Thinking about buying a house? Or a municipal bond? Be careful where you put your money, says William Baldwin at Forbes.
And he is very right. Baldwin identifies two factors which make a state a Death Spiral State:
The first is whether it has more takers than makers. A taker is someone who draws money from the government, as an employee, pensioner or welfare recipient. A maker is someone gainfully employed in the private sector...
The taker count is the number of state and local government workers plus the number of people on Medicaid plus 1 for each $100,000 of unfunded pension liabilities...
The second element in the death spiral list is a scorecard of state credit-worthiness done by Conning & Co., a money manager known for its measures of risk in insurance company portfolios. Conning’s analysis focuses more on dollars than body counts. Its formula downgrades states for large debts, an uncompetitive business climate, weak home prices and bad trends in employment.
Here are the top Death Spiral States, according to Baldwin:
Ohio Taker ratio: 1.00
The battleground state has a fiscal standoff between takers (people collecting welfare, a government salary or a government pension) and makers (private sector employees).
Hawaii Taker ratio: 1.02
Dark clouds over Waikiki Beach: Hawaii has slightly more takers than makers.
Illinois Taker ratio: 1.03
Too many goodies promised to insiders. Unfunded pensions contribute to the balance of 103 takers to every 100 makers.
Kentucky Taker ratio:1.05
Twilight in Lexington. People drawing from government slightly outnumber people chipping in with private-sector jobs.
South Carolina Taker ratio:1.06
Riptides on Folly Beach.
New York Taker ratio: 1.07
Causes: taxes, unions and, regulations
Maine Taker ratio: 1.07
A beautiful coastline, but lots of takers.
Alabama Taker ratio: 1.10
The Mises Institute, located in Auburn, AL, is outnumbered. Send money, they need help.
California Taker ratio: 1.39
Now, we are talking serious takers--who all think they are givers.
Mississippi Taker ratio: 1.49
It's a deadly combo of welfare workers and state employees.
New Mexico Taker ratio: 1.53
The worst taker state in the country
(ht Joe Nelson)