State bankruptcy bill imminent, Gingrich says. State Bankruptcy Option Is Sought, Quietly. State Bankruptcy Would Change Life for Public Pensioners, Bond Holders. <br/><a href=" US News</a> | <a href=" Business News</a> Copy Under existing law, a state cannot go bankrupt. That's not because the action is forbidden. Not the U.S. Constitution nor any other piece of paper says a state cannot. Now lawyers, politicians and other ingenious folk are looking for a way around that problem -- a fact that should come as no surprise, given the perilous financial health of California, Illinois and other states encumbered with crushing debts. The 50 states have spent collectively, in the past two years, half a trillion more dollars than they took in as taxes. Like Titanic victims struggling in the water, they are desperately grabbing any orange crate that floats by, trying anything to stay afloat.
Arizona has sold off its state capitol. California, facing a $19 billion shortfall, must now spend more on pensions for its public employees than it spends on the University of California system. The Debate Over What's Slowing the U.S. Recovery | The Atlantic Wire. Dimon Says a Hundred Municipalities in U.S. Won’t ‘Make It’ Out of Debt. JPMorgan Chase & Co. (JPM) Chairman and Chief Executive Officer Jamie Dimon said some municipalities will need to renegotiate debt and a hundred may not “make it.”
“I wouldn’t panic about what I’m about to say,” Dimon, 55, said today at a U.S. Chamber of Commerce event in Washington. “You’re going to see some municipalities not make it. Speculation about widespread municipal-bond defaults intensified in December when bank analyst Meredith Whitney predicted that “hundreds of billions” of dollars of municipal bonds may default in 2011 amid pressure to balance budgets. JPMorgan, the second-biggest U.S. bank by assets, said in February its commercial bank’s municipal-debt holdings are diversified enough to handle a likely increase in defaults.
“It’s not going to be thousands,” he said. Bond Defaults Standard & Poor’s said this month that municipal-bond defaults in the first two months of 2011 are down 50 percent from the same period last year. Golden Goose.