Econintersect: Move over Stockton, California. You are about to be displaced from the record books. The City of Detroit (pictured below) is filing for bankruptcy protection after collapsing under the burden of nearly $20 billion in debt. In 2012 Stockton, population about 296,000 filed for bankruptcy protection. While the final resolution of losses is not complete, as of June 28 a total of $2.5 billion in debt has been shed by the California city, according to the Stockton Record. The debt discharges from Detroit’s $20 billion will certainly leave Stockton in the distant dust.
The largest municipal bankruptcy in U.S. history is actually a county. Jefferson County, Alabama defaulted on $4.23 billion in 2011 after falling victim to questionable financial engineering help from JP Morgan. Based on what Econintersect has been able to learn, Detroit has achieved its crisis without the help of investment banking magic. While the amount of eventual default is not estimated at present, there is a good chance that the Jefferson County total could be substantially exceeded, in Econintersect‘s opinion.
Here is a video of helicopter views of Detroit from NBC News:
Visit NBCNews.com for breaking news, world news, and news about the economy
Sources:
- Detroit becomes largest US city to file for bankruptcy (NBC News, 18 July 2013)
- Stockton California: Belly Up (GEI News, 28 June 2013)
- Bankruptcy: One year later in Stockton (Scott Smith, Stockton Record, 28 June 2013)
- How J.P. Morgan Aided and Abetted the Largest Municipal Bankruptcy in U.S. History (Shah Gilani, GEI Analysis, 13 November 2011)
