They are rating the chances of default. The bond purchasers will be paid, one way or another. Privatize the parking meters (like Chicago already did), the roads, the water utilities, etc. It's the people who live there that will pay for the deficit via increased taxes and fewer services.
They are. From all the data I can see, property values for almost all areas in the Northeast and Rust Belt in general are declining (in real terms), except for certain few rich areas in and around the big cities that the richer populace is “escaping to”. I’m writing from mobile, but compare the Fed’s analysis for home prices by state.
Even Buffett says he’s looking at state finances when deciding investment options, and if he’s saying it, surely other organizations are too. It will be a gradual accelerating decline though (barring effects of natural disasters), since people don’t just up and move.
