This morning, Detroit told its creditors that it will stop paying interest on its unsecured bonds.
Emergency Manager Kevyn Orr has proposed a restructuring plan that would pay bondholders just 10 cents on the dollar, and impose similar cuts on city workers expecting pension and health benefits in retirement.
This is drastic. But Orr has a 128-slide presentation explaining why it's necessary.
The city is running out of money, will soon be spending a majority of its revenue on servicing liabilities, can't provide adequate police and fire services, and is full of abandoned buildings that keep burning down.
We've pulled some of the most interesting data and charts from his presentation to explain how Detroit gotten into this mess, and why the only way out is default.
Everybody's leaving Detroit. Over the last six decades, its jobs base has eroded and its population has declined 63%.
There's a vicious cycle: People leave because conditions are terrible, which erodes the tax base, which worsens municipal services, which makes conditions worse, which drives more residents out. For example, violent crime is crazy high...
... And Detroit police, mismanaged and understaffed, solve less than 10 percent of crimes.
See the rest of the story at Business Insider