Category: Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

2 Responses to “Detroit’s Bankruptcy: The Uncharted Waters of Chapter 9”

  1. Bridget says:

    My muni investing rules of thumb:

    State level GO bonds from states that I perceive to be fiscally responsible and do not tax their residents at onerous levels,

    Essential purpose revenue bonds on established infrastructure, but avoid municipalities like the Bay Area, Chicago, Detroit that I perceive cannot be trusted,

    Texas school district bonds backed by the state’s Permanent School Fund.

    Kevin Orr seems to be a very smart and well qualified guy, and since he is now running things instead of the untrustworthy thieves and villains who drove the city into bankruptcy, it looks like the secured revenue bonds will be honored.  That is something for the investor to consider….if a municipality declares bankruptcy, who will be the decision maker?

    I believe that it would be appropriate for the bondholders to disclose how much they paid for their holdings and also the level of credit protection they have purchased.  When you are looking at reducing retiree benefits, it would be immoral to pay bondholders more than what they actually have at risk, and Orr ought to stick anybody who sold credit protection on Detroit bonds with the risks they voluntarily undertook.

    As far as retiree benefits are concerned it’s known that public unions through the years have elected compliant politicians who then in turn approved what amounts to predatory benefits calculations.  I think it would  be eminently appropriate for Orr to predefine a reasonable formula for pension benefits and reduce any that compensate individuals above that level.  And Medicare and Obamacare are good enough for the rest of us, so why not Detroit retirees?

  2. duaneteddy says:

    As a muni bond consultant, I disagree with the author’s conclusion that the Detroit bankruptcy did not affect the muni market.
    Just ask Puerto Rico what it did to their bonds.