Illinois default risk greater than Iceland: Will Other States Follow? US will have its own Greece !

Illinois made headlines a few weeks ago when it overtook California as the worst credit risk among American states. Now, the fifth most populous state in the U.S. has officially overtaken Iceland in the default risk category as well.
Iceland, as we know, suffered from one of the largest banking collapses in 2008, essentially went bankrupt, and has been stuck in the "2008–2010 Icelandic financial crisis” ever since.


So, for Illinois to jump ahead of the Arctic country-- in terms of default risk-- is no small feat, to say the least.
Just what kind of trouble is Illinois in? The State is looking at a two-year budget deficit going into FY2011 of at least $12.8 billion.

For 2009 to 2012, U.S. states would have nearly $300bn in budget deficits, according to figures from the National Association of State Budget Officers (Nasbo). Meanwhile, the Center on Budget and Policy Priorities projected that states’ cumulative budget shortfall will probably reach $140bn in the coming year, the biggest yet.

So, when the urgency of the European debt crisis subsides, and the bond market shifts its focus away from Europe and onto the United States, America could have its own-- Greece, or even PIIGS --of some sort, as early as next year.