“If previous crises provide any indication of what lies ahead, FY2011 may be even more challenging than 2010.”

– Meredith Whitney, or Meredith Whitney Advisory Group, in a report on mounting fiscal troubles for state governments. After riding the boom and bust in real estate, 48 states are underfunded for fiscal 2010, she notes. State and local government spending accounts for 12% of U.S. GDP. Whitney’s conclusion: When state governments lower costs to balance their budgets, they’ll be cutting spending programs and jobs that will weigh on overall GDP.

Meanwhile, the Pew Center released its own dire analysis of the states’ fiscal conditions. With the Dow hitting another 13-month high today, it might be prudent to swallow a dose of caution by reading “10 states face financial peril.”

“If you buy a railroad, you can’t move it to China or to India or anyplace else. You are betting on the United States. I can’t think of a surer bet.”

- Warren Buffett, explaining Berkshire Hathaway’s (BRKB) $44 billion buyout of Burlington Northern Santa Fe (BNI).

Click here to see Buffett talking about his biggest deal ever with CNNMoney anchor Poppy Harlow.

While the size was a surprise, the bet on America was not. In September, at the Fortune Most Powerful Women Summit, Buffett said he was busy buying stocks and had lots of faith in the U.S. “Our genius in the U.S. is not avoiding problems. It’s overcoming problems,” he told my colleague Carol Loomis.

Their on-stage conversation–recalling the collapse of Lehman (BCS) and its awful aftermath, and also looking ahead–was terrific. We ran snippets earlier on Postcards. But since Buffett is back in the news, we’ll share all 22 minutes:

And if you’re curious to know what it’s like to work for Buffett, read “How Warren Buffett manages his managers.”

“The lesson of today is that you’re working for yourself.”

–Janice Bryant Howroyd,  founder and CEO of staffing company Act 1 Personnel Services, in The New York Times. Howroyd’s advice is yet another take on the the advice that in these uncertain times, it’s smart to stay flexible and adapt. As the employment landscape transforms and companies try to keep pace, workers have to do the same. This can mean refreshing skills, considering temporary or part-time work, and even accepting lower pay to stay in the game.

“Most people say they’re giving their lives to the company, but it’s more of a cooperative process. Companies have tasks to perform and you must put in your best effort and identify yourself with that job,” not with the company,” Howroyd says. If you can’t be your own boss, at least be the boss of your career. –Jessica Shambora

“Progress comes in fits and starts and we’re going to need to grind out this recovery.”

–President Obama, responding to today’s dismal jobs report that showed much greater losses than expected. The reported net loss of 263,000 jobs for September was up from 201,000 in August, and the unemployment rate of 9.8% hit another 26-year high. “I’ve made the point that employment is often the last thing to come back after a recession, and that’s what history shows us,” the President said. “But our task is to do everything we can possibly do to accelerate that process.”

Meanwhile, the teen unemployment rate hit a record high 25.9%, with young minority workers disproportionately affected. At 37%, the rate of unemployed African American teens is four times the national average. “The full effects of that lost opportunity will be felt for years to come,” says Kristen Lopez Eastlick, Senior Research Analyst for the Employment Policies Institute. –Jessica Shambora

Our post, “Why CEOs should do housework,” drew a bunch of interesting comments, including one from Dr. LPC in Canterbury, England, who cites research showing that “couples where husbands contribute to housework are also more likely to have additional children.” Dr. LPC surmises that this “must result from all that additional sex they get…”

Whatever.

That August 11 Postcard was about a new book, due out next month, called Women Want More, by Boston Consulting Group senior partner Michael Silverstein. The book is a Women’s marketer’s guide to capturing “the world’s largest and fastest-growing market.” Last week I had lunch with Silverstein–who labeled me a “fast-tracker,” which is one of his six consumer categories. And I guess it’s the best one to be in since fast-trackers, 24% of the female population, comprise 34% of female earned income. Fast-trackers seek adventure and learning, the marketing man says.

Okay, as I sought more learning on this topic of female buying power (women spend over 70% of consumer dollars globally, I learned, and are outpacing men in income growth), I dove into the data he left for me. One chart, in particular, struck me as practically as interesting as Silverstein’s stats about where in the world husbands do housework and where they don’t.

Practically as interesting–and much more practical, if you’re a marketer.

When Silverstein and his BCG colleagues asked 12,000 women in 22 countries about her “favorite brands,” here are the ones that got the most mentions, in order: Nike (NKE), Apple (AAPL), Sony (SNE), and Banana Republic and its retail sister, Gap (GPS). After those came Adidas (ADDDF), Target (TGT), and Dove (UL).

