Pension Theft: Class War Goes to the Next Stage - Dean Baker

[badtoworse]

24. Screw the lenders sounds great until you consider the long term impacts

Not screwing the workers won't mean jack to a bond investor if the bonds aren't senior in a bankruptcy situation. Such "bonds" would receive a substantially lower credit rating and some might be able to get a rating at all. You might not care what happens to the credit ratings of states, cities and towns across the country, but you would almost certainly feel the impact. Those states and municipalities (including yours) will have a much more difficult time borrowing money. Many bond investors like pension funds and insurance companies have rules about minimum credit ratings they can buy and it's likely that numerous municipalities would be unable to sell their bonds to such investors. In any case, borrowing by ALL cities and towns will become a lot more expensive. Having to pay a lot more in bond interest will mean that everyone's taxes will go up and there will be less money available to provide services. My guess is that you'll be among those screaming the loudest about how the banks are screwing us again.