Detroit declared bankruptcy.

**Just the facts** · 07-21-2013, 11:11 PM

If you can't discharge the debt the only alternative is to pay it. Where is Detroit going to get $20 billion, the Federal government? If that happens you will see a huge wave of state and local bailouts. There is no chance Detroit can increase tax by $20 billion so that option is out. There is something like $1.7 trillion in state unfunded liabilities and the US government has $120 trllion. Where is this money going to come from?

Are we prepared to take this scenario to its logical conclusion - currency collapse, or are some people just not going to get the money they were promised?

**venture** · 07-22-2013, 12:29 AM

Originally Posted by Just the facts

If you can't discharge the debt the only alternative is to pay it. Where is Detroit going to get $20 billion, the Federal government? If that happens you will see a huge wave of state and local bailouts. There is no chance Detroit can increase tax by $20 billion so that option is out. There is something like $1.7 trillion in state unfunded liabilities and the US government has $120 trllion. Where is this money going to come from?

Are we prepared to take this scenario to its logical conclusion - currency collapse, or are some people just not going to get the money they were promised?

I think we'll still see bankruptcies allowed to clear out debts by cities, but at some point we need to realize there is no paying off debt. It is what everything is built on now. Some people just aren't going to get their money...since it never existed in the first place.

**OKCTalker** · 07-22-2013, 08:21 AM

Many groups were over-promised by politicians and they believed it, just ask retirees with incredible benefits packages and bondholders with high-yield municipal bonds.

But another, more important group has suffered through this, and it is the 700,000 remaining citizens of Detroit who will finally have their promises delivered. They deserve 100% of their street lights, 100% of a necessary police force, 100% of their fire engines & ambulances ready to respond to emergencies, and a response time that ISN'T 5x the national average. They don't deserve Michigan's highest property tax and income tax rates, and they don't deserve the highest violent crime rate in the nation.

It'll be a long road to rebuild this city, but Snyder and Orr said they'll do it without federal or state bailouts, keeping local residents as their number one priority.

Who lied to retirees & bondholders? Former Michigan governor Jennifer Granholm (now teaching at UC Berkeley), former mayor Kwawme Kilpatrick (in jail), current mayor Dave Bing (on his way out), and the Detroit city council which wouldn't cut costs and kept borrowing $100 million per year to cover operating losses.

This is a lesson for every municipality and state with looming unfunded pensions, including Oklahoma.

**Just the facts** · 07-22-2013, 10:44 AM

I honestly don't know what the people who are owed money are expecting to happen. There is no money. When you accept a deal that has the other party paying you later you need to make sure they are actually capable of paying you later.