The beneficiaries of taxpayer charity will be highly concentrated in just five states – California, Nevada, Arizona, Florida and Michigan. That is not because the subsidized homeowners are poor (Californians with $700,000 mortgages are not poor), but because they took on too much debt, often by refinancing in risky ways to "cash out" thousands more than the original loan. Nearly all subprime loans were for refinancing, not buying a home.
I linked to this article because I have been telling anyone who would listen that this recession is going to be felt more severely in just a few states. Everyone is going to feel the recession but the tone of the conversation will be dominated by the severity of the problems in just a few states. Meanwhile the economies in the other states will recover quickly since they have less severe problems to deal with. All of the states on this list except for Michigan were the primary beneficiaries of the real estate bubble and the sub-prime lending. I suspect that Michigan’s problems are more closely related to the layoffs in the auto industry. Michigan’s problems will only be resolved when the rest of the country starts to buy cars again.