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The 11 "Death Spiral" States

Tyler Durden's picture


Eleven states made Forbes' list of danger spots for investors including California, New York, Illinois, and Ohio. They warned (and with the cliff it is even more critical), if you have muni bonds in these states - clean up your portfolio; if your career takes you there - rent, don't buy! Two factors determine their list of 'fiscal hellholes'. The first is whether there are more takers (someone who draws money from the government) than makers (the gainfully employed). The second is a state credit-worthiness score (via Conning) based on large debts, uncompetitive business climates, weak home prices, and bad trends in employment. Conning rates North Dakota the safest state to lend money to, Connecticut the most hazardous. A state qualifies for the Forbes' death spiral list if its taker/maker ratio exceeds 1.0 and it resides in the bottom half of Conning’s ranking. See below for the 11 states to avoid...no matter what Bob Toll, Larry Yun, Bob Pisani, or Alexandra Lebenthal tells you..


Number 11 - 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).

Number 10 - Hawaii Taker ratio: 1.02
Dark clouds over Waikiki Beach: Hawaii has slightly more takers than makers.


Number 9 - Illinois Taker ratio: 1.03
Dubious ex-gov Rod Blagojevich personifies what's wrong with this state: Too many goodies promised to insiders. Unfunded pensions contribute to the balance of 103 takers to every 100 makers.

Number 8 - Kentucky Taker ratio:1.05
Twilight in Lexington. People drawing from government slightly outnumber people chipping in with private-sector jobs.

Number 7 - South Carolina Taker ratio:1.06
Riptides on Folly Beach.


Number 6 - New York Taker ratio: 1.07
Blackout in the Flatiron district after the hurricane. Manhattan still has a vibrant financial sector. Manufacturing there is extinguished. Causes: taxes, unions, regulations and cheap apparel workers abroad.


Number 5 - Maine Taker ratio: 1.07

Casco Bay, Portland. This is a state with a beautiful coastline and a ratio of 107 drawers from the public fisc to every 100 contributors.


Number 4 - Alabama Taker ratio: 1.10

Cityscape seen from the Vulcan statue in Birmingham.


Number 3 - California Taker ratio: 1.39

California is generous to a fault, at least to state employees and the needy. To private sector employees, who are outnumbered, it is not so hospitable.


Number 2 - Mississippi Taker ratio: 1.49

Flooding near Tunica in May 2011. The state ranks second to worst on the list of states burdened by a high ratio of takers (welfare recipients and state employees) to makers (private sector workers). 


And The Worst State to live in or lend to is...

Number 1 - New Mexico Taker ratio: 1.53

Wildfire near the Los Alamos Laboratory in June 2011. In our taker/maker ratio, federal employees are excluded from the taker count since their cost is not borne locally. That doesn't save this state from having the worst ratio in the nation.


As Forbes advises:

To lend money to California, Illinois or the other nine states perched on the precipice requires a leap of faith. So does buying a house in those locales. Don’t count on a property tax limit to protect your home’s value. If other taxes are high enough, there won’t be any buyers.


Source: Forbes

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Tue, 12/04/2012 - 19:18 | 3033808 koaj
koaj's picture

im happy NJ for once didnt make the top 10 worst of something

Tue, 12/04/2012 - 19:21 | 3033818 Flakmeister
Flakmeister's picture

Arkansas is also mightly pleased...

A very dubious metric nonetheless...

Tue, 12/04/2012 - 19:38 | 3033857 MachoMan
MachoMan's picture

As we say in arkansas, thank god for mississippi!  [meaning, mississippi is always worse than us on virtually every metric]

Tue, 12/04/2012 - 19:45 | 3033878 flacon
flacon's picture

Speaking of New Jersey... FREE JON CORZINE!

Tue, 12/04/2012 - 20:09 | 3033908 TruthInSunshine
TruthInSunshine's picture

I honestly think Forbes underestimated the number of takers by a fairly significant degree. I am delving more deeply into their methodology.

And regarding this:  "...Bob Toll, Larry Yun, Bob Pisani*, or Alexandra Lebenthal..."

The carnival barking sell-siders of residential real estate, who declare that it's always, forever & wherever the best time to buy a home!  

*Bob Pisani, from failed real estate developer to wandering floor reporter for cnBSc, a network with approximately 1,800 daily viewers.

Tue, 12/04/2012 - 20:23 | 3033996 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I lived in NM 6 years. It is one step from a 3rd world nation. This is not surprising.

Tue, 12/04/2012 - 21:14 | 3034155 old naughty
old naughty's picture

No wonder most of the other 40 wish to secede...

Wed, 12/05/2012 - 01:23 | 3034817 merizobeach
merizobeach's picture

Where are the Mississippians crying foul that Alabama didn't make the list?  Oh, right, this is the internet.

Tue, 12/04/2012 - 22:29 | 3034329 New World Chaos
New World Chaos's picture

While I was there, New Mexico increased its resemblance to Old Mexico.  Not just talking about the demographics.  Gangs, evil cops, cronyism, poverty, drunk driving, and drug trafficing all got worse.

