Following is the opinion published yesterday by U.S. Bankruptcy Judge Steven Rhodes in Detroit.
Nothing distinguishes pension debt in a municipal bankruptcy case from any other debt…
City workers and their unions have carried on over the last several years as if the pension debt was sacrosanct. That delusion is over. This ruling might be overturned, but if it is upheld then it will enforce a degree of fiscal prudence that is unimaginable to the liberals.
The municipal governments cannot print money to overcome this hurdle and their ability to sell municipal bonds is limited by their credit ratings, which in turn limits pensions funds from buying bonds with such poor ratings. For the financial conservatives, instead of rejoicing, they should reflect on the fact that this is the equivalent of dancing on the grave because it will bring a lot of financial pain. For the liberals it will be yet another chance to employ their sophistry.