I think this bankruptcy is an exciting thing for Detroit. The purpose of bankruptcy is a reboot and if anyone needs a reboot it's Detroit. Of course, Detroit isn't the only city going through or considering bankruptcy. Unlike most people, I view the nationwide phenomenon of municipal bankruptcies positively. Years of unsustainable policies have left the big cities of the U.S. in a financial state where they can no longer effectively provide services. In 2013, 40%+ of Detroit's revenues went to bond payments, pension benefits, and health benefits to retirees. This is money taken away from providing services to current residents of the city.
Bankruptcy will mean bond money will no longer be so easily forthcoming, but that's a good thing. Cities will be forced to grow within their means, and that pressure will force more prudent fiscal policy going forward.
It is my hope, and this is unpopular I know, that Detroit successfully unburdens itself from all obligations associated with pension plans. I certainly support pensions for people who dedicate their life to public service, but seeing cities and counties decimated by poorly managed pensions is crushing. Between early qualification, and 'punching' or otherwise basting your pension salary based on your last year worked, have been policies that have robbed other pensioners and citizens alike of benefits and services. Without a reasonable discussion about what can be expected of the taxpayers to bear, and what cannot, we will see more Detroits.
I'm not sure I'm understanding you. Are you suggesting that current retirees should get nothing of what was promised to them? What are they supposed to do? Seems like this would put a lot of old folks into a desperate situation and only worsen the city's downward spiral.
I am pretty sure you do understand. Your appeal to compassion for "those for whom commitments are made" is a powerful one, but ultimately fails as fiscal policy. The city dies, the remaining 706 thousand people of Detroit get to watch their city turned into a cesspool of crime, uncollected garbage, and unreliable services. And those old folks lose their pensions too. Governments have made commitments that they are mathematically unable to keep. You need look no further than the unfunded CalPers (California's Pension) fund to see what is coming on the horizon.
At this point there are no "good" answers, but the path to the "right" answer is pretty clear, it is unsustainable to balance the retirement of a few on the labors of others.
I've made a number of suggestions to folks in Sacremento, pretty much anyone who asks and some that don't. On various ways the system might work. One outcome though is you don't get "lifetime income" unless you do what Mr. Money Mustache suggests and convert your lifestyle into something that can survive on a 3-4% annual withdrawal rate of your accumulated benefit.
retirees, regardless of position, should get a set amount. It really should not be more than they made per year while an employee - many systems let them game it by popping overtime on it, unpaid vacation, and the like. There are cops with 100k+ pensions who retired at 50!. There are politicians with even bigger payouts, judges making over 200k in retirement.
There needs to be a "retirement" value for government employment that results in a good retirement but not extravagant. Sorry, but once you start passing the fifty thousand in retirement your getting a bit much. I would cap any retirement at median for your region, with minor and I mean MINOR boosts to cover medical for special circumstances, like really hurt in line of duty.
Go look at the bad retirements that people are paying.
Not to be too cynical, but I wonder how many government employees see themselves as dedicating their lives to public service, as opposed to those who simply prefer a government job over a private sector job.
I think the whole public servant thing is largely a myth.
I can't speak for all of them, or even a majority of them, but I do make a point to get to know my representatives (and the candidates who would like to be elected) and have found a number of people who would rather not have to be in government but have found themselves forced their by a sense of "if no one else will do this I guess I will" sort of duty.
For what its worth, its pretty easy to talk to these people. Its hard not to talk to them when an election is coming up.
I sometimes think voters that care enough to engage are a myth. :-)
I did one contract for a state government long ago. A friend of a friend brought me in because she knew I'd be unable to comprehend the normal pace of government work, and would therefore cluelessly batter my way though institutional inertia to get things done in time to meet certain goals.
I am definitely not suited for large organization, private or public. And there certainly were people who were just punching a clock. But a lot of people were, despite decades of service, still coming in every day determined to make things better.
