The bankruptcy of the once great city of Detroit comes just a few years after that of General Motors, Motown’s legendary car manufacturer. Both collapses crystallise decades of accumulated failures, including a failure to look reality in the eye sooner.
They also symbolise the US’s big advantage over Europe: its greater willingness to let go of hopeless causes so that more successful activities have room to grow. The ability to let doomed ventures die is a sign of strength, not weakness. If Europe – especially the eurozone – wants out of the crisis, it should adopt American-style tough love.
It is natural to be rattled when giants buckle. The liabilities restructured by GM amounted to $172bn. Its host city faces debts of possibly $20bn, according to Detroit’s emergency manager Kevyn Orr. Much of this represents losses borne by people who were sure their claims would be honoured. That is no doubt unfair; and one cannot fault burned creditors for doing what they can to get others to make them whole, as Detroit unions now want the federal government to do.