Fortune ran an insightful article on 6 states that are in dire straights given their unsustainable debt load and dim prospects for recovery. Based on several key metrics, it would be wise to avoid buying municipal bonds or muni bond ETFs that carry a high portion of debt from the states outlined below:
It’s really disturbing that it’s come to this and even given the federal aid in various forms (direct, first time home buyer credit, bailouts for autos/homebuilders/unions, stimulus and other redistribution of wealth legislation), something’s going to have to change to reconcile the burgeoning debt load and lack of income to offset obligations. These states need to either revisit the services they offer and the pension promises they’ve made (and continue to make to new hires) to state employees or they’re going to start to default on promises. The other option, which is entirely plausible, is a federal bailout of state budgets via federal tax increases (or heck, more debt). Given the lengths the current and past administration have gone to to undertake more debt, bail out the screwups and have NO plan for “Who Pays”, a federally funded bailout is another option which would obviously further weaken the US Dollar. But something’s gotta give.
- Do You Live in a Doomed State?
- Are you seeing a difference?
- Cutbacks in services, National Park Closures, State worker Pay Reductions?
Interested in what the impact to Main Street is given the crisis.
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