I recently reported on the near-default situation of several states, showing how deeply to the core of the state the residual problems of the financial crisis cuts. You can add to that list of serious funding problems, the capital city of Connecticut: Like many other local governments across the country, Hartford, city of Mark Twain and the young John Pierpont Morgan, has been grappling with budget problems for years. On the same day that Illinois lawmakers finally scrapped together a long-overdue budget, Hartford hired the law firm Greenberg Traurig LLP to evaluate its options, which include bankruptcy. It would be the first prominent U.S. municipality to seek protection from its creditors since Detroit did so in 2013. (Newsmax) The rise in both corporate and national defaults right now is showing up in other areas of the world, too:
- Sovereign government and corporate defaults in both developed and developing economies are beginning to emerge. For example, China has registered in 2017 its highest level of corporate defaults in the first quarter of a calendar year on record. Delinquencies and charge-offs in the United States soared to $US1.4 billion in the first quarter of 2017, the highest recorded level since the first quarter of 2011….
- In May 2017, six major Canadian banks were downgraded by Moody’s Investor Service (Moody’s) as concerns rise over soaring Canadian household debt and house prices leave lenders more vulnerable to losses. Moody’s also downgraded China’s sovereign debt in May 2017 for the first time since 1989 and has warned of further downgrades if further reforms are not enacted….
- In May 2017, S&P has downgraded 23 small-to-medium Australian financial institutions as the risk of falling property prices increases and potential financial losses start to increase. In June 2017, Moody’s downgraded 12 Australian banks, including Australia’s four major banks.
- Standard and Poor’s and Moody’s downgraded bonds for the US State of Illinois down to one notch above junk bond status as the state has over $US 14.5b in unpaid bills.
#These pressures are spreading at a rate that could be considered endemic around the world by next year....