Detroits Bankrupty bad news?

Detroit, once the emblem of the growing U.S. economy, had no other options than to file for bankruptcy. Other cities in California, and cities like Jefferson County, Alabama, have done the same for very similar reasons: registering a budget deficit year-after-year as revenues declined and costs rose—especially pension costs.

Municipal bond investors are crushed when cities file for bankruptcy. But that’s old news. Unfortunately, there could be many more bankruptcy situations at the city and municipal level going forward.