Boy are the knives coming out for Meredith Whitney !
Whitney is the analyst who predicted the bursting of the real estate bubble and that bank stocks would tank as a result. At the time she was making those predictions she was attacked on numerous grounds all of which proved to be baseless.
In a story in today's N.Y. Times Business section, she is being attacked for her prediction made on "60 Minutes" that we could see " 50 to 100" municipal and state defaults.
The criticism and attacks include charges that she was irresponsible in saying what she did. That she was responsible for investors pulling their money out of municipal funds when the story admits that they were doing so BEFORE she ever opened her mouth.
That she was acting solely in her own self interest. That she is seeking to have her own company recognized as a rating agency for municipal debt. Well after the sterling performance of Moody's , Fitch's and S & P; how could she do any worse ?
She is a "one hit wonder". Many analysts make one "big" prediction in their careers that comes true and she's had hers. Some quoted in the article liken her to Elaine Garzarelli who predicted the October, 1987 Stock Market Crash.
The funniest one is that she is "unqualified" to opine about state and municipal debt. Well anyone up on current events who is familiar with the precarious state of many state and city budgets has come to the same conclusion that she did.
Clearly, there is a lot of push back by municipal and state unions. Aided by their political and media friends. Which includes the Times.
Those quoted in the story who actually READ her September, 2010 report all said it was well researched and documented and measured in its language.
This "kill the messenger" approach follows weeks of stories about possible municipal and state bankruptcies i.e. "thinking the unthinkable". The story even tries to take a "What me worry" approach by mentioning that Vallejo's bondholders were paid off by its insurance company. It didn't bother mentioning that the insurer, MBIA, is generally considered to be insolvent. It also says that states can just raise taxes, unlike the banks. Well yeah, until they reach the point of diminishing returns where tax increases actually bring in LESS, not more revenue.
On a related note, just today it was reported that Obama is proposing to lend states the money they are supposed to pay back to the Feds for the money they were lent to make Unemployment Insurance payments. I am NOT making this up !



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