Economic analyst Mike Shedlock says he's been "waiting for some large city to take initiative and declare bankruptcy to escape [the] onerous burden of public pensions." Even just one default could start a chain reaction, he argues. He thinks that first city could be Miami, and points to an NBC report as evidence. Miami commissioner Marc Sarnoff has been openly talking about the possibility of bankruptcy, largely due to increased public worker salaries. Sarnoff only sees a few ways of avoiding it: renegotiating union contracts, mass layoffs, or raising property taxes--an unlikely route given the current economy. Shedlock says "bankruptcy is the only option that makes any sense." Could the next wave of default debate involve cities, rather than countries?

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Heather Horn