As far as I can tell, it's the same thing with the teachers I know. It is a hard job, much more difficult than I could ever do. But despite that, most teachers I've met are doing the work because they really like teaching, and they care about what happens.
It blows my mind, really. My short attention span and desire to stir up trouble mean I'm well suited for startups, but could never spend 40 years doing the same thing. That, however, is exactly what we want out of government: stability, reliability, predictability.
It's all well and good to talk about "honoring commitments made to retirees", but if the city can't provide basic services because 40 cents of every dollar it spends goes to debt service, the city isn't in a position to honor those commitments anyways; it will simply fail harder and more painfully for all its residents in the futile attempt to honor those intractable commitments.
In dream-world, we'd never have problems like this! A constructive alternative to Detroit's problem? They should have declared bankruptcy a long time ago, before levering up their debt with bond schemes.
I do. Raise property taxes and sales taxes until you can pay your bills. The solution is actually simple. It is impossible for elected officials to do and keep their job, but simple.
That might not actually work, seeing as how Detroit already has a population problem and higher taxes will probably force even more of them out, leading to flat or lower overall revenue.
But the VAST majority of the money spent "honoring commitments made to retirees" is not made to "current residents of Detroit". Most of it was just a one-way funnel of money from Detroit out to the suburbs, other areas of Michigan and beyond.
It makes no sense for Detroit... to essentially be funding people in the suburbs... by taking on debt. That was just craziness.
A lot of those bond schemes were undertaken because overly generous pension promises had left the governments in a situation of having to meet unreasonable growth targets in order to meet their obligations. A lot of the craziness in 2008 was the result of pension fund managers struggling to recoup the losses of 2001 and get back on track.
And how is bankruptcy going to prevent this from occurring again? Will future politicians still have the ability to grant crazy pensions knowing their term won't endure its negative effects? Not sure what the solution is but I don't think bankruptcy will solve it.
Why should unions have any political zorch? Why must collective bargaining require any amount of state intervention (besides, obviously, protecting individual liberty and property)?
I think the pattern has been established in cities which avoided bankruptcy, like San Jose - you hire a barebone skeleton of public employees, re-negotiate the contracts in light of macroeconomic conditions, and subcontract everything else - those employees are now eligible for 401k or IRA or other more exciting things.
It will be interesting to see how pension liabilities and current pension guarantees are handled. This is a very large scale problem not just in Detroit but across America, where the retirement guarantees given to retiring politicians and government workers is very costly.
If they force the bond holders to eat it all then the market for municipal bonds will be hurt badly. The irresponsible largess in the current government pension system needs to come to an end.
Pensions are a joke. I hate to say this but look at the teachers of Mass as a good example of just how much so. 20 years ago teachers paid 2% of their salary into the pension, today they pay 10%. Do you expect that in any reality today's teachers are going to see that returned to them?
Basically, promises are made that have no bearing on reality and the now has to suffer for it. I wish they'd give them the opportunity for a 401k. At least then they'd have an option of seeing something after 40 years of dedicated public service.
Oh, please. These pensions are impossible now, but that's because of decades of underinvestment and out-of-control health care costs.
Also, the workers didn't promise themselves anything. They made a deal with their employers. The employers didn't have to agree to anything. They did, and those deals should be honored.
The employees getting the pensions are not the same ones doing the negotiating. By your theory, government employees would always get what they wanted and therefore never strike, but that's demonstrably not the ase.
It's not as though they let the garbage man write his own pension.
It's funny, when a bank NINJA-loans a half-million dollars for a 1000ft^2 bungalow, it's always the-purchaser-took-advantage-of-the-bank, and never, the-bank-should-have-known-better-and-deserves-to-go-broke.
No, certainly the garbage man doesn't write down his own pension. His union negotiates with the government over how much money (that doesn't belong to either of them at the time) to promise to all garbage men.
Banks deserve to be exposed to the risk they assume in general, but this issue has problems in addition to the problem of banks being sheltered from risk.
