But here is my view, the problem comes when Pension costs are taking up more and more of the government budget (this case Detroit). 25% of your yearly budget is a huge chunk of your budget. It hurts, not on paper but in reality. Detroit can't pay for good basic services which causes more and more people to move out of the city. So you can't fix the exodus without fixing your budget. You can't cut services because that's what's causing the exodus.
Detroit has only two good choices if it wants a future.
1) Federal Bankruptcy as that's the only place it's gonna end up if the State of Michigan forces a haircut to bond holders without touching the pensions.
2) A fair plan that leaves most of the "pain" in two areas.. Bonds and Pensions. Tell bond holders to take a 10 or 20% hair cut (10 to 20 cents on the dollar) and have the General Pension fund (Detroit's largest and most underfunded) take a 5% to 10% hit (if it's 10%, I'd say bond holders would need a 15% to 20% cut).
Btw..Detroit could cut it's funding to the new hockey arena but that still wouldn't cover the shortfall for this year.