Last night CBS' 60 Minutes reported on the growing crisis in state government budgets in the U.S. This blog has recently written about this topic - as have other bloggers (see a good piece today by Robert Oak in The Economist Populist). 
Steve Kroft of 60 Minutes interviewed New Jersey Governor Chris Christie and Meredith Whitney, who manages the advisory firm, Meredith Whitney Advisory Group LLC. She is recognized as one of the financial analysts who correctly predicted the U.S. housing bubble before it happened.Whitney is very worried about the growing budget deficits and outstanding level debt that state governments have incurred. She told Kroft, "Next to housing this is the single most important issue in the United States, and certainly the largest threat to the U.S. economy,"
Dr. David Krause, AIM program director said, "Just two weeks ago I wrote about the 'Next Debt Crisis: U.S. Municipal Bonds'. I believe this situation will continue to worsen - despite the improvement of the overall economy - because state and local government revenues tend to lag the overall economy by a year or two. This expose by 60 Minutes should open the eyes of a lot of investors who will be surprised when they see that they muni bond mutual funds have dropped in value in Q4, while stocks and other risky assets have had excellent performance. This is good background information and I encourage my students to follow this situation, which is not unlike what we are presently viewing in Europe."