Investment companies and banks and automakers, Silverstein says, don’t stand a chance in this “favorite brand” tally because women, the BCG research shows, say those businesses don’t understand their needs. “The providers effectively diss women,” Silverstein says.

Hmm, I would add that financial firms and car companies often confuse customers more than simplify. They complicate their offerings. Nike, Apple and the other favorites score because their pitches are clear and direct, even when the products are complex.

And what do women want more of most of all? Time.

That, we all could’ve guessed!

“The United States economy is now out of the emergency room and appears to be on a slow path to recovery.”

–Warren Buffett, today in a New York Times op-ed. The Berkshire Hathaway (BRKA) CEO writes that while mistakes were made in the recovery effort, a “gusher of federal money” prevented a meltdown. He goes on to caution that “enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects.” If we don’t, the Oracle of Omaha warns us (and Congress): “Unchecked greenback emissions will certainly cause the purchasing power of currency to melt.” –Jessica Shambora

She still has her mojo.

A lot of people were surprised, even confounded, when analyst Meredith Whitney, the bear of all bears, stuck her neck out early yesterday and put forth the Street’s highest estimates for Goldman Sachs’ (GS) second-quarter profits. Whitney predicted that Goldman would report $4.65 a share. The consensus estimate was $3.48. Goldman announced this morning that it earned $4.93.

And you’d think the stock would pop on that news, wouldn’t you? Attesting to Whitney’s mojo (which, as I noted in yesterday’s Postcard, we’d been questioning), CNBC’s Jim Cramer wrote this morning that “Meredith Whitney pretty much ruined the Goldman Sachs trade” by putting that super-high estimate ahead of the earnings call. Goldman shares rose seven points yesterday to nearly $150. It’s down slightly  today. “Whitney wrecked it,” Cramer griped about the do-nothing stock.

Whitney thinks Goldman stock has plenty of room to run. Ever bearish on the economy, she’s convinced that Goldman, above all financial-services firms, will benefit from global woes, which are rising. In yesterday’s report, she says that Goldman will make out big on the surging muni market. Goldman is a major underwriter of muni debt–albeit behind Citigroup (C), Bank of America (BAC), JPMorgan Chase (JPM), and Morgan Stanley (MS)–and the No. 1 book-runner of Build America Bonds. These are a new type of municipal bond, part of the Obama administration’s $787 billion stimulus plan. Cities, states, universities and government entities use BABs, as they’re known, to finance infrastructure projects. This is a potential $50 billion annual market, Whitney says, and Goldman currently holds a 25% share.

Meanwhile, state budget gaps are sure to balloon as tax revenues fall faster than expected–and  unemployment rises to 13%, Whitney predicts. Goldman is poised to benefit from the widespread pain. With her upgrade yesterday (making Goldman her only “Buy” as well as her sole upgrade since she quit Oppenheimer in February), Whitney lifted her estimate of Goldman’s full-year 2009 profits to $16.59 per share, from $10.80. In 2010, she expects Goldman to earn $19.65 a share. That’s substantially above the Wall Street consensus.

Her price target that accompanies her new “Buy” recommendation on Goldman: $186. That’s 25% above the current price. One Postcards reader, Matt in Baltimore, commented yesterday that it “would have been impressive if she had declared a ‘buy’ rating for Goldman back when it bottomed out at 52$ a share in Nov. 2008.” True. Whitney said precisely that yesterday morning on CNBC’s Squawk Box, adding that she’s only recently gained clarity on how Goldman is making money–the fixed-income bonanza. And once other analysts recognize it too, they’ll raise estimates.

So there she stands, a bull on Goldman Sachs, though still in bear clothing. Whitney’s husband, meanwhile, has been running with the bulls, literally. Six-foot-seven, 260-pound John Layfield, best known as onetime pro-wrestling champion JBL on WWE Monday Night Raw, is in Pamplona, Spain. While she was shaking up the market, he was doing the famous run. Another kind of mojo entirely.

All eyes are on Goldman Sachs (GS), which announces earnings tomorrow. What goosed the stock…and then the banking sector and then the entire market today? Meredith Whitney’s upgrade.

It mattered–and helped send Goldman up nearly 5% to $149–because the famously bearish financial-services analyst, who helped bring down Citigroup and the banking sector two years ago, has been negative ever since. She announced her upgrade of Goldman at 2:24 a.m. At least that’s when the email from her company, Meredith Whitney Advisory Group, popped into my inbox this morning. This is Whitney’s first upgrade since she broke away from Oppenheimer in February to go on her own. It’s also her only “Buy” rating among eight stocks she follows.

So yes, Meredith Whitney finally turned…on one stock only. Don’t dare call her a bull on the market. She says in today’s Goldman report that her positive outlook “is deeply rooted in our sustained bearish stance on the U.S. economy and state of U.S. financials at large.”

