[Scanian]

What effect do you think that would have on the bond market.

[Ev Reeman]

Unknown at least as far as the long term.

Furthermore, not all states would have to declare bankruptcy.

Some states are in good financial and economic shape because they have taken the hard steps necessary to ensure future sustainability, job growth, pro business policies, lower tax structures etc.

[tbw2]

Debtors only gain from bankruptcy what lenders lose. This will crush the market for state bonds. Municipal bonds may not fair as bad, since cities can still owe their debts even if a state goes under.

My concern is the "federal bail out with strings", since it will likely be conditioned on the end of federalism. Federal money upon unilateral acceptance of federal power.