Grand Rapids, MI -- (SBWIRE) -- 09/10/2010 -- Anyone who pays attention to world financial news knows about the problems Greece and other European Union (EU) countries have had recently. But what about some of our individual states right here at home? Noted financial advisor Dennis Tubbergen thinks we may have been too optimistic when thinking the monetary situations here at home are any brighter.

Tubbergen, CEO of USA Wealth Management, a federally registered investment advisory company, notes at the end of the day the financial health of many U.S. states would compare to that of Greece and other EU countries. Tubbergen believes excessive debt is the reason for the economic mess we now find ourselves in and offers his opinions in his economic blog and monthly newsletter Moving Markets.

“I may have been optimistic in my assumptions, with the cost to insure the debt of some U.S. states now exceeding the cost to insure the debt of some of these financially suspect countries,” admits Tubbergen.

Tubbergen refers to a Bloomberg Businessweek.com posting from August 21, 2010 that states, “Investors have to pay 284 basis points to insure their California bonds, 20 basis points more than Portugal’s. At 298 basis points, Illinois is in worse shape than Ireland. It costs more to insure the debt of New York (224 basis points) than Italy’s.”

In the same article, Justin Marlowe, an assistant professor at the Daniel J. Evans School of Public Affairs at the University of Washington in Seattle, states that credit-default-swap spreads show that these U.S. states are ‘on the brink of financial catastrophe.’

The article goes on to explain credit-default-swaps and how they are “. . . an instrument created as a form of insurance that also may be used to place bets against them. California and Massachusetts earlier this year asked securities firms how they could underwrite their bonds and sell contracts that would allow investors to bet against the states in the same way they would short stocks.”

That’s right. The states of California and Massachusetts asked securities firms to look into creating securities that would allow investors to bet ON these states defaulting upon their debt. And according to Tubbergen, recent financial regulatory reform did not address this issue.

“Just wait,” warns Tubbergen. “The very same vehicles that helped cause the last financial meltdown may very well play a big part in the next meltdown.”

For more information on Dennis Tubbergen’s views, visit http://www.dennistubbergen.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.