Ready for more state IOUs?

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Remember California IOUs? Other states are play to face budget realities as well. Reliance on easy assign and assign attendant set income created a outlay strength (bordering on criminal) that's most to impact a wall. Debt maturities are looming.

NY Times: Without a budget deal, New York module be left with just $36 meg in the slope by the end of December, according to current projections.

The land muni CDS markets are play to widen, as actuality sets in. In the interpret below we eliminate California and Michigan, as their problems impact already been substantially publicized.





State finance is relatively simple. Many states crapper not run deficits by law, and modify those who crapper module end up stipendiary increasingly wider spreads. The two remaining choices are upbringing taxes or selection budgets. Raising taxes only entireness on the so-called "wealthy" (as NY did in April), otherwise there module be a revolt in this environment. The "wealthy" in states same NY impact enough mobility to only advise to added states, reducing set receipts to the land further. And modify if they don't, the impact of such set hikes is generally insufficient to advise the needle. Tax hikes also damage businesses and reduce hiring.

That leaves outlay cuts. But employees of some states impact momentous influence over land politics, including influence over governors and land legislators. Those politicians who revilement budgets - specially if they revilement land jobs - module only not wager added term. New York's Paterson for example knows he module not intend reelected, so he has the guts to do the right abstract and compel the cuts. The legislators however module fisticuffs him on this to the last minute. Other states module impact this surround soon as well, and more land IOUs (instead of cash) are sure to follow.




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