I think, in the case of Detroit, they will both be taking pretty painful hits. Snyder is serious about this. The bankruptcy administrator is likely to be unsympathetic. And very little help is likely to come from DC. Couple all of that with Chapter 9 providing all creditors with FAR fewer rights, and I think the writing is pretty much on the wall.
The only thing the creditors can try at this point is to get a judge to rule that Detroit is not eligible for bankruptcy. Slim chance there... but we've all seen stranger things happen.
Hmm. I've been thinking about your comment for a while.
I don't see the feedback loop. In normal bankruptcies, or any other mistake in management, there's a feedback loop to help self-correct and prevent this from happening again. So politicians made a lot of promises they couldn't keep, got in bed with the folks running the city and created all sorts of sweetheart deals, made lots of speeches about making the city a better place and so forth while running it into the ground.
The lawyers come in, nullify the promises made to many of the participants, including bond holders and dedicated employees, all of whom acted in good faith. The politicians walk away. Heck, some of them are probably busy right now continuing to move up the political ladder.
So where's the feedback loop? The fact that bondholders will be more careful next time around? That's all I can see, and it's a very flimsy thing to hang that much optimism from. My bet is the state picks up the bonds, takes over managing the city budget, and gives everybody involved a 30-40% haircut. This may prevent the particular city named Detroit from repeating the same mistake for a few years, but it does absolutely nothing for all the other mismanaged cities. I'm not even sure Detroit will remain in the doghouse very long. In fact, from a certain political angle, looks like a very well-played strategy. At the end, all the players walk free and continue making speeches about how awesome Detroit is and "if they had only listened to me" things would have worked out.
Doesn't look too encouraging for anybody, but heck, maybe I missed it.
You're right, the feedback loop isn't as strong. Basically, I'm hoping the bankruptcy can spur political change. Ideally, after a couple of years of being run by a bankruptcy judge, and residents feeling the sting of things being cut, new blood comes into city management and takes advantage of the stabilized financial position to put the city on a course for the future. I think even if the bankruptcy process can't bind the city government in the future, it does change the political climate. I think it will weaken the public unions, and I think the end of easy money through bond issuances will force greater fiscal discipline.
There's really no feedback loop against doing anything stupid with the current monetary system; quite the opposite - becoming insolvent is apparently subsidized by the federal reserve apparatchiks. The banks cant lose no matter what, so you can't expect very much rational economic activity to occur.
Now rewrite your post in the context of the federal government's promises. (Total unfunded liabilities).
When a company is forced to reorganize due to bankruptcy often a change of management is required. However, the "management" of Detroit is elected by the people, and they will likely choose to simply send the same folks or the same sorts of folks back into power after this happens.
How is this a reboot? To me it seems more like the typical infinite "just one more last chance" that enablers give to drug addicts.
As a practical matter, for the next year or two, Detroit will be run by Kevyn Orr and a U.S. bankruptcy judge. After the bankruptcy, the governor might keep an emergency manager around, otherwise, the mayor and council will retake the reigns. But they'll be bound by: 1) the political fallout of the bankruptcy (it will be painful for everyone involved); 2) agreements entered into as part of the bankruptcy; and 3) more skeptical creditors going forward. Significantly, I think the bankruptcy is going to greatly reduce the power and influence of the public unions, as the emergency manager and the bankruptcy court spend a year or two restructuring things while going over their heads.
I'm no Ch9 expert, but my understanding is that a receiver will be appointed. That person is not elected. So while the politicians retain executive power, the purse strings are taken away from them.
There will be much unhappiness and gnashing of teeth before it's all finished.
The city government is still corrupt and incompetent, and the remaining population is largely unemployable. Yes it's a good thing that the city is going from broke to just poor, but I don't know if it will every truly recover.
