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States can actually dismiss debt as sovereign entities. That doesn't protect them from the consequences.. for example no one loaning them money in the future. B
by voidlogic 9y ago
States can actually dismiss debt as sovereign entities. That doesn't protect them from the consequences.. for example no one loaning them money in the future. But they can do it.
- alexanderstears 9y agoStates can't use federal bankruptcy courts to restructure their obligations and are Constitutionally prohibited from 'impairing the obligation of contracts'. How can U.S States dismiss debt as sovereign entities? They can probably refuse to pay it but the debt holders would have a solid case to get judicial relief.
- voidlogic 9y agohttps://en.wikipedia.org/wiki/Sovereign_immunity_in_the_United_States https://en.wikipedia.org/wiki/Sovereign_immunity_in_the_Unit...
- alexanderstears 9y agoThat's a mechanism that might extend bankruptcy to the States at some point, but American States have always paid their debts to the financial market.
- voidlogic 9y ago>American States have always paid their debts to the financial market. I don't contest that, but what I am saying is, like National governments they can dismiss their debt. Although, of course they would have non existent credit after such an event. The States unlike some European governments are not used to functioning in the absence of borrowing.