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Whatever one thinks about the Meredith Whitney call, she was rather good on CNBC making her case the other morning. I think my concern that's not necessarily bond-specific but more of a generalized concern is some of the small-to-mid towns in rural/outlying areas - if they start losing services (a number of smaller towns losing post offices, which is actually happening), the towns may start to wither over time and you may get more and more towns like Cairo, Illinois, which is effectively becoming abandoned - the downtown is already largely empty, as seen in the first portion of the video below (and Cairo has had problems over many years, but I just think more small towns will wither similarly if they start seeing reductions in core services.)
The youtube video below was filmed in 2008 and notes the population at 3,600. According to the census, it has declined more than 20% since then.
I don't think this is really a problem of recession although recession might have accelerated the process. It is simply due to big city urbanazation of US. As economy has transformed to a more service oriented economy, jobs particularly for younger generations are more available in bigger cities so some small town will be losing population. Even in greatest times, a town loses the big manufacturer as a factory is closed and the fortunes turn.
There's certainly aspects of that, but a transformation into an (even more?) service-oriented economy is not a positive. My view was that if things do turn South again, rural cities are not going to fare well, and I'm doubtful big cities are going to be without considerable problems of their own. I've said it before and I'll say it again: this time period does not end well.
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The youtube video below was filmed in 2008 and notes the population at 3,600. According to the census, it has declined more than 20% since then.