The law does not always deliver what people might consider the “fairest” outcome. But setting aside the law and the various compromises made by elected officials when they crafted it in order to deliver a “fair” outcome would be a costly mistake—costly for every single city, county or state government that borrows money. Unfortunately, this is precisely what may occur in Detroit when the courts finish adjudicating the morass that is the Motor City’s historic bankruptcy.
Detroit filed for bankruptcy protection just over a year ago, saddled with $19 billion of debt—most of which is in the form of unfunded pension obligations. Its financial demise was decades in the making, the result of middle class flight combined with a gradually worsening economic climate in the region, all of which was exacerbated by a series of poor decisions made by various governments over the years.
