The announcement in June that Yubari, Hokkaido, has effectively gone bankrupt rolled like an earthquake across Japan, jolting numerous local governments suffering their own financial problems. This two-part series examines the situation in Yubari and in Atami, Shizuoka Prefecture, which also is in dire straits.

YUBARI, Hokkaido -- Hiroshi Sato has lived his entire 77 years in this snow-driven central Hokkaido city best known for the Yubari melon brand.

But since Yubari declared in June that it is effectively bankrupt, Sato thinks he may have to bid his hometown farewell and move to Sapporo, where his children live.