It involves a LOAN needing COLLATERAL -and the type of collateral for a city is a sticky widget
--- something pledged as security for repayment of a loan,
to be forfeited in the event of a default.
No one ever expected a City to default on a bond -Thats the Catch 22 because WHAT is put up for forfeit ?
a.) land
b.) buildings,
c.) assets
It's never happened before on this scale in the USA, for a city with nearly 1 million residents.
Do people want the Water Treatment Plant in Detroit to be run by the State ?????????
-- many are mad as hornets that power was usurped away from voters
The financial industry makes no fuss about - Detroit/DWSD defaulted on their bonds -
Now the financial wizards constructed a method of generating NEW credit, on a bad bet to begin with
http://www.hblr.org/2013/03/credit-d...s-instruments/
Swaps aren't looked favorably upon................how much liquidity exists............?
The primary purpose of a bank is to make loans, not speculate.
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