Last week Warren Buffett brought a little bit of hope to the citizens of Detroit, declaring that he believes the city is going to be better off after recently declaring bankruptcy, reported Fortune Magazine. While the city of Detroit recently reached the end of the line in terms of financial stability, Buffet asserted that it can look forward to more new jobs as soon as five years down the road.
While the city is just wrapping up the second week of its bankruptcy trial, the process actually began over a year ago. Detroit has been in a long downward spiral for years, ever since the auto industry began its decline. The city has always had strong ties to the auto industry, and when automobile manufacturers hit a rough patch, people started to leave Detroit in search of new opportunities. The city’s population went from 1,849,568 in the 1960s to just 701,475 in 2012, according to Vox. Fewer working residents meant smaller tax revenues, plunging the city into its financial woes.
Currently standing in $18 billion dollars worth of debt, Detroit’s current financial troubles make it the greatest municipal bankruptcy the U.S. has ever seen.
Filing bankruptcy will help Detroit, according to Buffet, and as long as the process goes quickly, he believes the city will succeed in the end. Detroit is home to the headquarters of many major corporations, including GM, and serves as a good place to set up shop for new businesses. These two factors could greatly help the city during this difficult time.
“The Detroit bankruptcy shows individuals how powerful remediating bankruptcy can be. If a city as large as Detroit can get the help to get back on its feet it gives individuals more hope that it can help them as well,” says Legal Assistant,Weik Law Offices.
Buffet joined Lloyd Blankfein, CEO of Goldman Sachs, and Valerie Jarrett, Senior Advisor at the White House, in Michigan last week to see how the city is handling the restructuring process. He also met with Quicken Loans CEO Dan Gilbert, who has put billions of dollars into Detroit real estate over the years, although it will be a while before the city starts to reap the benefits of these housing purchases.
As Detroit’s bankruptcy process continues, it remains to be seen how the city will fare in the end, but residents and city officials can at least take some comfort knowing that the Oracle of Omaha sees a light at the end of its long, dark tunnel.