The next crash


NEW YORK (CNNMoney) — Just as fears about a heavy sell off in the municipal bond market seemed to be easing, Standard & Poor’s issued a warning that this year could bring a potential surge in the number of downgrades of bonds issued by state and local governments.

States including California, Illinois and New York are strapped for cash and dealing with deep budget deficits, sparking fears that states and cities could fall short in payment obligations to muni bond holders.

As I’ve written before, the Republicans are going to use this as an excuse to pass legislation that will allow states to file for bankruptcy — while protecting the bondholders. Steal the pensions, crush the state unions – win/win!