Tim Cavanaugh on When Cities Go Bankrupt

Bankruptcy, municipal bankruptcy in particular, is powerful medicine, says Tim Cavanaugh. Bond holders hate it because it requires them to take a hit on what were thought to be ultra-safe investments. Public finance experts hate it because it limits—though it does not totally eliminate—their ability to take on more debt in the future. (Boo hoo!) But here's the good part: Nobody hates municipal bankruptcy more than government employee unions.