CNBC reports:
“The risk in the second half of the year is that investor attention switches from Europe to the US,” said Robert Parker, senior adviser at Credit Suisse Securities, who singled out parts of California, as well as towns and cities in Illinois, Michigan and New York state as among the most vulnerable.
“You will see investor concern about the viability of those cities and therefore you will see, inevitably, further spread widening in the municipal bond market.”
If these market swings are sustained, they could push up borrowing costs for local governments , which, in turn, could exacerbate the squeeze on local authority finances and place more stress on the federal budget.
You might ask why this is so?
The Heartland Institute explains the situation in Illinois:
In fiscal year 2008, 11,254 Illinois public school employees had annual salaries exceeding $100,000, up from 9,591 in 2007. When pensions, retirement health insurance, and employee insurance are added, public school employees’ total compensation is about 30 percent more than their salary. That means more than 40,000 Illinois public school employees, or about 25 percent, have total compensation of more than $100,000 per year.
And that $100,000 does not include the value of tenure or a nine-month work year.
As you can imagine. Barack Obama wasn't part of a "change" movement when he was in the Illinois state legislature.
