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vallejo is not the same as the rest of the country as they are very unusual in their inability to cut costs. not only that but this has been discussed for longer than 5 years. I feel that looking at "the muni market" as if it were a homogeneous market is not terribly useful anyway when there are 10s of thousands of issuers. Los Angelese power and water is not affected by the same issues as Santa Cruz or Vallejo or Detroit. many many many muni issuers are not affected by housing actually at all and many many more have low housing inventory, low forclosure rates, growing or stable population base, ect and remain very strong credits.

the vast majority of Vallejo's "unsecured creditors" are not bond holders anyway. there is a reason vallejo's bonds trade near par and haven't missed even an interest payment. comparing the unsecured creditors with the bondholders is not accurate.