New Jersey Borrowing a Sign of Coming Muni Crisis: Whitney

New Jersey's move to take out a short-term $2.25 billion loan to pay its bills is symbolic of how difficult state and municipal financing will be in the year ahead, analyst Meredith Whitney told CNBC Tuesday.

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Whitney, who has predicted a wave of municipal defaults this year worth upwards of $100 billion, said the move in the Garden State is not highly significant by itself.

But she said it is "endemic of the larger issues" when taken in conjunction with how much trouble the state and others like it across the nation will have in meeting their basic debt and pension obligations.

"I wouldn't read too much into this one financing. It could be business as usual. That's not the issue," Whitney said in a live interview. "New Jersey's fiscal woes are far bigger than them accessing a line of credit or a new loan."

Rather, she said these types of moves will be mere warning shots as states approve their spending plans for the fiscal year ahead—running from July 1 to June 30—and balance those budgets by cutting local aid.

"That's what's really going to hurt. So the pain of the states is just upon us," said Whitney, famous for her warning about Citigroup's exposure to subprime loans back in 2007, a call that would foretell the ensuing financial crisis. "What you'll see now is as the states are submitting final budgets, you'll see the real pain at the municipal level start happening July 1. That will intensify and that's where you'll see the fallout."

The financing option that New Jersey Gov. Chris Christie is exploring would entail a short-term loan that the state would use to bolster its tight cash position so it can pay bills once the new fiscal year starts.

It would be the second time in two years the state employed the move—the first being two years ago under then-Gov. Jon Corzine in a move that drew catcalls from Republicans who bemoaned the additional debt load, even though it was short term. In the end, the state did not use the line of credit.

That likely will be different this time, though, as the government struggles with a tight cash position until it begins collecting the bulk of real estate tax revenues in later quarters.

"This is not a dead-end situation, a doom situation," Whitney said. "It's just gone to a point, an inflection point, where you've got to find solutions very near-term before you see larger risks."

Whitney continues to stick to her prediction that a swarm of municipal defaults looms, even in the face of virulent criticism from those who see municipal financing improving.

When she first made the call on "60 Minutes" in January, the municipal debt market sold off. Since then, it has recovered and municipal bond funds have shown modest inflows for the past few weeks, with $128 million net coming in for the week ended June 22, according to Lipper.

But that came after $49 billion had left munis following the initial Whitney call.

"When I come up with numbers of the defaults, I can think of dozens of large ones off the top of my head," she said. "This is just the sad reality of where we are."