More wealth, please

18 June 2013 By Agnes T. Crane

Motown took a step closer to bankruptcy last week when the state-appointed fix-it man called on bondholders and public workers to accept steep cuts. Trouble is Detroit needs more than debt relief. It needs to build up its tax base if it’s to become functional as well as solvent.

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On June 14, Detroit’s emergency manager Kevyn Orr unveiled his plan to fix the city’s poor financial position. Among the proposals, Orr asked bondholders and current public workers to accept deep cuts on their respective investments and retirement plans. He also called for a moratorium on debt payments.
Orr put the probability of a bankruptcy filing at 50/50.
Michigan governor Rick Snyder appointed Orr, a bankruptcy expert, in March. The emergency manager has the authority to change labor contracts, sell assets and recommend bankruptcy.

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