In the course of a pretty wonky piece on CDOs, Felix Salmon points out that the modern financial environment weakens the political position of creditors. Back in 1975, when New York City was on the verge of default, its bonds were uninsured, and held mostly by the city’s rich and its biggest banks. Both sets of bondholders were relatively few in number and invested in the city’s long-term survival. The creditors were able to come together and speak with one voice to force wage cuts and layoffs on the unions and service cuts… Read More