Death Spiral Nears ...

Acclaimed journalist Michael Lewis’ best-selling 2010 book, “The Big Short,” about the bursting of the housing/subprime bubble, focused on a little-known but ultimately highly influential Wall Street analyst named Meredith Whitney who saw the collapse coming in 2007. Now Lewis is again highlighting a dire warning by Whitney about a coming fiscal catastrophe, this time in U.S. municipal bonds. In “California and Bust,” a massive article in November’s Vanity Fair, Lewis details Whitney’s analysis: While many states are struggling, they’re less vulnerable than cities, because states can always bleed cities for funding. But hundreds of cities – without access to easy ways of raising revenue and with enormous unfunded obligations for pension and retiree health care costs – face fiscal ruin. Where will ground zero be for this meltdown? California, says Whitney.
http://www.signonsandiego.com/news/2011/oct/10/heeding-california-and-bust/

The unholy matrimony of government employees and unions gives birth to the death spiral ...