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Detroit: The trillion dollar question

The great reality check

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A pension is a contract
but a bankruptcy changes everything

The great reality check...

A deal is a deal...until the other party goes bankrupt. Then the deal goes out the window.

A pension is a contract - a deal. And it's only as strong as the payor's balance sheet.

Currently there are trillions of dollars in pension obligations nationwide and trillions of dollars in so called "municipal bonds"

What happens when villages, towns, counties, cities, sewer authorities, etc. etc etc. go broke in greater and greater numbers?

People won't get paid, or at the very least they won't get paid o 100 cents on the dollar.

Just as Detroit pioneered the auto industry, Detroit is going to be a pioneer again of the Great Deflation - but it won't be the only government entity to hit the wall.