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A new disaster is looming, according to a prominent market research analyst. Meredith Whitney, a financial analyst who runs her own consulting firm and correctly predicted the major debt fallout of Citigroup, warned in a little-reported on interview Sunday that as many as 100 US cities face default on their municipal bonds.
Cities and states issue bonds to pay for public services. The trouble is that municipalities are no longer collecting enough in taxes to meet their budgetary needs. According to a 60 Minutes report Sunday -- which received almost no attention by the popular press -- US cities have spent nearly half a trillion more than they've collected in taxes, and face pension shortfalls of $1 trillion.
"Next to housing this is the single most important issue in the US and certainly the biggest threat to the US economy," Whitney told a CBS 60 Minutes' interviewer Sunday night.