Really liked the place though (thanks, northern NM mountains and hippies).  The four main states I have lived in have all been in the top 6 as far as the welfare ratio goes, and NM was the least dysfunctional overall. 

Tue, 12/04/2012 - 20:58 | 3034089 perchprism
perchprism's picture



The author didn't go into much detail.  One "taker" doesn't equal one "maker" in terms of income.  However, that parasite's vote is what counts.  When the takers outnumber the makers it's all downhill from there.

Tue, 12/04/2012 - 22:57 | 3034519 A Nanny Moose
A Nanny Moose's picture

A jughead from the jughandle state.

Wed, 12/05/2012 - 04:43 | 3034918 Daily Bail
Daily Bail's picture

Check out the first photo - it's worth the click if you're a guy who likes chicks in bikinis while still clinging to the belief that it's all about finance.

You're welcome.

States Most Likely to Go Bankrupt

Wed, 12/05/2012 - 08:35 | 3035042 LedMizer
LedMizer's picture

I thought Charlie was as queer as a football bat?

Wed, 12/05/2012 - 09:47 | 3035196 shovelhead
shovelhead's picture

Honey baked hams...Yum.

Tue, 12/04/2012 - 23:47 | 3034668 ArkansasAngie
ArkansasAngie's picture

I was thinking the same thing ... about Mississippi.


Wed, 12/05/2012 - 09:32 | 3035147 midtowng
midtowng's picture

It's interesting how many of these states are deep red.

Wed, 12/05/2012 - 12:19 | 3035866 Jumbotron
Jumbotron's picture

As we say in arkansas, thank god for mississippi!  [meaning, mississippi is always worse than us on virtually every metric]


As someone who was born and raised in Mississippi and whose best friend at work from Arkansas constantly reminds me of this refrain....all I can say is that as the state that always is ranked 49th in everything....Arkansas sucks so bad they can't even be NUMBER 1 in losing....unlike the Great State of Mississippi !!


LOL !   +1 MachoMan


Go, Mississippi
Words and Music by Houston Davis


States may sing their songs of praise
With waving flags and hip-hoo-rays,
Let cymbals crash and let bells ring
Cause here's one song I'm proud to sing.


Go, Mississippi, keep rolling along,
Go, Mississippi, you cannot go wrong,
Go, Mississippi, we're singing your song,

Go, Mississippi, you're on the right track,
Go, Mississippi, and this is a fact,
Go, Mississippi, you'll never look back,

Go, Mississippi, straight down the line,
Go, Mississippi, ev'rything's fine,
Go, MIssissippi, it's your state and mine,

Go, Mississippi, continue to roll,
Go, Mississippi, the top is the goal,
Go, Mississippi, you'll have and you'll hold,

Go, Mississippi, get up and go,
Go, Mississippi, let the world know,
That our Mississippi is leading the show,

Tue, 12/04/2012 - 21:33 | 3034229 Muddy1
Muddy1's picture

New Mexico is #1 for something besides alcohol related traffic accidents??????????  As a Native New Mexican, I think I'm offended.

Perhaps off topic but now reported via DRUDGE: NSA is watching you, and everyone else. http://rt.com/usa/news/surveillance-spying-e-mail-citizens-178/

Tue, 12/04/2012 - 22:58 | 3034524 A Nanny Moose
A Nanny Moose's picture

Were employees at Los Alamos counted among the makers, or the takers?

Wed, 12/05/2012 - 11:04 | 3035528 aerojet
aerojet's picture

What difference does it make that the NSA is watching us?  The NSA has *always* been watching us.  And if they're so freaking good at it, why is there such a vibrant illicit drug trade going on in the US?  Does that mean fed.gov basically underwrites illegal drugs.  Don't answer that, because I already know that they do.

Tue, 12/04/2012 - 19:29 | 3033839 cossack55
cossack55's picture

I'm shocked Freedonia didn't make it.

Tue, 12/04/2012 - 22:34 | 3034417 Fred Hayek
Fred Hayek's picture

Rufus T. Firefly straightened the place out.

Tue, 12/04/2012 - 19:33 | 3033851 JPM Hater001
JPM Hater001's picture

Is New Jersey still a state? I thought it was turned into a swamp.

Tue, 12/04/2012 - 19:37 | 3033858 cougar_w
cougar_w's picture

Sure they are still a state, just like Louisiana is.

Don't tell them I said that though, they'll cry.

Tue, 12/04/2012 - 20:46 | 3034043 Seasmoke
Seasmoke's picture

if NJ isnt on this list, then these 11 states are in BIG fucking trouble.......NJ is nothing but a corrupt cesspool of TAKERS

Tue, 12/04/2012 - 22:58 | 3034425 mark mchugh
mark mchugh's picture

Not so.  (And I can't believe I'm defending New Jersey)

In 2009 (the most recent data), New Jersey was one of the very,very few states that sent more to Washington than it took.


