Doug Carey's  Instablog

Doug Carey
  • on Retirement Advice
Send Message
Doug Carey is the owner and founder of WealthTrace. He has over 17 years of experience in the financial markets. He is a Chartered Financial Analyst with a masters degree in Economics from Miami University in Oxford, Ohio and a B.S. degree in Economics, with an emphasis in Finance, from Ball... More
My company:
WealthTrace: Retirement Planning Software
My blog:
A World of Planning
  • City of Vallejo, CA to Pay 5 to 20 Cents on the Dollar 0 comments
    Jan 19, 2011 9:28 PM

    The news for unsecured creditors of Vallejo, California's municipal bonds is in, and it is not good. They will only receive 5 to 20 cents on the dollar under a reorganization plan the city filed Tuesday in federal court.

    The city regrets that it cannot pay a higher percentage,” Vallejo officials said in the court filings. “The city lacks the revenues to do so while maintaining an adequate level of municipal services, such as the provision of fire and police protection and the repairing of the city’s streets.

    For the full article please see-

    It has been a long time since investors were overly concerned with losing their principal on municipal bonds. The last time there were a substantial number of municipal defaults was during the Great Depression. By 1935, 15.4% of municipal debt was in default. During our most recent downturn we have not seen those levels of default, but there are serious potential cash flow problems for states and cities alike. Vallejo is certainly going to be one of the worst cases, but investors should be prepared for a very tumultuous 2011. Muni yields in general are not yet nearly high enough to compensate for the risk.


    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Back To Doug Carey's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.