This is nothing short of a depression scenarion, plain and simple
Meredith Whitney: “We believe the municipals will default”
Meredith Whitney Advisory Group is now predicting dramatic declines in US home prices, large layoffs at US banks and widespread defaults in the municipal bond market. As concerns munis, people, she says, will not want to own this asset class after the shit hits the fan. The rating agencies have helped generate a false sense of security about the tax-exempt market. States will focus on their own survival first, leaving local governments to fend for themselves. Housing market will remain disrupted, banks cannot do well under this scenario. Eighty thousand layoffs in the US due to fallout in housing. Holy sheet!