Bank analyst Meredith Whitney has come out with a 600-page report that details another looming economic crisis: the precarious status of state and local finances.

"What Whitney found reminds her of the poor disclosure and arcane accounting rules that hid the fragile condition of the banks and monoline insurers that she unmasked," Fortune notes. "The states represent the new systemic risk to financial markets," says Whitney. "I see a lack of transparency and an abundance of complacency on the part of investors and politicians, just as we saw before the banks imploded," she said, according to Fortune.

This is an issue that has hardly gone unnoticed. State officials are keenly aware of the problems facing them, especially in places such as California, where the state economy and budget crises are big news. Unfortunately, the full impact may be underappreciated.

But as the problems continue to ripple down from the federal government to state governments to local governments and then to real people, this will likely get more attention. All of this is hitting home at a time when real estate markets have yet to recover.

You have to wonder how much local economies can take and whether the end of state and local pension systems is at hand.

For more:
- here's the Fortune article
- Whitney on 60 Minutes

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