Yes, there is a day of reckoning for limitless spending and borrowing.
In a report issued Wednesday, Moody’s rated the debt of 30 cities, towns, villages, counties, and school districts as “speculative grade,” up from 25 last year. A speculative-grade rating for a local government means, at best, its debt is risky and, at worst, it could end in default. 24/7 Wall St. looked at 13 of the riskiest local governments that may be on the verge of bankruptcy.
In an interview with 24/7 Wall St., Moody’s Managing Director and Chief Credit Officer of U.S. Public Finances explained that the number of cities, counties and towns that default on some or all of their debt is growing. She attributes this to “a significant amount of credit pressure, sluggish economic recovery, and cities not being able to grow out of their problems this time around.” She added that many cities see defaulting as the only way to avoid total economic disaster.
On the federal level, we’re now at $16 trillion in debt. It doesn’t take an advanced economics degree to see what’s coming.
