A scary scenario: What if a U.S. state defaults?

[Newsjock]

Source: The Globe and Mail

It’s the year 2013. A large U.S. state can’t come up with the cash to make a bond payment. A default would ricochet through markets worldwide. What happens next?

That’s the scenario that a high-powered panel gathered to address this week at a conference in New York. For seasoned observers, the chance that a state would default on its debt ranges from remote to impossible. Yet the fact that the risk is being openly discussed shows the depth of the worries over the finances of states and cities.

Strapped for cash and committed to huge spending as their employees age, these governments are a looming vulnerability in the U.S. financial system. They also represent a drag on economic growth as deficits force them to slash services and staff.

... While California is usually the poster child for fiscal trouble, other states aren’t far behind. By next spring, Illinois will face a deficit of $15-billion, or half of the state’s yearly day-to-day spending. Nevada, too, will confront a budget hole of similar proportions.

Read more: http://www.theglobeandmail.com/report-on-business/economy/a-scary-scenario-what-if-a-us-state-defaults/article1775492/

[Name removed]

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[RainDog]

2. red states have gotten welfare payments from liberal states for years

so, I suppose, if you're a republican state it's okay to have liberals way your way.

hmmm. must be a coincidence.

[Name removed]

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[grantcart]

4. Get ready for your pizza

In the meantime please take note.

In the entire history of the US a full 8 year term by the President of one party followed by a full 8 year term by a President of another party has happened exactly once, allowing a unique opportunity for direct comaparison.

When Clinton left office he left with record surplusses and a vibrant full economy.

When Bush left office he left with record deficits and a historic loss of jobs.

Now so far in Obama's Presidency he has created more private sector jobs than Bush created in 8 years.

You deserve the poverty that your Republican heros have delivered to you.

[Name removed]

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[Rincewind]

5. I can't remember where

I read it, but the right wing WANTS to force the states into default. The idea is to make them declare bankruptcy, and use the bankruptcy court to cancel all union contracts with the state employees, and force the states to sell off the employees pension funds. So, the state employees, those that still have jobs, will be working for minimum wage, with no benefits, and with their retirement gone.

[Hannah Bell]

7. The entire financial sector & a large part of the business sector wants the same thing.

This is the NYC bankruptcy revisited.

and it's going to mean mass unemployment if it happens.

the little bomb no one's talking about until *after* the election.

[unhappycamper]

8. What to find some bucks for state governments?

Cut the one trillion dollar military budget and get out of the sandbox.

Military spending accounts for 58% of all discretionary funding in the 2011 national budget.

[Mnemosyne]

9. Germany stopped paying foreign debt, cannot remember name of the act, but

it was near the beginning of that shit storm.

Legalize weed and deficits will shrink...