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Meredith Whitney Is About To Seriously Double Down On Her Muni Doom Prediction Joe Weisenthal Feburary 21, 2012 Meredith Whitney first predicted widespread muni doom in late 2010, and so far that hasn't come to pass at all. Since then, her reputation has definitely taken some hits, but she's not giving up on her big call by any means. According to Kevin Roose at DealBook, Whitney will be coming out with a new book in December called: “Downgraded: Why the Next Economic Crisis Will Be Local.” The book is being put out by publishing house Portfolio. Dealbook posted this paragraph...

We're already in May, and so suddenly people are wondering: Where are all the muni market disasters we're supposed to be getting this year? Why has it been so quiet. Why haven't munis fallen, like Meredith Whitney said they would? Fear not: she hasn't given up. Speaking today at the Milken Conference in LA, she doubled down on her call for hundreds of billions of dollars worth of defaults saying, according to Bloomberg: "This municipal issue, you can criticize me for anything you want, I’m numb to it, because I have more conviction on this than I’ve had on any...

If there is a muni collapse as some people expect, who gets slammed? Probably you. Households, followed by mutual funds, are the biggest holders of muni debt. Insurers are a distant third, which suggests that even if the wheels come off, the institutional fallout won't be dramatic.

<p>If you want to know what life in the Third World is like, just ask Lisa Pack, an administrative assistant who works in the roads and transportation department in Jefferson County, Alabama. Pack got rudely introduced to life in post-crisis America last August, when word came down that she and 1,000 of her fellow public employees would have to take a little unpaid vacation for a while. The county, it turned out, was more than $5 billion in debt — meaning that courthouses, jails and sheriff's precincts had to be closed so that Wall Street banks could be paid.</p>

Municipal bond issuance dropped to an 11-year-low in January. It has not picked up substantially in February, according to the muni bond people I speak to. January saw $12.2 billion of new debt, a decline of nearly 63 percent from January 2010. Volume hasn’t been this low since January of 2000. The standard explanation for this is the end of the Build America Bond program, which offered qualified issuers a 35 percent federal tax subsidy to issue taxable debt. But the BABs—the bonds' colloquial name—accounted for just 24 percent of the $757.6 billion of state and local debt issued from...

The muni market needed re-pricing, but now it has gotten way out of control, according to PIMCO's Christian Stracke and Joseph Narens. The pair explain that what's happening right now in the muni market makes a certain amount of sense. It's a bit like last year, when the market repriced sovereign risk to act like a credit product, rather than an interest rate product it was previously valued at. That meant yields were higher and the cost to insure the debt rose too as a result of investors realizing that, yes, a sovereign could actually default. Now that's happening with...

Who Has The Big Knife Out For Meredith Whitney? Robert WenzelFebruary 3, 2011 There's something very odd about the trashing Meredith Whitney is getting over her warnings on the municipal debt market. First, there's been the unending attack by Charlie Gasparino at FOX on her warning. Now word comes, via Gasparino, that a Congressional subcommittee, headed by Congressman Patrick McHenry, wants to look into the condition of the municipal bond market . Although Gasparino is painting the story as though it is somehow an investigation of Whitney. Writes Gasparino: "As part of this inquiry, the subcommittee is looking into the...

We read last night's news that the massively underfunded Illinois pension fund is now the subject of an SEC inquiry with little surprise: "The Securities and Exchange Commission has launched an inquiry into public statements by Illinois officials about the state's underfunded pension fund, the state's governor's office confirmed Monday night. The Illinois inquiry is focused on public statements concerning an overhaul measure passed in 2010 meant to help shore up the retirement system, said the governor's spokeswoman, Kelly Kraft." The issue at hand is nothing short of complete accounting fraud: "An issue being examined is whether Illinois was taking...

As states struggle with enormous deficits and exploding pension costs, some analysts are urging Congress to enact a law enabling states to declare bankruptcy the way municipalities can under Chapter 9 of the federal bankruptcy code. This is a bad idea. A state bankruptcy provision could create more problems than it solves. Bankruptcy proponents understandably worry that states such as California and Illinois are so deep in the hole they may end up petitioning Congress for federal relief. To forestall this possibility, the argument goes, even the threat of bankruptcy would give governors and legislators a powerful new weapon for...

Meredith Whitney is not crying wolf. The analyst famed for correctly calling the implosion of banks and the ensuing credit crisis has been warning about defaults in the $2.9 trillion municipal bond market. She isn’t the only one. Jamie Dimon, Chief Executive of J.P. Morgan Chase recently commented that there are significant problems facing munis and technical defaults have already happened. He ought to know. Big banks like his backstop billions of dollars of muni obligations with letters of credit that they may not want to renew. The immediate, under-the-radar problem for the municipal bond market is that borrowers relied...

In the United States, it is not just the federal government that has a horrific debt problem.  Today, state and local governments across America are collectively deeper in debt than they ever have been before.  In fact, state and local government debt is now sitting at an all-time high of 22 percent of U.S. GDP.  Once upon a time, municipal bonds (used to fund such things as roads, sewer systems and government buildings) were viewed as incredibly safe investments.  They were considered to have virtually no risk.  But now all of that has changed.  Many analysts are now openly speaking...

You hear a lot about the states that are facing a financial wall. California, NY and Il are on top of the list. But that is a 2010 story. The 2011 story will shift toward the nations municipalities. There are 36,000 cities, towns, villages and boroughs across the land. They all are facing problems. This chart from the CBO (pdf LINK) describes the problem: As you can see the local munis get the lions share of their revenue from three sources; direct payments from the State (30%), local property taxes (26%) and other revenues (22%). A total of nearly 80%...

Old cases, both solved and unsolved, keep cropping up in this True Crime post. The Stebic case intrigues in that a reporter was caught prancing around the Stebic house in a bikini while that poor woman is still missing. And while Mr. Stebic likely enjoyed his bikini-clad reporter friend, he's now been named a "person of interest". Duh. Phil Spector continues his idiotic trial until everyone tires of him and throws his butt in the slammer. New this week, a little girl murdered by an illegal immigrant. Why wasn't he deported after his FIRST sex crime? That pizza bomber story,...

CHEYENNE, Wyo. - A woman singing with a band at a local restaurant was shot and killed early Saturday, and police were looking for her estranged husband _ a member of the state Army guard and who police believe has sniper skills. Police Capt. Jeff Schulz said Robin Munis, 40, of Cheyenne was shot in the head with one gunshot that came from outside the restaurant where she was performing. Schulz identified David Munis, 36, of Cheyenne, as a suspect. Police said they were looking for his 1999 black Dodge pickup with Wyoming registration NG-975. The couple had recently separated,...

Police Are Looking For Husban, A Trained Sniper (CBS News) CHEYENNE, Wyo. -- A woman was shot and killed early Saturday while she sang with a band at a restaurant and bar, police said. They were looking for her estranged husband, a National Guardsman who they said had sniper training. Robin Munis was shot in the head with one gunshot that came from outside the Old Chicago restaurant where she had been performing just after midnight, Cheyenne police Capt. Jeff Schulz said. "He fired from outside the bar, she was killed inside the bar," Schulz told CBS affiliate KGWN. No...