Broken City: Detroit

How Detroit's epic bankruptcy could help the rest of the country

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Photograph by Dave Jordano. Background extended.

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It's unlikely to get that bad anywhere in the U.S., even in Detroit. But the fall of this iconic city will bring many changes in the way local governments function and cities grow. While the broader rerating of municipal debt that's very likely to happen down the pike would increase borrowing costs and reduce the amount of money all cities can raise through bond issuance, it might also prompt many to shift their growth models, rein in unsustainable labor costs and partner in more innovative ways with the private sector (which still has $2 trillion in cash on its balance sheets) in areas like education and infrastructure at a time when federal help is less forthcoming. In the short term, the uncertainty factor is huge. As one judge in Detroit described the unknowns in a bankruptcy of unprecedented scale, "It's like a stream you're trying to cross. Each step will have to be taken very carefully, like putting your feet on stones, one at a time." But it's worth it to get to the other side. At the very least, Detroit's bankruptcy should lead to an era in which a once great American city can put the lights back on and see its way to a new kind of future.

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