Just when you thought it was safe to get back in the market

Bank analyst sees a potential trillion dollar state budget crisis:

“The similarities between the states and the banks are extreme, to the extent that the states have been spending dramatically, growing leverage dramatically,” Whitney said.

...when her firm looked at states’ credit ratings done by Moody’s, the reasons for those overly high ratings were invisible. “Our ratings are quantitatively based,” she notes.

State constitutions, Whitney notes, require balanced budgets, a feat they are accomplishing by using off balance sheet leveraged pension funding.