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If you are talking about the federal gvt stepping in to save them I say no, it looks like the city is going through bankruptcy and investors and pensions are going to get a hair cut.
A city, or even a country, doesn't die because of bankruptcy, inability to pay their bills. Like a human being who declares banktruptcy, it's not the end of the world. Time for a new beginning! Same with San Bernardino, Stockton, Vallejo in California. Are those cities closed down?
Even bigger: Argentina defaulted on their sovereign debt some time ago, and? They're still buying new issues of their Government debt!
Many, who see Detroit possibly starting over with a clean slate, will jump in, give them a hand, and hope for the best a second time!
When I went overboard with debt in the 70's, after 7 years, I was given second chances as well. My credit rating is now around 700!
I think Detroit is a bit different from Argentina: When you invest in foreign debt, you know that generally no one is going to bail out the liabilities if the country goes bankrupt. The real question here, for me, is what happens to Detroit's debt? Someone is going to lose: Either the pensioners, the bondholders, or the future inhabitants. It seems unlikely that anyone will actually underwrite new debt that shifts the current debt further forward. Defaulting on the bonds - including the kind of bonds that everyone, until now, always thought would be safe no matter what - could wreak havoc in the municipal bond market. And there are (state) constitutional blocks in place to make the city's retired workers bear the brunt.
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