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Reuters - Alabama's governor and Wall
Street lenders bargained on Friday ahead of the expiration of a
stand-still pact in a bid to avert a bankruptcy filing on $3.2
billion of debt by the state's most populous county.

In many ways, the current financial unraveling should be viewed under the auspices of two Founding Fathers, Alexander Hamilton and Thomas Jefferson.Thomas Jefferson, an Anti-Federalist viewed big business in general, and financiers in particular as corrupt. He preferred the average man to be a farmer as opposed to a banker. Jefferson feared that big cities and big money would indeed corrupt the morals and values of the American people (as it did throughout history as in Rome).

In this credit crunch, corporations and consumers have gotten all the attention. But the credit crisis is also a really worrisome event for cities and municipalities. Consider Jefferson County, AL. It is on the verge of defaulting on an $84 million interest payment on its $3.2 billion in bond debt, reports the AP. Bankruptcy seems assured. This will rank right up there with the Orange County, CA, fiasco in 1994. I don't think we'll see a rush of similar defaults, but the costs of borrowing has soared. There may be some short-term funding issues that crop up.

Bloomberg is reporting Subprime Finds New Victim as Muni Defaults Triple.

IRVINE, Calif.----Toshiba America Information Systems, Inc. and Toshiba America, Inc. extend their congratulations to the Orange County Water District and Orange County Sanitation District , winners of the "Toshiba Green Innovation Award" for their jointly designed Groundwater Replenishment System.

We haven't spent a lot of time discussing states and municipalities as the credit crunch continues to unfold. But it's clear that they are suffering. Lot of states--Connecticut, Florida, and Massachusetts, for example--have delayed new financing. The city of Vallejo, CA, recently defaulted on over $200 million. And lots of government entities are having funding issues. For example, the N.C. Turnpike Authority was unable to sell bonds that were to finance the state's first toll road.

Reuters - The U.S. State of Alabama will be the
likely home of a new Volkswagen manufacturing plant,
beating two other states, German industry newsletter
Automobilwoche said on Saturday, citing senior company sources.

CARLSBAD, Calif.----Case Financial, Inc. today announced it has received an extension to the exploration agreement entered with Trio Gold Corp. on June 2, 2008, to explore 29 gold claims covering 547 acres located at the north end of the Carlin Trend in Elko County, Nevada.

As reported in the Financial Times, Blue Coast, a unit of the German insurer Allianz (AZ), is now selling catastrophe bonds that break down losses from hurricanes by the county in a state, instead of at the state level itself. The $120 million issue is the first to bring the event down to the county level. Whether this will encourage local municipalities along with states themselves to cover their catastrophe risk is difficult to tell.