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Originally Posted by CaptainCrunch
The two major questions are, is there a chance of a federal government bailout. Especially considering their mayor is a democrat. Can the United States afford to see a major city go down like this.
How big is the court case going to be here. The fastest way to cut spending in a city with very few remaining services is to cut wages, cut jobs and to cut the existing pensions. There's no way the people with pensions don't file a lawsuit over this.
The only other way to generate revenue is to massively increase taxation. But with over half of its population gone and 78,000 buildings abandoned do you double? triple? tax rates. Start charging pay as you go services, where cops ask for your credit card when they get to your house?
I haven't followed the story closely, but Detroit shrinking down to 700,000 people is shockingly grim. After the announcement yesterday how many more people leave?
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Apparently there's been talk of a federal bailout but it hasn't gained much traction and seems unlikely. The major pensions have already filed suit but the talk I heard this morning was that the general consensus was that their cases wouldn't be very successful. There's definitely going to be a lot of litigation surrounding this, and it will have some major impacts on the way municipalities do business going forward. If the decisions shake confidence in the basic concept of cities funding through the issuance of general obligation bonds it will completely change the way that every city in the country operates going forward.