(Page 2 - NJ sent Washington $103.5B)


(NJ only got $80.6B from Washington)

Note: California sent $273B & got $346B


Tue, 12/04/2012 - 23:01 | 3034532 A Nanny Moose
A Nanny Moose's picture

That is one of the best sites ever for raw historical fiscal data.

Tue, 12/04/2012 - 23:15 | 3034577 Antifaschistische
Antifaschistische's picture

That's only because they aren't including Tropical Storm Sandy Relief Dollars....if they did, you'd make the top five.  Never give up hope.  :)

Tue, 12/04/2012 - 19:21 | 3033813 EuroInhabitant
EuroInhabitant's picture

According to Ambrose E-P, the US is recovering thanks to the shale gas revolution. Lots of manufacturing jobs are "homecoming" because of the cheap gas. So Americans, you are having a bright future.

Tue, 12/04/2012 - 19:43 | 3033836 Stuck on Zero
Stuck on Zero's picture

The government already accounted for that economic plus and spent it.  With interest.


Tue, 12/04/2012 - 19:49 | 3033887 surf0766
surf0766's picture

The epa will shut gas fracking down once the frackers are told they do not pay their and their neighbors fair share.

Tue, 12/04/2012 - 20:04 | 3033922 Ginsengbull
Ginsengbull's picture

Those jobs will be gone when they have enough wells operational.

Tue, 12/04/2012 - 20:10 | 3033949 CCanuck
CCanuck's picture

All of your bright futures are belong to us

Tue, 12/04/2012 - 19:22 | 3033817 Rustysilver
Rustysilver's picture

You forgot to add CT and MA to the list.

Tue, 12/04/2012 - 19:37 | 3033854 insanelysane
insanelysane's picture

How the hell did RI not make the list???

Wed, 12/05/2012 - 11:07 | 3035548 aerojet
aerojet's picture

What about Michigan, Wisconsin, Minnesota?  Welfare state writ large...

Tue, 12/04/2012 - 19:22 | 3033819 kaiserhoff
kaiserhoff's picture

Who still buys this shit?  I mean really, what can they be smoking that they think they'll get paid?

Tue, 12/04/2012 - 19:25 | 3033828 Cdad
Cdad's picture

Answer?  Dumb ass, lazy pension fund managers.  As for what each is smoking, I think that depends on what state said pension fund manager hails from.

As I wrote elsewhere, this market is absolutely flooded with idiots....aka America's "Best and Brightest."

Tue, 12/04/2012 - 19:32 | 3033848 Winston Churchill
Winston Churchill's picture

Same guys that couldn't get enough RMBS bonds.

Maybe DHS needs to up the ammo orders.

1,5 bn might not be enough ,when these pension funds, and

states blow up.

Tue, 12/04/2012 - 20:03 | 3033918 Ginsengbull
Ginsengbull's picture

Their ammo sucks.


Frangible, low ricochet potential crap, and green 223 lead free fmj.


Russians arent messing around. 203 grain 7.62x54 Barnaul are cheap, and soft point for excellent terminal effects.

Wed, 12/05/2012 - 11:10 | 3035558 aerojet
aerojet's picture

Because so many long guns are chambered in 7.62x54R these days.  Let's see--Mosin Nagant, various Dragunov clones, and if you can find one, the PKM GPMG. 

Tue, 12/04/2012 - 19:23 | 3033822 francis_sawyer
francis_sawyer's picture

More bread & circuses... NOW!

Tue, 12/04/2012 - 19:24 | 3033825 macdec35
macdec35's picture

I am in Arizona only a few miles((9) from Calif, are we indanger of an influx on those folks?

Tue, 12/04/2012 - 19:33 | 3033852 cougar_w
cougar_w's picture

Californians on the move head north, as a rule. LA could go broke and empty and you might see something then. Otherwise, you can relax.

Oh and you can make some coin here. If you really live that close then you are in good position to profit from all the confused and stupid LA fat people looking for a burger and Big Gulp while they try to find a place to lay down and die. Set up a fast food franchise or else a cemetary catering to the Big-n-Tall-but-mostly-Big, either could be a money maker.

Tue, 12/04/2012 - 19:41 | 3033865 spinone
spinone's picture

I hear goliath caskets is looking for franchise owners http://www.oversizecasket.com/

Tue, 12/04/2012 - 19:48 | 3033888 cougar_w
cougar_w's picture

I wonder if Rome in 64 AD had these kinds of problems?

Tue, 12/04/2012 - 22:06 | 3034330 hairball48
hairball48's picture


As long as they don't come to Montana!

Tue, 12/04/2012 - 19:56 | 3033901 Strider52
Strider52's picture

Too freakin hot in Az.

Tue, 12/04/2012 - 23:06 | 3034546 A Nanny Moose
A Nanny Moose's picture

Mogollon rim perhaps?

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