Now that we are here, we have to make the best of it. If it is going to make citizens better off, this is a new start for us."

For now, creditors, and the people of Detroit, can expect difficult times ahead, but there may be light at the end of the tunnel for the city, if the proceedings go smoothly. However, given the size of the city's liabilities, that may be a bit optimistic.

---


Pope Francis: end world hunger through 'Prayer and Action'


© 2014 - Distributed by THE NEWS CONSORTIUM

Pope Francis Prayer Intentions for April 2014
Ecology and Justice:
That governments may foster the protection of creation and the just distribution of natural resources.
Hope for the Sick: That the Risen Lord may fill with hope the hearts of those who are being tested by pain and sickness.



Comments


More Business & Economics

COMCAST DOMINATING? Merger may dominate market for local political advertisers Watch

Image of If Comcast's proposed $45 billion merger with Time Warner Cable is approved, according to industry sources, the Democrat Party-leaning cable television and Internet service could very well dominate the market for local political advertising.

By Catholic Online (NEWS CONSORTIUM)

If Comcast's proposed $45 billion merger with Time Warner Cable is approved, according to industry sources, the Democrat Party-leaning cable television and Internet service could very well dominate the market for local political advertising. The merger's ... continue reading


Is the 'Mark of the Beast' the future of money? Watch

Image of Theoretically, a unique identifier is attached to your digital wallet, could transmits payment for the groceries directly to the store.

By Catholic Online (NEWS CONSORTIUM)

Some futuristic thinkers say that in the next 20 years or so, when people go to the market, they will pick up the items they need and leave - without the benefit of paying a cashier. Sensors will identify a consumer by a mark, their way of walking or facial ... continue reading


Credit card wars: Wal-Mart sues Visa over transaction 'conspiracy' Watch

Image of Wal-Mart objects to the requirement that retailers who want to accept any payments via Visa honor all issuers' Visa-branded cards.

By Catholic Online (NEWS CONSORTIUM)

In an ongoing war over credit cards in the modern retail environment, Wal-Mart Stores Inc. is suing Visa Inc. for allegedly conspiring with banks to fix transaction fees. It's just the latest in a long, ongoing legal fight between retailers and card issuers. ... continue reading


In spite of tax revenue all-time highs - government still running in the deficit Watch

Image of Congress passed and President Obama signed

By Catholic Online (NEWS CONSORTIUM)

According to the Monthly Treasury Statement for February, inflation-adjusted federal tax revenues hit a record $1,104,947,000,000 in the first five months of fiscal 2014. It would stand to reason that the government would have partially dug itself out of its ... continue reading


'Regulated' Bitcoin exchanges planned in New York Watch

Image of Singapore has imposed a tax on Bitcoin trading and using it to pay for services, after classifying it as goods, rather than a currency.

By Catholic Online (NEWS CONSORTIUM)

In a sign that the digital form of exchange in popularity - and by extension, legitimacy, New York's financial regulator has called on firms to submit proposals to set up "regulated" exchanges for currency such as the Bitcoin. LOS ANGELES, CA (Catholic Online) ... continue reading


One, fell swoop: Italy's biggest bank to cut 8,500 jobs Watch

Image of The company is to create an internal

By Catholic Online (NEWS CONSORTIUM)

"I believe the group has turned the page," Italy's largest bank, UniCredit's chief executive, Federico Ghizzoni said. "We could have staggered the losses over several years. We decided to take them all in one year." It wasn't good news for many - Unicredit has ... continue reading


$30 trillion increase from $70 trillion between mid-2007 and mid-2013 sends global debt over $100 trillion Watch

Image of The bank is owned by 60 central banks and hosts the Basel Committee on Banking Supervision, a group of regulators and central bankers that sets global capital standards.

By Catholic Online (NEWS CONSORTIUM)

Everyone at some point seems to 'rob Peter to pay Paul' - especially international governments. During the European debt crisis, many nations borrowed money to keep their governments solvent. As a result, global debt increased by $30 trillion from the original ... continue reading


Wowza! Restaurant starts charging diners for Obamacare Watch

Image of Obamacare sounds nice, but somebody has to pay. At least Gator's Dockside is up front about it.

By Catholic Online (NEWS CONSORTIUM)

Going out to dinner? You'd better be prepared to pay a little bit extra thanks to Obamacare. A chain of Florida restaurants is tacking a surcharge onto diner's bills to help keep expenses at bay and workers on the payroll. LOS ANGELES, CA (Catholic Online) - A small ... continue reading


Time banking - where time is BETTER than MONEY Watch

Image of In a time bank, time is the money.

By Catholic Online (NEWS CONSORTIUM)

Alternative currencies such as Bitcoin and BerkShares are gaining popularity as people look for ways to escape what they see as a rigged and flawed system of monetary exchange in government currencies. However, the idea of banking time as opposed to money is also ... continue reading


Google tops Exxon as world's second-most valuable company - for a day Watch

Image of The one day-surge demonstrated the growing role of technology in the economy.

By Catholic Online (NEWS CONSORTIUM)

It was quite a day on Wall Street. Google, the world's largest online advertiser through its dominant search engine, had a higher market capitalization before falling back at the close in New York to a value of $395.4 billion compared to Exxon's $395.7 billion. ... continue reading


All Business & Economics News

Newsletters

Newsletter Sign Up icon

Stay up to date with the latest news, information, and special offers

Daily Readings

Reading 1, Acts 3:1-10
1 Once, when Peter and John were going up to the ... Read More

Psalm, Psalms 105:1-2, 3-4, 6-7, 8-9
1 Alleluia! Give thanks to Yahweh, call on his name, ... Read More

Gospel, Luke 24:13-35
13 Now that very same day, two of them were on their ... Read More

Saint of the Day

Saint of the Day for April 23rd, 2014 Image

St. George
April 23: Pictures of St. George usually show him killing a dragon to ... Read More

Inform, Inspire & Ignite Logo

Find Catholic Online on Facebook and get updates right in your live feed.

Become a fan of Catholic Online on Facebook


Follow Catholic Online on Twitter and get News and Product updates.

Follow us on Twitter