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Meredith Whitney Municipal Bond Collapse Call Being Questioned

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http://www.nytimes.com/2011/02/08/business/economy/08whitney.html?_r=1&ref=business

If one stock-picker emerged intact from the wreckage of the financial crisis, it was Meredith Whitney. With a prescient warning about bank stocks in 2007 — as well as a gift for the perfect sound bite — she became a media darling, celebrated in a Fortune cover article and in frequent television appearances as a market seer.

Until now, that is. These days, Ms. Whitney, 41, finds herself pilloried in the news media and by colleagues for predicting a calamity in municipal bonds. Critics say the call is overstated, but it has alarmed investors in that usually sleepy market.

Ms. Whitney is also drawing scrutiny from Washington, where a Congressional panel will meet on Wednesday to examine the turmoil in the muni bond market, including whether Ms. Whitney’s call has fed the volatility and allowed some investors to profit unfairly.

Citing scheduling conflicts, Ms. Whitney has declined an invitation to appear before the panel of the House Oversight and Government Reform. But the subcommittee’s chairman, Representative Patrick T. McHenry, Republican of North Carolina, said that would not dissuade him from investigating her record.

“This isn’t a gotcha thing, but she’s going to be part of the hearing, whether or not she participates,” he said. “If she doesn’t want to come forward in a venue like this, that makes a statement.”

Ms. Whitney has not been shy about making statements in the past, whether it was delivering bold predictions about unemployment or dressing up as Paris Hilton for her firm’s Halloween party.

But her scathing report on deteriorating state finances in September, followed by an appearance on “60 Minutes” in December, has been catnip to her critics.

“There’s not a doubt in my mind that you will see a spate of municipal bond defaults,” she said in the “60 Minutes” interview. “You could see 50 sizable defaults, 50 to 100 sizable defaults, more. This will amount to hundreds of billions of dollars worth of defaults.”

Normally, Wall Street analysts are loath to criticize one another, at least on the record. But since then, even fellow analysts are calling her out for stepping beyond what she knows, bank stocks, into less familiar territory. Others, especially municipal bond market players, have gone on the warpath.

“I’ve seen a copy of the report, and frankly, I’ve seen better papers from graduate students in finance,” said Richard P. Larkin, director of credit analysis at Herbert J. Sims & Company, a municipal bond broker and underwriter. “It’s ludicrous, reckless and irresponsible, and it’s being done without any regard for the consequences.”

Investors were pulling money out of municipal bond funds even before Ms. Whitney’s appearance on Dec. 19, but in the weeks since, the pace of withdrawals has accelerated, with more than $14 billion coming out between Dec. 22 and Feb. 2.

Considering the state of US municipal finances a collapse seems inevitable, unless of course the nice Mr Bernanke steps in and just buys all this crap at face value because he now can't make a loss. What is clear is the tax revenues have fallen far short of current expenditure and tax revenues don't appear to be recovering which can only mean ultimately default. The difficult question is when? Already in the states the pressure for default for some cities is growing and it only appears to be a question of when rather than if and therein lies the problem, predicting when the collapse will happen is very difficult, she might have made the call too early certainly at the moment there is very little political support for a default as we are still in the denial stage.

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http://market-ticker.org/akcs-www?post=179313

Congress: Lie Or Get Subpoenaed!

Amazing crap here....

A congressional subcommittee that's investigating the implosion of the $3 trillion muni bond market wants Meredith Whitney "to come clean and explain her doomsday prediction of hundreds of billions of dollars in muni defaults over the next year," Charlie Gasparino reports.

I find this incredibly amusing, given the following report:

PROVIDENCE, R.I. (AP) — Federal regulators are investigating Rhode Island's bond offerings, adding it to the list of state and municipal governments to come under scrutiny by the Securities and Exchange Commission.

This is on top of Illinois and Pennsylvania issuers.

The problem? Pension funds, among other things. A black hole that I've often commented on. Given the state Constitutional issues with these funds, and the lack of a PBGC exit capacity for the States (in present law), there's little that can be done about it at this point too.

Will it detonate all municipal debt? No. But that's not what Merideth said. She said that there would be "many" defaults and reach hundreds of billions in face value.

I can believe that, although I think she's a bit aggressive on the timing. That is, I don't think the worst of it is 2011; it just gets worse from here. So I'd say the number is accurate but she might be a bit early.

The pension issues are an ongoing problem and until they're solved, they're not going away. Never mind Medicaid-cum-illegal-alien care. Yeah, I know, it's not illegal-alien care. Not officially anyway. Pull the other one.

I guess I shouldn't be surprised by any of this. The candy-emitting unicorn must not be disabused. Especially if someone might be led to understand what's really coming out of that animal's butt, and oh by the way, there's no such thing as a Unicorn either - that's just an old-fashioned bull and he's emitting.... well, you know.

Denniger on this.

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It is interesting how humans play games. Everyone seems to be out to get Meredith, because she was the little boy who caused so much trouble when she said that the King wasnt wearing any clothes.

This Richard P Larkin is a bit of a joke. Was he one of the analysts who called out the criminality behind the US housing bubble? He calls Meredith's actions irresponsible. I think that she experienced similar when she said that Citigroup was in trouble. Of course calls such as this normally draw the ire of those who have a vested interest in things like keeping the Ponzi going, especially if they havent been able to exit. Blaming the person who exposes the scam is certainly an old tactic to scare people away. Maxwell did that for as long as he could, as did those on the board at Enron.

Clearly in the US, there are states that are unable to raise enough taxes to pay on their commitments, and need to borrow Ponzi fashion to keep everything going. Their only hope is a federal bailout. Predicting when a Ponzi will collapse if you know it to be a Ponzi, isnt easy. Madoff went on for a very long time.

Still, I am sure that they will do all they can to rip Meredith's analysis to shreds and turn the blame on her, instead of hauling those who have run reckless budgets and made stupid promises at the expense of their taxpayers.

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Meredith Whitney’s Hedge Fund Said to Be in Turmoil
2014-12-19

The hedge fund Meredith Whitney started last year after she became one of Wall Street’s best-known analysts is in turmoil. Her biggest investor demanded his money back and two executives left in the past month, according to a person with knowledge of her firm.

..Whitney, 45, gained Wall Street renown during the financial crisis for correctly predicting Citigroup Inc.’s dividend cut. Then, on CBS Corp.’s “60 Minutes” in December 2010, she predicted hundreds of billions of dollars of municipal-bond defaults.

She later told Bloomberg News it had been “a guesstimate” involving “fifth-derivative dimensions.” Instead of collapsing, municipal bonds became a star performer.

..Others are finding profits hard to come by, too. Hedge funds are shutting at a rate not seen since the financial crisis, with 461 closing in the first half of the year, according to Hedge Fund Research Inc

http://www.bloomberg.com/news/2014-12-19/meredith-whitney-s-hedge-fund-said-to-be-in-turmoil.html

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Ms. Whitney is also drawing scrutiny from Washington, where a Congressional panel will meet on Wednesday to examine the turmoil in the muni bond market, including whether Ms. Whitney’s call has fed the volatility and allowed some investors to profit unfairly.

Citing scheduling conflicts, Ms. Whitney has declined an invitation to appear before the panel of the House Oversight and Government Reform. But the subcommittee’s chairman, Representative Patrick T. McHenry, Republican of North Carolina, said that would not dissuade him from investigating her record.

It's probably allowed a different set of investors and people to profit/benefit compared to the Fed's (and others) announcements intended to manipulate markets. All their announcements seem to go without official scrutiny.

Why does it always have to be the same benefactors - give some others a chance for a change.

Edited by billybong

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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