Can you really call municipal bankruptcy a nationwide phenomenon? You have: Jefferson County, Alabama that got mixed up in some interest rate swaps they had no business getting involved with; a couple of cities in California that got punished especially badly when home prices collapsed; and now Detroit which has been suffering from an ever shrinking tax base. I don't think you can really look at it and say there's a trend.
Detroit, San Bernardino, Mammoth Lakes, Stockton, Harrisburg, Central Falls (RI). Cities all over the country are on the verge of bankruptcy. States can't go bankrupt, but Illinois has stopped paying many of its bills--as state support for municipalities dries up, that could case many municipalities to go into bankruptcy.
What I don't see in the comments yet: This is interesting not only for Detroit, but for the precedent it sets. There are 10 or 15 municipalities that will study how to screw the retirees & bondholders as thoroughly as Detroit plans to and then go down that path.
I have a hard time feeling sorry for bondholders in these situations. There is always some risk in lending money. Perhaps they should try and find more creditworthy institutions next time.
A lot of money in the US is being lent with the assumption that creditors will always be bailed out by the state or federal government; that mindset exasperates excessive borrowing and spending at the local level and encourages creditors to make risky loans. This is the textbook definition of a moral hazard.
Even as a credit analyst, I agree that you can't really feel sorry for the bondholders here. If you want to lend in any market, you need to assume the risk that the debtor goes bankrupt. Pensioners are a different story though.
However it's absolutely not true that "a lot of money in the US is being lent with the assumption that creditors will always be bailed out by the state or federal government", at least not a large amount relative to the total bond market size. Rates are low now, yes, but that's because the Treasury rates are so low, not because of some implicit government backing of credit that is making assets less risky. In fact, spreads (bond yield - treasury yield) are near historical norms.
> Even as a credit analyst, I agree that you can't really feel sorry for the bondholders here. If you want to lend in any market, you need to assume the risk that the debtor goes bankrupt. Pensioners are a different story though.
Very much agree.
> However it's absolutely not true that "a lot of money in the US is being lent with the assumption that creditors will always be bailed out by the state or federal government", at least not a large amount relative to the total bond market size.
This is more subtle. While bankruptcies even on the scale of Detroit don't work with an implicit backstop assumption, large-scale muni bankruptcies on the scale predicted by Meredith Whitney are a different story. Let's face it: When push came to shove, Fannie and Freddie were not allowed to enter runoff mode.
There doesn't seem to be an opinion that this will kick over the can and start the bankruptcy run, but throw in a couple of more and the political&banking dynamics would turn interesting in a hurry.
I'm very liberal, but I don't see this as screwing the retirees. I think they got a better than they should have deal. The unions over-reached and they got rates of return that were unsustainable. We haven't even talked about the gaming of the system that happens (punching up salary for the last year, so their retirement benefit goes up).
The police chief in a town near mine retired on something like $300-400K and it was discovered that he had taken a job at another city, several hundred miles away.
There is so much corruption and abuse of the municipal retirement plans that I think a reboot is in order.
In California the police can pre-retire and collect their retirement while they are still working at their same job. So you have the San Luis Obispo sheriff making upwards of $600,000.
If you're ever living in San Francisco making $130K as a programmer yet still wondering if you've made the right career choice, browse the public salary databases in the area to confirm the fact that you indeed did not.
If you make $130k in California as a programmer, plus maybe $10k in employer health insurance contribution and another $10k in 401k matching ($150k total comp), you're in the same overall pay bracket as a "sewers supervisor" in San Rafael or a BART train operator: http://www.mercurynews.com/salaries/bay-area?appSession=8741....
I particularly like the idea of promising firefighters a too-good pension, make them run into burning buildings to save people, and then reneging on the promise now that they won't be running into buildings any more. Serves them right for trusting a promise, the fools.
I wonder what effect that will have on future muni workers?
In general, firefighters are very well paid, so there is that consolation price. Yes, it does suck, but the result is the rest of us pick up the tab. I was just in the news today that unfunded state pensions are at the $1T mark.
