MEREDITH WHITNEY: Something's Got To Give As Muni Bonds Enter A 'Negative Feedback Loop From Hell'

Meredith Whitney, the banking analyst who once correctly predicted Citi would have to slash its dividend, has been taking a lot of heat for predicting cascading defaults in the municipal bond market. This call has not panned out.

Whitney first went public with this call in a a 60 Minutes interview back in December 2010.

And she is showing no signs of letting up.

According to Investment News' Jeff Benjamin, Whitney continued to hammer her message at the Investment Management Consultants Association conference in Seattle on Sunday. From Benjamin:

“This is just the beginning, and this stuff will take a long time to play out,” she said. “This is not fun stuff to talk about; the fun stuff to talk about is all the good stuff that governors are doing around the country.”

Along those lines, Ms. Whitney laid out an investment theme that involves digging deep into state and municipal budgets that will tell the story of where and how money is going to be spent over the next few decades.

“People who don't like the taxes in one state will move to another state and that creates the negative feedback loop from hell, and something has got to give,” she said. “The investment side of the issue is the demographic landscape of the United States is changing before our eyes and this is what is important for the next 25 years.”

Yikes.

Read more at InvestmentNews.com.