How Bad Will the Muni Bond Situation Get?

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Recently
by Robert Wenzel: Seven
Things That Will Cost More in2011

 

 
 

There
is an attitude by some market observers with regard to the developing
muni bond crisis that "this to shall pass."

It is exemplified
by the recent retweet by Joe Weisenthal:

Agree RT
@PragCapitalist: Bigger concern from muni fallout is higher taxes.
Not defaults

This really
comes down to guys who aren’t crunching the numbers. Meredith Whitney
is crunching the numbers. She is very bearish. Others, who are in
a position to know details the most of us are not privy to, tell
me the situation is worse than most imagine. They tell me we may
have a year or two before the problems develop, but that taxes won’t
do it. Indeed, they tell me there is no easy solution.

The only "solutions"
I see are massive money printing by the Fed, which devalues the
dollar domestically by more than 50% or a default on the pension
obligations owed by the states. Neither option is the type that
will sit easy with those concerned.

Read
the rest of the article

January
14, 2011

2011
Economic Policy Journal

The
Best of Robert Wenzel

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