Also, there's the issue of how we got here. When the police and firefighters say "we need this, or else" it's a little hard to turn them down. I don't think they are completely without blame.
Could you post the numbers that lead you to believe that most or all of the specific people here have unjust or unreasonable pensions? Because I'm pretty sure those numbers don't exist.
Note that much of Detroit's debt is insured by monoline insurers who viewed the probability of a majour U.S. city entering Chapter 9 in the way S&P and Moody's viewed a nationally correlated housing meltdown pre-2008. I have not yet seen how this bankruptcy will (a) affect the monolines' solvency, or, (b) change their behaviour around municipal credit wraps.
Interesting. Though the article, from 12 July 2013, quotes a 20% recovery rate on Detroit's GO bonds (it's somewhat humorous to see Detroit's "full faith and credit"-backed bonds referred to as unsecured by Bloomberg). I'm seeing the market buzzing around 75 to 80.
Assuming a 75% recovery rate and 95% coverage, that means the monolines would be liable for about $475 million. I'm not sure (a) what fraction of the capital of U.S. monoline which insure municipal debt that is, or, (b) how that is distributed across variably capitalised muncipal monoline insurers.
Apparently, one of the major reasons for bankruptcy has been population loss. Detroit has lost 250,000 people in the last decade. What has particularly happened in Detroit that has led to migration of population?
The riots are part of the story, but absolutely not the start. Population was significant declining before the riots. A number of choices, including a long history of racial segregation in housing before the 60s combined with US housing policy (the GI Bill) to create strong incentives for people to build new houses outside of the city. That, combined with a lack of dense housing in the city, created cascading problems that are difficult to recover from.
A good source on this topic is Thomas Sugrue's "The Origins of the Urban Crisis".
Detroit's de-population is a tremendously sad story. The city peaked in the heyday of the U.S. auto industry at 1.8 million people, and is now around 700,000. The decline of the U.S. auto industry meant jobs left the city, and along with those jobs most of the middle class people. This was compounded by white flight in the 1960's and 1970's (and as a result the city proper is 80% black even though the overall Detroit metro area is 70% white). Fully a third of households in the city are below the poverty line.
It's not just the auto industry; Detroit was a US industrial hub, and had a diverse manufacturing employment base that included defense spending, textiles, energy, food... the whole Rust Belt got shellacked by deindustrialization. I might go out on a limb and say that if anything, the auto industry kept Detroit alive. Look what happened to Gary for a more grim example.
It probably stopped the city from collapsing entirely into the dust, which would have been sad.
Detroit was a symbol of what was great about America in the 1950's and 1960's. In 1960, it had the highest per-capita income in the U.S. It was built on American technology and American manufacturing prowess and an industry that brought wealth and good jobs to ordinary Americans, not just the top 1% (either financially or intellectually).
It was built on the auto cartel, which robbed consumers all across the country to keep the Grosse Point estates of the automobile executives well appointed and manicured.
It'd be interesting to see some research on that. Most of the plants I'm aware of aren't actually in Detroit proper, but the metro area.
A quick glance over the list of GM factories[1] shows just one assembly plant in the city. Chrysler has a bit more going on[2] in Detroit. Of course, this doesn't take into account all of the suppliers, which is a huge omission. In my experience growing up in the area, it wasn't so uncommon for someone to be working for a company whose sole customer was one of the Big Three.
It's not just the big three auto plants. There is all of the ancillary plants that make the parts and sub-assemblies. Raw materials, Logistics, Accounting, Foodservice, and everything else that goes along with productive activity.
One thing to note is that many people moved outside of the city limits into the suburbs, which including Detroit has a population of something like 4 million people (ie. Wayne, Oakland, Macomb counties). The population of the city of Detroit proper is much less than that, like 750,000.
Michigan has a very strong "home rule" law which concerns the annexing of these suburbs which prevents Detroit from amalgamating these suburbs, which has led to decline in tax revenue for the city proper. As people move out to the suburbs, the city can't sustain itself due to declining tax revenue.
