[quote=CA renter][quote=The-Shoveler]It’s very simple really,
When the City files BK, it does so in Federal court.
If the Federal court over rules the State Law saying that “public employee pensions cannot be diminished or impaired”
Well I guess that’s where the real battle begins.
Interesting times.[/quote]
Employee compensation (including pensions), are priority claims. The only question is how they will determine the limits of the priority claims for a municipal BK, as opposed to limits for a business BK. Bondholders do not have priority claims.[/quote]
Thing is who will want to buy Muni-bonds in the future ?
There is going to have to be much high interest to get people to buy Muni’s in the future especially if they take the whole hit me thinks.
I think this is where Stockton’s case is still interesting.
Buffett recently got out of the Muni-bond insurance biz by the way.
