I was talking about creditors in general in bankruptcy....the notion that all creditors are doing something stupid for rate of return sounds very liberal and anti free enterprise.
The bond lenders were stupid. The public employee unions were stupid. The voters were stupid. Name a big player in Detroit's bankruptcy that wasn't?
Probably the only "free enterprise" players who made out were the bond consultants, and that game is more fascism than free enterprise. California's experience with Arnold and his ties to Wall Street bond underwriters (as opposed to in-State underwriters) shows this amply. Using out-of-State underwriters COST the State a cool $250 million in lost tax revenue, never mind the economic impact. Oh, but Arnold OWED them for backing his gubernatorial run. I have little doubt that the same forces were involved in getting their share of the sacking of Detroit.