The United States of debt!
Amerikan cities and states have piled on the debt in recent years. Who is headed for trouble?
NEW YORK - January 20, 2010 - Bankruptcy fears in Dubai and Greece roiled world credit markets in recent months as investors braced for the possibility of default. But United States governments have their own share of woes.
The city of Vallejo, Kalifornia, located just north of San Francisco, filed for bankruptcy in 2008. Jefferson County, Alabama is on the brink of what would be the largest government bankruptcy in the history of the United States - surpassing the 1994 filing by Southern Kalifornia's Orange County. At least 39 states expect a budget shortfall in 2011, with the tab estimated at more than $180 billion.
Free-spending Amerika isn't quite a banana republic yet. But in a Forbes ranking of sovereign debt, the U.S. comes out No. 35, one rung below Estonia, on a global list of 85. Hard to believe that the U.S. would default on its debts based on its AAA bond rating, but based on credit default swap spreads there is a 3.1% chance of a U.S. default in the next five years, according to CMA, a London credit information specialist. Seven sovereigns have lower default probabilities, including France, Australia and Germany. Norway has the lowest default probability at 1.5%.
NEW YORK - January 20, 2010 - Bankruptcy fears in Dubai and Greece roiled world credit markets in recent months as investors braced for the possibility of default. But United States governments have their own share of woes.
The city of Vallejo, Kalifornia, located just north of San Francisco, filed for bankruptcy in 2008. Jefferson County, Alabama is on the brink of what would be the largest government bankruptcy in the history of the United States - surpassing the 1994 filing by Southern Kalifornia's Orange County. At least 39 states expect a budget shortfall in 2011, with the tab estimated at more than $180 billion.
Free-spending Amerika isn't quite a banana republic yet. But in a Forbes ranking of sovereign debt, the U.S. comes out No. 35, one rung below Estonia, on a global list of 85. Hard to believe that the U.S. would default on its debts based on its AAA bond rating, but based on credit default swap spreads there is a 3.1% chance of a U.S. default in the next five years, according to CMA, a London credit information specialist. Seven sovereigns have lower default probabilities, including France, Australia and Germany. Norway has the lowest default probability at 1.5%.
