Are States Masking Their Debt?
When U.S. state government finances are compared to those of Greece, you know something is wrong: This article in The New York Times yesterday sent shivers up my spine. Here’s the lede:
“California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay. “
State officials are quoted in the story as saying that a Greece-style financial collapse is a “nonissue,” and you’ll be further reassured that Goldman Sachs (yes, the same Goldman Sachs allegedly involved in leading Greece to fiscal chaos) says that states are “very unlikely” to default on their debt.
Wow, I feel better now. Not.