e21 has a good staff editorial up on the now-tragic Greek crisis, with possible implications for New York and California.

The plan for Greece, of course, is for Europe and the IMF to bail out the debt-drenched nation’s bondholders, by imposing austerity measures on everyone else. These measures must be draconian enough “to attenuate the anger of German voters.”

But the Greeks, or at least the most vocal and violent of them, are not cooperating. As the editorial notes:

Whether the Greek unions succeed in quashing the deal, eventually the strings attached to the aid will impose costs on an interest group with sufficient clout to make the interests of creditors [bondholders] seem less compelling. At some point, taxpayers in the “parent” will demand concessions that the bailed out entity will not abide. At this point, the bailouts will finally end.

Here at home, bondholders lend money to states like NY and CA largely because they think that the feds will bail them out in a crisis (I think).

President Obama’s “Build America Bonds” program has solidified this expectation. After all, international bondholders are buying muni bonds labeled “America” itself, giving them extra confidence if they don’t know very much about individual state credits and don’t care to learn.

But what if, when the time for an explicit bailout of American states is at hand, whoever is in charge in DC must make New York and/or California make tough-minded public-sector concessions to get the rest of the nation on board? Then, it may not be worth it, politically, for state governments to serve as the conduits for bailouts of their bondholders.

In that case, bondholders, at the very least, would have to take some losses along with other big creditors, including pensioners — and quite possibly have to take even bigger losses than the better-connected parties.

America may not have to confront such issues this year or this half-decade. But unless heavily obliged American states start to pare back their long-term obligations, the question likely will arise someday.

Please read more on this topic here, too …

You may also like

New York’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards

New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More

As a Supreme Court Ruling Loomed, Cuomo Bent His Own Rules on COVID ‘Clusters’

In the midst of the constitutional showdown over his pandemic policies, Governor Cuomo made changes to a disputed Brooklyn 'cluster zone' that seemed to contradict his own declared guidelines. Read More

New York Has Widened Its Lead in Per-Capita Spending on Medicaid

New York's per-capita Medicaid spending soared to more than double the nationwide rate in 2018, widening its gap with the other 49 states. Read More

Essential Plan surplus hits $3B

As Governor Cuomo pleads for financial help from Washington, one of his state's programs is sitting on $3 billion in unspent federal aid: the Essential Plan. Read More

Upstate escapes the worst

With the coronavirus pandemic hitting some parts of New York much harder than others, Governor Cuomo has signaled that he will begin to relax shutdown restrictions in low-virus parts of the state. Here's a closer look at how infection and fatality rates vary from region to region. Read More

NY is shorted on virus relief

Although New York is taking the brunt of the coronavirus pandemic – with 43 percent of the nation's known cases and 40 percent of the deaths – the state is due to receive only 5 percent of the $150 billion Coronavirus Relief Fund just established by Congress. Read More

NY’s uninsured rate hits new low

Bucking the national trend, New York's uninsured rate dropped for the eighth consecutive year, new data from the Census Bureau show. The share of New Yorkers lacking health coverage in 2018 was 5.4 percent in 2018, down from 5.7 percent the year before. The number of people lacking health coverage dropped by about 72,000, to just over 1 million. Both the rate and the number are roughly half what they were in 2013, the year before the Affordable Care Act went into effect. Read More

SOTS health-care roundup

Health care was the dog that did not bark at Governor Cuomo's combined State of State and budget address on Tuesday. Instead of announcing a major plan to expand coverage, he called for appointing a commission to study "options for achieving universal access" and report back by December – a clear sign that he has no stomach for tackling the issue in this session. Read More


Sign up to receive updates about Empire Center research, news and events in your email.


Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org


The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!