She likes Goldman because she’s predicting “a tsunami of debt issuance” from federal, state, and local governments to shore woefully underfunded budgets. That, plus a surge in corporate debt issuance (to at least 60% of peak cycle levels, she says) will benefit Goldman, which along with Morgan Stanley (MS) is the last Wall Street giant standing. Survival of the fittest, precisely. The weak fall and the strong get stronger.

As for Whitney, she’s showing her muscle. Last week here at Fortune, we were talking about her as we began to assess the crop of candidates for this year’s Fortune Most Powerful Women in Business list, due out in mid-September. Last year Whitney ranked No. 35 on the list. We were wondering if she’s still got her mojo. Guess she does.

P.S. Whitney has sells on three stocks: Wells Fargo (WFC), Capital One (COF), and Citigroup (C).

A gloomy outlook as we head off for the long weekend. Today’s monthly jobs report was worse than May’s, worse than expected, and worse than we’ve seen in 26 years. The U.S. unemployment rate rose to 9.5%…and is bound to go past 10%.

So when will the pain ease? Microsoft (MSFT) CEO Steve Ballmer told me last week: “I don’t think we’re in a recession. I think we’ve reset. It’s very different. A recession sort of implies a recovery…I don’t assume there is a recovery.” Here’s the video of Ballmer and me on stage at the Cannes Lions International Advertising Festival, where he was named Media Man of the Year.

While in France, I caught up with another CEO, WPP Group’s (WPPGY) Martin Sorrell, who’s long been one of the more wise and worldly forecasters. (His company owns ad and marketing agencies that serve global giants like IBM (IBM), American Express (AXP), Ford (F), and Nestle (NSRG.Y), as well as Microsoft.) I asked Sir Martin is he buys Ballmer’s belief that media spending might decline as a percentage of GDP in the next 10 years. “I think advertising and marketing services as a proportion of GDP will be flat or rise,” he replied. “Any flatness or decline in the developed markets will be outpaced by growth in the BRICs and next 11.” Next 11? He means the major developing countries beyond Brazil, Russia, India, and China.

As for that broader question of how we’ll “reset” or otherwise emerge from this global economic downturn, Sorrell has an artful way of envisioning it: “It will be like an italic, lower-case letter “L” with a little bit of a flip up,” he says. “The recovery will not be a ‘V.’ And it will not be a ‘W.’ The little flip up will come in the first half of next year.”

Noodle that, and leave your worries behind this weekend!

P.S. In case you missed them, here are two more video clips from my conversation with Steve Ballmer in Cannes: Ballmer on Bing and Yahoo and Ballmer on Windows 7 and lessons from Vista.

On Friday I told you about Microsoft (MSFT) CEO Steve Ballmer’s riff on Bing and Yahoo. I asked him: How much market share do you need to gain in search to not need to do a deal with Yahoo (YHOO)? Ballmer called my question “back-handed” and went on to give a really interesting answer. Check out the video or my Friday Postcard if you missed the Microsoft boss’s take on Bing and Yahoo.

Ballmer nobly engaged and sparred in our on-stage Q&A at last week’s Cannes Lions International Advertising Festival. He batted back my question about the global recession this way: “I don’t think we’re in a recession. I think we’ve reset. It’s very different. A recession sort of implies a recovery.” He added: “For planning purposes, I don’t assume there is a recovery.” Here’s more from Ballmer on the “reset” and how Microsoft is adjusting to it:

The Festival’s 2009 Media Man of the Year wasn’t afraid to sock the ad community with bad news. Ballmer proposed that media spending might decline as a percentage of GDP in the next 10 years. “We live in a funny Internet world,” he told the crowd of 1,000 or so. “As soon as all information and content is digital, and the marginal cost of production can look pretty close to zero, you get all kinds of changes in the monetization models.” Innovators will invent new ad-funded models, he said, “yet at the same time, the amount of time that people will be spending in relatively advertising-free environments could continue to increase.”

Not a happy outlook. Though, as I noted to Ballmer and the audience: Who can predict, really? I mentioned that I’d last been to this Lions Festival in 1993—and read aloud this prediction from a 1993 Fortune story titled “How Bill Gates Sees the Future”:

“I think the intelligent-corded phone will catch on faster than the PDA (personal digital assistant). We can take today’s office phone system with all those features you can’t figure out how to use and put a screen on it, and even do simple video conferencing. Also, in four or five years, you’ll have wild advances in flat-screen technology that will really change what makes sense to be on paper versus what makes sense to be on that screen.”

Ballmer’s reply to his famous partner’s outlook: “Well, he was right on 50% of the predictions!” Indeed, and the art of business is betting big on the right 50%.