Many other cities have amalgamated recently. Toronto, for example.
Detroit has been in continual (statistical) decline since the riots.
In the decades following the riots, the middle class black population followed the white population into the suburbs.
At the same time, the industrial economy of the rust belt collapsed.
Then the auto industry collapsed.
Any one of these things could set in motion a vicious circle (people leave, local services become underfunded, crime increases, property values decline, more people leave) but Detroit got hit continuously for ~4 decades.
The 67 riots were a big part of what provoked 'white flight' from detroit to the burbs. Of course, detroit was already losing population before that and the trend didn't speed up overall until much later, when the car companies started struggling. As always, it's more about economics than it is about race.
> It's a somewhat racist simplification of things.
Housing and education are the two remaining bastions of socially acceptable racism and classism in American society. Middle class white families don't want to move into a city that's 80% black and 30% below the poverty line. There is a lot of talk about the revitalization of downtown Detroit. Take a look at this demographic map (blue = blacks, red = whites) and see if you can guess what neighborhoods those yuppies are moving into: http://media.mlive.com/news/detroit_impact/photo/detroit-rac....
Middle class black families don't want to (really: won't) move into a city with high crime and low employment prospects. We attribute a racial dynamic to Detroit because of the label "white flight", but it's the label that's racist; the dynamic transcends race.
You see the same thing in Oak Park, on the outskirts of the West Side of Chicago, where I live. If you can get out of Humboldt Park and North Lawndale, you do: the schools are better and the neighborhood is safer. And the move from Lawndale to Oak Park doesn't even change your employability, unlike a move out of Detroit.
Exactly that; Chicago has a diverse economy that isn't as dependent on manufacturing; Chicago is also a finance center and a transportation hub, neither of which hurt.
It's not really just the label that's racist - I wish I could hand you the citation, but I'm having trouble finding it online. IIRC, there was a study dating from the 60s that showed that when a neighborhood reached somewhere around 10-15% black, white people started moving out. This was taken advantage of by real estate investors, who would move a few middle-class black families onto a block (possibly taking a loss, because completely white neighborhoods aren't attractive to most black families), starting a process of buying at a discount the houses of the white families who were desperate to leave, and then reselling to middle-class black families who often had higher incomes than the white families they were replacing. In this way, the replacement of white families by black families would snowball.
Of course, the appeal of those neighborhoods to middle-class black people would also drop, because as the whites left, the neighborhood lost its luster as a symbol of achieving the middle-class for black people. Prices start to drop to the level where less than middle class people can move in (to what would still be an aspirational neighborhood to black people who weren't in the middle class.)
Then the city starts to withdraw services (the 1950s, 1960s, 1970s city), and, as in Chicago for example, builds highways and other developments as firebreaks to stop the expansion of these new black neighborhoods. Eventually many sections start to go into serious decline, and middle-class black people either leave, or manage to form exclusive enclaves within them.
tl;dr Humboldt Park and North Lawndale didn't originally have high crime and bad schools, that was a process that was begun by white flight.
I always like to cite the example of the neighborhood I grew up in in Chicago: Avalon Park, where "the average educational level increased, while the poverty rate decreased from 6.1% to 5.1% between 1960 and 1970."[1] The fact that black people were an improvement to the neighborhood didn't slow white flight down a whit - we moved there in 1978, when I was 2, and when I entered school at 5 there was a single white person that attended Avalon Park Elementary School. His name was Patrick, and his stepfather was black. I only ever saw one white person in that neighborhood who wasn't a teacher at that school. It was a windy day, and she was walking in front of Sears on 79th, trying to keep her scarf from blowing away. It was 1989.
If you care, I'll find the reference at some point - but I couldn't find it online, and most of my books are packed away in a fashion where it would take me at least an hour to find anything specific. If this year is like last year, I'll find cause to wade into the stacks two or three times and I'll keep an eye out for it.
