Is State Bankruptcy Law In Play?

Read this New York Times article by Mary Williams Walsh: Path Is Sought for States to Escape Debt Burdens (1/20/2011).
"Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign." (read more at NYT)
Related:

Bankruptcy code won't cure what ails U.S. states (WestLaw News & Insight)

On the GOP, bankrupt states and government unions by James Pethokoukis (Reuters)

Misunderstandings Regarding State Debt, Pensions, And Retiree Health Costs Create Unnecessary Alarm (The Center on Budget and Policy Priorities)

Newt's remarks at the Institute for Policy Innovation (Newt.org)

Gingrich seeks bill allowing state bankruptcy to avert bailouts (Pensions and Investments)

A Bankruptcy Law—Not Bailouts—for the States by Law Professor David Skeel (Wall Street Journal)

Default and bankruptcy in the municipal bond market (part one) (Self Evident)

Default and bankruptcy in the municipal bond market (part two) (Self Evident)

State and local debt not uniformly troubled: analysts (National Federation of Municipal Analysts)

Muni bond queen Lebenthal disputes Whitney alarms (Reuters)

Meredith Whitney On Municipal Bankruptcies (Ch. 9), State Arbitrage (CNBC Video) (Distressed Volatility)

Meredith Whitney Talks Munis On CNBC After 60 Minutes Interview (12/21/2010) (Distressed Volatility)

Meredith Whitney: 50-100 Municipalities Could Default (60 Minutes Video)

What do you think will happen here?

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