I was having a good debate a few days ago about what creditors would be able to seize in the event of a default. For example would the state parks, state wildlife zones, oil offshore.. would creditors be able to seize those if the state is not able to pay.  Would a bankruptcy trustee be appointed in charge of the state, and able to pass laws in order to make the creditors whole.  If I was say running the Chinese bond fund, I would want California to put up collateral if I was to lend them more. Since the Chinese want collateral in a deal where they know the game and there is no honor for either creditor or debtor, why not just offer them our former slaves as collateral. Since their descendants feel entitled to compensation, they should experience a little of the pain as well.    On a different subject, the Republic of China borrowed a fortune from the US government while it was in existence. The the PRC came on the scene, they summarily dismissed the debts as having been made by an illegal regime. Irony, anyone? Since slick Willy slinked his way into the White House from Arkansas, you can say that we've had an illegal regime running things in this country. Can't we just rebuke the Chinese debt (after ridding ourselves of our current illegal regime)and tell them that turnabout is fair play?