Eric Cantor, the new House majority leader says there will no no federal bailout of indebted US sates. He also says he does not back bankruptcy for states.
Looks like states will have to do what they have always done during recessions: but spending and raise taxes and fees.
Aside from Meridith Whitney and a few others, most do not see major default risks ahead for state governments. Smaller municipalities may find themselves in more trouble, however.
The dollar is generally firmer this afternoon as the market succumbs to profit in EUR/USD on the approach of 1.3700 and above 1.00 in AUD/USD.
