It’s easy to compared US states to troubled European sovereigns, and indeed there are plenty of similarities.
Here’s one huge difference though.
European countries are much more reliant on the kindness of strangers, so to speak. Principal repayment dwarfs interest payments across Europe, making rollover risk a much bigger issue. Conversely, for US states to go into crisis, there will really need to be a big problem on the revenue side, and not just a diminishment of market confidence.
Photo: Morgan Stanley
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