dagblog - Comments for "Daylight in the Garden of Good and Kowalski"

In Michigan we've got

Ramona — Sun, 24 Nov 2013 18:41:40 +0000

In Michigan we've got ourselves in a situation where the central government can do what they want. Somehow they've finagled that power and so far nobody, even the legal eagles, has figured out a way to stop them.

They're making many mistakes--HUGE mistakes--and they are mistakes we'll never be able to fix. Once they've sold everything or torn it down, it's done. You can imagine how the people in Detroit who know this are feeling right now. It's like watching a loved one you believed you could save fall into a coma, knowing there are people who could have done something but didn't; knowing there are people who could still do something but won't.

Municipalities, indian

Michael Maiello — Sun, 24 Nov 2013 18:14:46 +0000

In reply to Daylight in the Garden of Good and Kowalski

Municipalities, indian reservations and, of course, countries are sovereign borrowers. The biggest mistake they can make is to sell assets for the benefit of creditors. Unlike corporate borrowers, they cannot be forced to do this. If you loan to a corporation and it defaults, you can seize its assets. If you loan to a sovereign, you cannot. Everybody knows this, especially bond investors. You do not get to liquidate Detroit or Greece. Such sales can only happen if panicked or corrupt people in power choose that course of action. It is always a mistake.