Detroit's bankruptcy: Can Motown be mended? LARRY EDWARDS sits patiently in his wheelchair outside City Hall, waiting for a lift home. He worked as a gardener at Detroit's Belle Isle Park between 1988 and 2011. That was before a knee injury, and then a stroke, forced him to retire. He remembers how beautiful the island was before people started to move out of town and the crooked politicians arrived. Mr Edwards will be 50 in December. The city already pays one-third of his full pension. He says that, since his pension is protected by a contract, he isn't worried about the city's bankruptcy. But he should be. By filing for Chapter 9 on July 18th, Detroit sought protection from all its creditors, including pensioners like Mr Edwards. Nothing will change for the next six months. But Kevyn Orr, the emergency manager appointed by the governor of Michigan, says future and present retirees will see cuts to the unfunded portions of their pensions. Health-care benefits are also likely to be squeezed. Detroit is the largest American city ever to file for bankruptcy. Its long-term debts are estimated at $18.2 billion, or $27,000 for each resident. Of this, about $9.2 billion is in unfunded retirement benefits. Since 2008 the city has spent around $100m more each year than it has brought in. Recent attempts to fix its finances have been thwarted by a feeble economy, a shrinking population and rapidly increasing legacy costs. Property-tax revenues have declined by 20% since 2008, and income tax by 30% since 2002. The crisis has been brewing for decades. Fifty years ago the city was rich. GM, Ford and Chrysler cranked out nearly all the cars sold in America. Detroit was home to 1.8m people. Today only 700,000 remain. Many are poor and poorly educated - 82% have no more than a high-school diploma. The city sprawls over an unmanageable 140 square miles (enough to swallow Boston, San Francisco and Manhattan). Delivering services to barely-populated neighbourhoods would be hard even if the city government were well-run, which it is not. Global economic shifts did not help - Detroit's Big Three have struggled to compete with foreign carmakers. But the big problem is that Motown has seen a "perfect storm of mistakes at every level," says Jennifer Bradley of the Brookings Institution, a think-tank. Its leaders ran up debts that a shrinking population could never pay. Those debts forced the city to raise taxes and cut services. That made Detroit a less appealing place to live, causing the population to shrink even more. Moving to the affluent (and politically separate) suburbs is easy, so many people have. Only 30% of the jobs within the city are held by residents, and 61% of Detroiters who work do so outside the city, according to Bruce Katz, also of Brookings. Some parts of Detroit are thriving (see article). But the city can be hostile to enterprise. The mayor is leading a campaign to shut down small businesses that do not comply with regulations - an odd priority for a city with no money. A bankruptcy as complex as Detroit's can take years to resolve. Mr Orr is aiming to do it by the autumn of 2014. He has published a comprehensive restructuring plan. His spokesman says that preparations have been made to move forward quickly. Ultimately, however, it will be up to the judge, Steven Rhodes. Mr Rhodes may also favour swift action. During the first hearing, only six days after the first filing, he slapped down an attempt by unions to move the case to a state court. Pension officials would prefer to fight the city under state rules, which offer stronger protection for pensions. They may also try to stop the bankruptcy by arguing in court that before filing, the city was not negotiating in good faith. Ain't too proud to beg Many speculate that Detroit will sell assets to pay down debts. The Detroit Institute of Arts has a fine collection of old masters. The airport and even Belle Isle could be on the block. The old would no doubt rather have a pension than a place to gaze at oil paintings. And bondholders, who face a severe haircut, will certainly have strong views. But others worry that selling Detroit's treasures will make the city less attractive to live in, thus driving even more people out. The judge will not tell the city what it must sell or keep, but any deal between the city and its creditors requires his approval. Detroit could consider options other than outright sales, such as leasing, so long as it makes reasonable efforts to maximise the amount it pays to all creditors. Many business leaders, as well as the governor of Michigan, Rick Snyder, are optimistic that the bankruptcy will mark the end of Detroit's decline. But Darron Benton, who works for a bus company, frets that it will make city services worse and reduce the value of his three-bedroom home. For the moment police, fire, water and sewerage will be unaffected by the filing. A recent deal with Bank of America, a secured creditor, has also released casino revenues of $11m a month, which will keep the city running. Current and former city workers face an anxious wait to find out what will happen to their benefits. Earlier this week a hulking police officer outside the pension department was close to tears when told that the authorities would not agree to move his $40,000 pension pot to his new employer outside the city. Detroit's future depends on the deal Mr Orr can cut. He argues that, if the city is to recover, it must invest $1.25 billion in restoring services such as the police and firefighters, remedying urban blight and modernising the city's decrepit IT systems. Neither the state nor the federal government has offered a bailout. Mr Orr says Detroit must solve its own problems.