by Sasha Cekerevac, Investment Contrarians:
Well, it’s official—as of last Thursday, the city of Detroit is bankrupt.
Detroit is a sad example of a city that was continually running a large budget deficit. But it grew into such a huge amount of government debt that the only way out was to file for bankruptcy and give investors pennies on the dollar.
While some might not feel sorry for large investors, don’t forget that many pension funds will lose a significant amount of money as the city restructures its government debt. Early reports of the proposed restructuring indicate that retired municipal city workers will get less than 10% of what they are owed.
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