Meredith Whitney: State Finances Are Still Doomed, And These Three States Are In The Most Trouble

Business Insider ^ | 04/26/2012 | Joe Weisenthal

[SeekAndFind]

Meredith Whitney was on CNBC's Closing Bell today.

Jeff Cox at CNBC.com spotlights one area where she's wildly bullish. She likes the agriculture and commodity states that are 'right-to-work' where businesses are creating jobs:

"I am wildly bullish on the U.S. in particular markets...I think the U.S. market looks terrific (though) as a collective the U.S. market is not going to grow all together," she said during a "Closing Bell" interview. 

"There's opportunity from Texas all the way up to North Dakota, and you can play every industry on that basis," she added. "It's the agriculture-commodity belt — also the Right to Work states. That's where businesses are moving because it's easier to operate and create jobs. So you see a massive demographic shift to those areas."

But there are three stats in particular she doesn't like: California (which is the worst) followed closely by Illinois and New Jersey. In Illinois, in particular, she cited something new about parents being forced to pay for school busses because finances have gotten so bad.

Some other points she made:

• Europe is stil in a lot of trouble. And beyond Spain, you have to watch France.

• The panic in Europe will keep US rates low, and that makes the Fed's job easier since rates will stay low.

• On Citi, there are no big risks out there any more.

• She's 'absolutely' still worried about state finances. In fact there's more evidence supporting the thesis that the states are in trouble.

• Some great financials she likes: American Express and JPMorgan (which is really trip).

[GonzoGOP]

California (which is the worst) followed closely by Illinois and New Jersey.

No way, Illinois is way worse that California. Not because California is better run but because California has more stuff to sell off. There are vast tracts of land in California that are owned by the state that could be sold off to pay their debts. Sure the environazi's won't do it, but if there is a full collapse someone will. Trying to sell off state assets in Illinois would be like trying to sell off toxic waste. You would have to pay someone to take it away.

[kbobdelux]

Meredith Whitney has been preaching the bankruptcy of the states for more than three years, and eventually she will get it right. Please see her comments on the tea party made up of “Freaked out white men” in August of 2011.

Be sure to watch the response of Rick Rick Santelli in his usualy form. They no longer let Rick come on after her appearances.

http://www.freerepublic.com/focus/f-news/2761586/posts

[Buckeye McFrog]

What’s the pool on when the first official bailout request lands on Barry’s desk if he’s re-elected?

I’m gonna go with Illinois on Jan. 30, 2013.

[GonzoGOP]

I’m gonna go with Illinois on Jan. 30, 2013.

To be honest I don't know if Illinois will survive the year. On the up side if the GOP wins they should declare that since it is illegal for a state to go bankrupt any state seeking assistance reverts to the status of territory. Get rid of the congress-critters from Illinois, California, New Jersey and a couple other big blue states and it will be a lot easier to get the federal budget under control.

[nuke rocketeer]

10-4 on that for Illinoisy!

Anyone want to buy a house near Joliet?

[Hieronymus]

That is a brilliant idea. Looking at a map of solid blue states, LA, the California Bay Area, Chicago, Greater New York City, Boston, and Baltimore-DC are leeches draining the nation. If most of these were cut out of congress and the electoral college, it would be a whole different ball game.

[Buckeye McFrog]

On the up side if the GOP wins they should declare that since it is illegal for a state to go bankrupt any state seeking assistance reverts to the status of territory.

Oooooh....I like the way you think! Though if they become a territory doesn't that just allow them to continue drawing Federal benes while no longer having to pay Fed taxes? (a la Puerto Rico)

[GonzoGOP]

If most of these were cut out of congress and the electoral college, it would be a whole different ball game.

Oh and it gets better. You can redraw the boundaries when they get readmitted. Break up California. Separate a Rhode Island sized state around blue Chicago from the rest of otherwise red Illinois.

Finally territories pay no Federal income tax. So the previously blighted areas suddenly become tax havens for business. Without the steady blue votes from those states there will be a lot less Federal benefits, but there will also be a lot more jobs. Give people a taste of freedom and they might like it and want more.

[GonzoGOP]

Though if they become a territory doesn't that just allow them to continue drawing Federal benes while no longer having to pay Fed taxes?

See my next post. The drop in taxes is a good thing. It brings jobs back to the states, and once people get used to paying zero federal taxes they will once again start complaining when the rates go up again.

As for the benefits, without the votes from California, Illinois, New Jersey exactly how many benefits do you think there would be? The budget would be cut back to something resembling sanity.

Finally you could force the states to adopt Arizona immigration laws and voter ID as a requirement for readmission. The legal precedent is already on the books as Confederate states were forced to ratify several amendments in order to gain readmission.

[reg45]

If Illinois reverted to a territory, Mr. 0bama would no longer be a resident of The United States and would have to leave office.

[Lonesome in Massachussets]

States have sovereign immunity. They can simply repudiate their debt away. Pennsylvania defaulted 1910, in 1841 and 1842, eight states and the territory of Florida repudiated their debts. Many states, including New York and Massachusetts have no legal authority to incur debt. That’s why they have things like the New York Port Authority, which takes on “moral obligation” debt, which is not backed by the “full faith and credit” of the State. Ditto, the Massachusetts Turnpike Authority.

No one in their right mind would lend a U.S. State money, especially long term.

Civil service unions have been piling obligations on the States, while no one was looking, basically, the politicians bought labor peace and patronage today in return for crippling pension burdens on the next generation. The next generation may simply decline to honor those obligations.

[GonzoGOP]

If Illinois reverted to a territory, Mr. 0bama would no longer be a resident of The United States and would have to leave office.

It isn't going to happen with him in office, so it is a moot point. This would be an endgame strategy to destroy the progressives if not forever, at least for a very long timel. If they remain in power in any way they won't let it happen. Their destruction is such an obvious result they would not allow its contemplation unless given no other choice.

When progressives take power they move the nation left. When the conservatives take power they hold the line, or more recently just move left a little slower. Removing the blue state Representatives and disassembling the Federal welfare state in their absence would smash their power base. Breaking up the big blue states would prevent them from rebuilding it. I would constitute a massive jump to the right and they putting up a barbed wire fence to be sure it stays there for generations.

Before the Civil War most presidents were Southerners. As a price for readmission steps were taken to ensure that while the Southern states could come back in, they wouldn't be running things for a while. After the Civil war the first president born in the South to be elected was Dwight D. Eisenhower in 1952. To be honest he lived in New York at the time and was more from the US Army than he was from any particular state. The first identifiably Southern president was LBJ. And his election (as opposed to taking office after an assassination) in 1964 was almost a century after the Civil War.

[douginthearmy]

Pennsylvania defaulted 1910, in 1841 and 1842, eight states and the territory of Florida repudiated their debts.

Interesting. Good post.

[Hieronymus]

You missed Woodrow Wilson, born in Virginia in 1856. His father was a CSA chaplain. Not that the South would be that eager to claim him.

[Bubba Ho-Tep]

Not that the South would be that eager to claim him.

Maybe not with the long view of history, but at the time his election was the object of celebration across the south.

[TheOldLady]

Boop the Bank Robber’s Nose!

Don’t Let Him Get Away With It!

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