The Looming Threat of Municipal Bond Defaults

Morningstar reports:

The arsenal of stimulus programs seemingly has stemmed the tide of capital market disasters and some think "green shoots" are taking root. But a new problem, perhaps even more daunting, is popping up: Municipalities across the U.S. have deep budgetary problems and the chance of default on their bonds grows every day. Recent estimates put the State of California budget deficit in excess of $24 billion, about a quarter of the size of the total budget, a shortfall that must be addressed in the next 30 days. What's more, while California has become the poster child for the problem, many other state and local governments are in the same fix. Some estimates put the total shortfall for all state budgets at almost $170 billion.

If you've been reading Newsalert since 2005, you've seen us talk about the issue.