The Domino Theory of Bankruptcy

Two years ago, an obscure Wall Street analyst named Meredith Whitney was vilified for this statement she made to CBS' “60 Minutes:” “There's not a doubt in my mind that you will see a spate of municipal bond defaults. You could see 50 sizeable defaults, 50 to 100 sizable defaults, more. This will amount to hundreds of billions of dollars.” You see, Whitney was threatening a major industry in this country that typically goes under the radar - the municipal bond industry, a massive $3.7 trillion industry. It relies on the confidence of investors and Whitney was threatening it. But this week, she looks like she was on to something.

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