Questions About Detroit's Bankruptcy:

[HardTimes99]

Who will be the primary victim of Detroit's bankruptcy? Who will be the primary beneficiary?

I'm having trouble figuring out who is actually going to get hurt by a failure of Detroit to pay its debts. Are Detroit's municipal pensioners at risk of losing some or all of their pension?

Is there a possibility of mass layoffs of municipal employees to cut payroll costs?

I'm very disappointed that the legislative and executive branches of the federal government allowed this to come to pass, given that we were able to pay for bailing out privately-owned banks in 2008-09.

Is the 1% going to be hurt by this bankruptcy at all? Or will only the poor and working class suffer?

[NoOneMan]

1. "who is actually going to get hurt by a failure of Detroit to pay its debts"

Anyone who is a creditor, which is anyone they owe money to. Maybe some ma and pop road construction company (yes, those exist), or pensioners. The very fact they have debt means there are people & companies who won't get paid what they were promised. Bankruptcy sucks to people on the other end.

[HardTimes99]

2. Are pensioners 'creditors' the way investors who buy bonds are?

[NoOneMan]

3. Anyone with a valid debt should be able to claim to be a creditor

Those individuals will probably be represented together by their unions, but they may not get the same priority of other creditors. I don't know the details of how thats works in this case. But yes, they most certainly are

[kwassa]

4. No, they are unsecured creditors.

They may well lose their pensions, without a great public outcry to stop this development.

The investors get paid first.

[HardTimes99]

5. That really pisses me off - nt

[NoOneMan]

6. By investors, do you mean bond holders?

What other type of investors would Detroit have?

[kwassa]

7. Exactly. Water and sewer bondholders.

Orr chronicled the city’s economic collapse in a detailed plan presented to creditors June 14 — a proposal that drew criticism from some who said the cuts were too deep and did not include the sale of city assets, including Belle Isle and a Detroit Institute of Arts collection. He proposed paying most of the money owed to secured creditors while pension funds, unions and unsecured bondholders would receive, in some cases, as little as 10 cents on the dollar.

From The Detroit News: http://www.detroitnews.com/article/20130718/METRO01/307180103#ixzz2Ze7avevw

[NoOneMan]

8. Capital vs Labor

And Detroit would be the place to further drive the stake through the heart of that argument.

Funny thing is, the labor did what it was supposed to. The capital didn't magically manifest into sustainable growth.