– Obama To Detroit: “No Bailout For You” (ZeroHedge, July 19, 2013):
While in the past President Obama has been more that willing to throw good money after bad and “refuse to let Detroit go bankrupt,” it seems when push comes to shove – under the intense scrutiny of a nation awash in scandal, a drastically bifurcated congress – that despite the imploring from local congressmen for “moar” already – that the savior of the city will not this time ride to the rescue on his white horse. In a statement, the White House said they “are monitoring the situation in Detroit closely,” with no hint – just as they have made clear for months – of any sort of Federal bailout. As USA Today notes, the federal government provided federal loans to prevent New York City from declaring bankruptcy during the 1970s. But times have changed; the federal government has debt and financial problems of its own, and a Detroit bailout could run into significant opposition in Congress and cause serious damage in the Muni market.
While the GM debacle put pensioners ahead of creditors, it would be unprecedentedly bad for the massive Muni bond market should Obama acquiesce and change the law once again to put pensioners ahead of GOs…
The White House statement on Detroit.
The president and members of the president’s senior team continue to closely monitor the situation in Detroit.
While leaders on the ground in Michigan and the city’s creditors understand that they must find a solution to Detroit’s serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalize and maintain its status as one of America’s great cities.”
Translation: “sorry guys, you’re on your own on this one!”