Municipal Bonds --Trillions at RISK

Discussion in 'Current Events' started by island1fox, Jan 15, 2011.

  1. island1fox

    island1fox Well-Known Member

    With all the bad budget news lately will the states "REDISTRIBUTE" wealth by defaulting on the bonds. Is this the next major Domino to fall in the collapse of the U.S. ?:dissapointed:
     
  2. Baba gounj

    Baba gounj pensioner

    look out , time is up on all those loans every state took to keep paying all those extended unemployment checks. Unfortunately the economy did not improve.
    So come Sept it's time to pay the interest on those loans. That works out to hundreds of millions of dollars for each state.
    And over 1 million homes it is estimated will be in foreclosure for 2011.
    Given all this, we're in for one heck of a year.
     
  3. Monkey Butt

    Monkey Butt You can call me Chappy Staff Member

    My muni bonds are in states that have a balanced budget requirement in their constitution. Not as risky I hope.
     
  4. klein

    klein Für Meno :)

    No need to worry.
    Before any state would default on those (same as Federal Treasury Bonds), they will do anything else, borrow more money, raise sales taxes, cut state jobs and lower their wages, raise all State services (Tuitions, costs of all vehicle services, registration, driver's licence), stop state infrastructure and road maintanence, etc.
    Higher cigarette/alcohol, gas, taxes. Basically, anything that helps to manage the debt.

    Otherwise, a credit default would majorly effect their credit rating, interest on debt repayment and new debts increases.

    Look out what California is up to these , and in the future days, weeks, and years.


    Also going to be very interessting to see how generation "Y" and "Z" will make-out with all the debt generation "X" left behind.
    (if we are still around).
     
  5. wkmac

    wkmac Well-Known Member

    How ironic that you post the above after I'd just read this by the late Frank Chodorov. His bottomline was don't buy gov't bonds at all. If you read the article and the monetary numbers used, keep in mind this was written in 1962' and thus what may have been true then are even far worse today.

    Sad part is, Chodorov's warnings aside, Wall Street, the Fed Bank and the Banking/Investment lobby have literally destroyed investment vehicles like CD's, Savings accounts etc. that work off a more honest interest rate system where rates are allowed to follow a more free market hand. In order to drive people out of such lowrisk income style investing that was the backbone of average citizen savings, the retired elderly and many pension funds, the Fed drove the discount rate to near 0% (we call that non free market intervention)to save the State and it's (the Fed) own ponzi scheme and thus drove interest rates so low that after accounting for inflation and income tax, in reality of real purchasing power, one earned a lost. Only option then was to enter the more risk averse stock market and many found themselves at the mercy of clowns like this.

    [​IMG]

    Same clowns like this also end up either getting elected to office or working on K Street and thus no wonder things only get worse and worse!