Why Detroit went bankrupt, and why it's unlikely to spread.

I don't expect you to read the entire Detroit Free Press investigative piece, so here's the skinny of it:

If your city's population declines, your city's government spending must also decline, otherwise you're left with growing debt and growing obligations.

Government spending and taxes don't have to be symmetrical to demographic movements, but long-term trends in population change must be addressed sooner rather than later.  After a decade you should be able to tell that something's gone wrong, after all.

While conservatives have come to blame Detroit's public employee pensioners, understand that if Detroit's government had shrunk to match population changes, it wouldn't have built up an excess of pensioners in the first place.  And, while it's popular to blame high taxes on high unemployment, the fact of the matter is, many cities with higher tax burdens have much lower unemployment rates -- Hawaii should serve as an example why tax rates aren't correlated to employment rates -- as shown in this separate report.

As population declines...

You have to reduce government employment...

Otherwise you face increasing tax rates...

And it all ends with exploding debt.

Now, why wouldn't this spread to other cities?  Well, it could, but you have to meet certain conditions.

First, you need either an outmigration of residents or rising unemployment.  Second, short of getting a boost in federal money, the local government must be unresponsive to matching spending levels to revenue.  Third, the government must end up shifting money around by floating bonds which end up maintaining total spending levels.  If you add in corruption that results in higher than necessary spending, then the collapse is even more spectacular.  When those bonds come due, they city can't pay for them because tax revenue never increased despite rising tax rates.  Result: Default.