Where would a Detroit bailout end?

Hotair ^ | 07/23/2013 | Ed Morrissey

[ScottinVA]

This does not answer whether Detroit has a reason to exist

I'm not sure the case has been made that its continued existence is necessary.

[MasterGunner01]

Exactly correct. To survive as an entity, Detroit needs a reason to exist. I don't think it does any more because its real benefactor, the auto industry, has died there and relocated. The magnet that drew the masses there is gone.

The Democrat policies instituted by Mayor Coleman Young and successors have driven out business and the tax base, leaving only welfare parasites, corrupt unions, and even more corrupt politicians. There is no hope for Detroit. It will die of its own poisonous culture.

[RobertClark]

One thing I find to be particularly puzzling in this debate: Residents and liberals like to point the finger at bondholders and say that they should take a total writedown of the bonds, as they are the eeeevvvviiilllllll vampires. Well, a lot of private pension funds invest in municipal bonds, and a lot of other retirement instruments do as well (401k's etc). The cost of the writedowns as well as the cost of a taxpayer bailout would fall upon the working middle class, primarily. They would be creating a double edged sword and each edge would inflict its own painful wounds.

[CA Conservative]

So in other words, its the same SS boat that the rest of us are in? Contribute all your life, and maybe you’ll get it, maybe you won’t, or just maybe you’ll get means tested out of it.

Yes, but I get the "privilege" of paying into TWO retirement systems that will most likely not be there when I retire - Social Security and PERS - thus leaving me with little disposable income available to actually provide for my own retirement.

[grundle]

Yeah - he'll stop he motor of the world.

And he'll do it in "Motor City."

[USFRIENDINVICTORIA]

IMHO,one thing is certain -- bond holders should not be bailed out.

High-risk municipal bonds provide a higher yield than bonds for municipalities with good credit ratings. Bond buyers weigh the higher risk against the higher returns. Often, these higher risks never actually manifest themselves, and the risk-taking bond buyers are big winners. Sometimes the contingent liabilities become real, and they lose. So far, holders of a diverse portfolio of high-yield bonds are still ahead of those holding "safe" portfolios. Even if you were (ahem) "incautious" enough to put all your bond eggs in the DebtRot basket; you might still be ahead of the risk-averse investor -- depending on how long you've held those bonds.

[American in Israel]

What about the promise “No taxation without representation”. It has been broken.

[American in Israel]

Without jail terms for the corrupt politicians that run Detroit, a bail out would be like trying to put out a fire in a trash can with hundred dollar bills.