This is just the beginning. Collectively US states continue to face massive budget short-falls in spite of massive Federal Aid. According to the Center on Budget and Policy Priorities, US states are expected to run deficits of $144 billion and $119 billion in FYs 2011 and 2012 respectively, unless they can cut spending further or raise taxes dramatically to close these gaps.
Remember, the muni bond market is $2-3 trillion in size, so we’re not talking about a minor issue here.
http://www.kitco.com/ind/Summers/sept092010.html
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