Austerity Watch: 3/22/11 Ireland, Minnesota

Investing

Published: March 22, 2011 10:41 am

Austerity Watch Daily covers critical news about national sovereign debt, Credit Default Swaps, state and municipal deficit actions, and discussions about

the US deficit and debt.

Here are some highlights from media reports:

1. The spread on debt between German and Irish two-year paper hit an all-time

high of 825 basis points amid concerns that Ireland will miss the next

payment on its sovereign paper. Irish officials have rejected higher corporate taxes which makes a default more likely. This will likely cause similar concerns about the debt of other troubled EU nations.

2. A major fiscal battle has begun between the governor and state legislature in

Minnesota. The State House wants to set spending for the next fiscal

year at $3.6 billion and protect most funding for education. Gov. Mark Dayton has no such intentions. He has suggested raising taxes

3. Wall St. analyst Meredith Whitney is still a bear on state bond defaults.

She expects 25 to 50 sizable defaults among state and municipal debt.

It is still unclear whether a whether a state can declare bankruptcy.

Jonathan Berr and Douglas A. McIntyre

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