The situation has prompted comparisons with Puerto Rico, which earlier this year announced a historic restructuring of some of its $70 billion in debt through courts after negotiations with bondholders failed.
Who was loaning them the money? Who are the "bondholders" with whom negotiations failed? Is it a TBTF bank, a pension fund or Warren Buffet? How many bondholders does it take to "just say no" to debt restructuring and if so what can PR or Illinois do? The cannot file BK as there are no provisions in the law that allow states to file BK. What is the alternative to saying no to restructuring? Grab them by the heels and shake them?
Some retired police, firemen, teachers, state and municipal workers are in for a rude awakening when they are told "sorry your pension plan is broke." I wonder where the Social Security Trust fund is investing to obtain yields over the prime rate unless 0% is sustainable (which we all know it is not). The SS pension fund will start paying less money to seniors unless taxes go up and that will not happen while Rs hold all the power.