http://www.realclearpolitics.com/authors/?id=21231Author Tue, 03 Aug 2010 00:00:00 -0500 Europe’s PIIGs are in a poke, but U.S. states and municipalities risk their own sovereign debt crisis, with a huge liquidity risk from short-term debt. According to the Federal Reserve, at the end of the first quarter of 2010, state and local governments had $2.8 trillion in outstanding debt. This massive figure doesn’t count unfunded pension liabilities (which, except for a few governments in immediate distress, face a longer-term solvency crisis), but does include $465 billion of debt issued on behalf of nonprofits and private industrial revenue bond borrowers, many of whom are politically connected. Of the $2.8 trillion, perhaps 25 percent effectively consists of short-term...]]>