That's also true, but on the flip side I think what we're seeing in Chicago is that the middle class black folks are more reluctant to leave for the suburbs and try to stick it out longer in those neighborhoods than the middle class white folks.
Here are some more maps for other cities. Detroit is kind of expected but I am surprised that many of those cities are as segregated as they are. There is a legend in there too.
That's Hamtramck, a city that was mostly settled by Eastern Europeans but also now has many immigrants from the Middle East and South Asia. It is technically a separate city from Detroit.
The only thing racist about attributing Detroit's decline to "white flight" is the name "white flight", since black families were also very much a part of white flight.
Lots of cities had race riots in the 60s. Lots of cities were rough during the crack epidemic, too. Most are doing great these days.
Looking past the collapse of the auto industry (which coincided with the greatest population decline in 2000-2010), to riots 50 (!) years ago as the sole reason for decline strikes me as having the answer in mind before hearing the question. YMMV.
As throngs left Detroit in the 60s through 80s, they started families, but not in Detroit. As people died off in Detroit, there was no younger population to keep the numbers up.
It's not all that, but some people moving out in the 2000s (me, for one) made the % drop larger. Had there still been 2 million in Detroit like years past, a 10% drop would have hurt but not that much (and just given the economies around a population that large, it probably wouldn't have even dropped that much).
Does anyone have any insight into how this affects residents of the suburbs like Livonia, Farmington Hills, Dearborn, Ann Arbor, Royal Oak, etc.? I've been visiting "Detroit" since I was a kid, but in reality was always staying with people outside Detroit proper.
Pretty sure they're all separately incorporated, so it wouldn't affect them directly. It will affect retires who moved out of Detroit into these cities and now rely on Detroit pensions.
Related to the other thread about San Francisco housing prices, in Detroit they should have hit rock bottom. Which would be good for cash-strapped startups trying to increase their runway.
I know nothing about crime rates, transportation and other amenities which could make life difficult. Is it that bad?
The cheap parts of Detroit are that bad. After a screening of BURN, an film following firefighters in Detroit, a firefighter commented 'A gallon of gas is much cheaper than a movie ticket.' There are blocks of houses where 0, 1, or 2 houses are occupied.
Downtown Detroit is safer and has better services, but it costs more than the rock bottom prices.
The deindustrialization and depopulation really hurt Detroit. But what also strikes me is the rapid change in racial demographics. In 1940, Detroit had a 90% white population and was the highest standard of living city in America. During the course of WWII, 350,000 blacks moved into Detroit. In 1943, the Detroit Race Riot caused by tensions between whites and blacks resulted in 43 dead, 433 wounded. In 1967 it happened again, this time 43 dead, 1189 injured, over 7,200 arrests, and more than 2,000 buildings destroyed. President Lyndon B. Johnson sent in the Army to quell it. In 2010, the demographics are 10% white and 82% black, and Detroit is a bankrupt wasteland.
Deindustrialization happened in other cities such as Pittsburgh - but they've recovered by transitioning into technology/medicine industries and the like. Pittsburgh has not seen a demographic shift like Detroit.
There's a 43 year gap between those stats. You've got the beginnings of a hypothesis, but I think you need a lot more data if you want to support it at all.
Or it could be that an 82% black population indicates $SOMETHING, rather than "black people killed Detroit". When Gary, IN started to fall apart with the steel mills closing, my theory was that the only people left were the ones too poor to get out. Could be the same with Detroit. Or not, I don't know. But the demographics remain, and a drive down Woodward Avenue will confirm the numbers.
What does it mean though? Your hypothesis should be something more than there sure are a lot of black people there and then let people's imaginations fill in what that means based on biases and broad generalizations. An observation is not a hypothesis.
You should expect to see this more often than not. Cities in Florida are going through the same things, but just haven't defaulted yet. Expect it. Its going to be the norm.
most of this is due to the archaic pension system.
