"The risk of default on municipal bonds in California is rising," says Moody's MD Robert...

"The risk of default on municipal bonds in California is rising," says Moody's MD Robert Burtter, lead author of a detailed look into city finances there. "Across-the-board rating revisions are possible ... in the next month of two." "Bankruptcy as a tool to extract bondholder concessions as part of a budgetary solution is a significant new risk for bondholders," says another report author.

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Comments (16)
  • Greenspanblows
    , contributor
    Comments (148) | Send Message
    Too little too late! Who really cares what Moody's has to say. The directors at Moodys have made it perfectly clear that this is only their opinion and their opinion can be bought. I guess California does not have any money to bribe them. Stick your opinions where the sun does not shine.
    17 Aug 2012, 12:28 PM Reply Like
  • wmateri
    , contributor
    Comments (578) | Send Message
    The threat of bankruptcy to extract concessions has worked very well for Greece so far, so why not try it in California.
    17 Aug 2012, 12:47 PM Reply Like
  • youngman442002
    , contributor
    Comments (5123) | Send Message
    I think those new 100 year bonds have a future....lol..no payments for 40 years...yeah right....put a bunch of those in my portfolio
    17 Aug 2012, 01:19 PM Reply Like
  • davidbdc
    , contributor
    Comments (3194) | Send Message
    Anyone buying bonds from California cities deserves what they get.


    If you want to subsidize 100K public employees that retire after 25 years on 100K/yr pensions be my guest..... but don't come crying to me when it all goes boom!
    17 Aug 2012, 03:43 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3527) | Send Message
    Poor Meredith. A prophet is without honor in her own country.
    17 Aug 2012, 05:40 PM Reply Like
  • caupachow
    , contributor
    Comments (523) | Send Message
    Wow! I am glad moody' told us because I am sure most of the SA community was fixing to load up on CA muni bonds.
    17 Aug 2012, 05:56 PM Reply Like
  • rick flair
    , contributor
    Comments (369) | Send Message
    oh yea, count me in...i heard theres a lot of productive people just lining up to pay taxes for those bonds....weeeeeee theres a dumb goyim born every minute......
    18 Aug 2012, 12:58 AM Reply Like
  • rick flair
    , contributor
    Comments (369) | Send Message
    access to the bond market by states , munis etc should be criminalized....they should be legally forced to operate on near term taxes ONLY. anyone who trys to sell bonds or the like should be thrown in prison...
    18 Aug 2012, 12:59 AM Reply Like
  • rick flair
    , contributor
    Comments (369) | Send Message
    anyone caught selling bonds, or middleman action should get capitall punishment....
    18 Aug 2012, 01:00 AM Reply Like
  • woodenship
    , contributor
    Comment (1) | Send Message
    Living beyond ones means.....Democratic "feather-bedding".....but of course.....flight to quality, not to Moonbeam but to Christy or Walker.....
    18 Aug 2012, 05:54 AM Reply Like
  • Andres Rueda
    , contributor
    Comments (185) | Send Message
    If investors panic in the municipal debt markets, the consequences will be terrible for cities, counties and municipalities. Their budgets are exploding with unfunded pension obligations, etc., their revenues are thin or thinning, and they have a hard time as it is despite very low interest rates. Jack up those low interest rates just a little bit, and ouch, ouch, ouch... California - the new Greece?
    18 Aug 2012, 02:53 PM Reply Like
  • James Sands
    , contributor
    Comments (2635) | Send Message
    Municipal bonds are why we have roads, schools, and many of our public amenities and most if not all of our major infrastructure. Everyone on here is acting like they don't matter?


    If Muni's were eliminated tomorrow, our entire Nation's world would stop on a dime.


    Munis provide a conservative investment with little tax consequences. That's why mostly high net-worth investors use them. They get their 3-5% tax free return from their initial $5 million investment. They don't need to make high returns, they already have wealth, no risk is necessary.


    And today's low-interest environment has put pressure on all interest bearing assets. So municipal ratses are lower, yet still tax free and better than money markets, cds, or other low-risk interest assets.


    As far as default risk, not all cities are facing serious issues with bankruptcy and most all pensions are now funded by government employees. So if you want to buy $30,000 in one municipal bond, I'd say you better really know what you are doing. But if you want to invest in a Vanguard short-term muni fund with a .20% expense ratio that manages 750 muni bonds, I think you'll be quite alright.


    I don't think any options traders would serioulsy be comparing a municipal bond asset class to options, so I'll just take that as a joke.


    Anyways, we should all be thankful that our gas isn't $10/gallon and we get to use all of our roads for free. However, the irony is that if we did pay more for our infrastructure, we probably wouldn't be having this "crisis" discussion in the first place.


    Remember social welfare and many of our social policies were created after the Great Depression, so as much as we like to talk up our privatized sectors and capital markets, socialism has been a part of history for a longer time than we think.
    18 Aug 2012, 03:16 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13369) | Send Message
    California has run into this before. They just issue employees IOUs which they get banks to cash as regular money until their government gets off their duffs and passes an unbalanced budget requiring a repeat next year or the one after. I really am only concerned after the IOU go out.


    By the way, if you say this is shadowy money printing and/or deficit spending, you would be right. Both of these things are technically prohibited by States.
    18 Aug 2012, 07:15 PM Reply Like
  • rick flair
    , contributor
    Comments (369) | Send Message
    btw, kanada is no different, it just seems no one ever shines a light on the endless bailouts we have built into the system. when you examine it and the fiscal reality, you begin to understand why no one the skmbags who facilitate the issuing of the said bonds, could care less about how they get rated, they want thier fees and vig and the dumb goyim who bought em and are enslaved to pay em off be dammed...
    18 Aug 2012, 08:03 PM Reply Like
  • chopchop0
    , contributor
    Comments (5155) | Send Message
    IL NY and NJ bonds probably aren't far behind
    18 Aug 2012, 11:44 PM Reply Like
  • rick flair
    , contributor
    Comments (369) | Send Message
    ask yourself this, and pretend you have an IQ of 75 when you think about it.....how does a province called British columbia work up a 43 BILLION dollar debt, with a population of around 3 million people?


    ok, how can that population of retarded socialist/commies EVER EVER EVA pay it off?


    the simpleton answer is , they CANNOT. there are not enough hours in the week, productive non gov't emplyees, etc etc....


    long story short, the non goyim bond sellers could not care less, they need to keep them ROLLING OVER the debt get it? that keeps the fees and the vigorish running into THIER burrow....its too simple and the numbnutz taxpayers keep paying??!?!!??! WHY??!?!


    19 Aug 2012, 12:28 PM Reply Like
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