Middle class flight. yes, I agree with you there. I had a business with repeat customers drawn from the middle and lower income groups. The lack of money took the lower income group, and the middle income group moved. At least half of my good customers went and so inevitably did my business.
Although they didn’t mention state bonds specifically, Wall Street seems to be moving toward my point of view on government debt:
http://www.freerepublic.com/focus/news/2577198/posts?page=30