BondGuy

Munis in the Crosshairs

Don't scare people needlessly. This has almost no relevance to the overall muni market. Jefferson County was trading derivatives, and was ripped off by Wall Street banks. Also, the underlying bond was a "revenue bond," which is more like a corporate bond, as it was paid off by the sewer authority revenues rather than by tax revenues, like a GO muni bond. GO (general obligation) bonds are what most muni investors have, and these bonds are the next safest thing to T-Bills, in that they are backed by the full faith and credit of the state. They are incredibly safe.

Auction-Rate Securities, RIP?

Agree with stockbrokerfraud.com. This has been truly appalling behavior that does huge damage to investor confidence not only in these notes, not only in munis, but in all aspects of financial markets. It's obvious that retail investors assume the same decency in others that they have in their normal, everyday dealings with others. Now they have learned this is not reciprocated by the financial industry, which will damage confidence in the entire private investment system.

Our Run-In With Auction Rate Securities - And What It Taught Me About Markets

The correct lesson would have been to trust NO ONE on Wall Street. The holders of these notes were deceived and abandoned by the investment banks and brokers. You got your money out, but many didn't. Moreover, the market is still illiquid, even for bonds with higher resets.

Some Muni Bonds Appear Screaming Buys Here

I would buy a Vanguard Muni Fund rather than individual bonds. You get their research and expertise at very low fees.

Some Muni Bonds Appear Screaming Buys Here

"As long as property values keep declining, cities will take in less and less revenue - potentially endangering those muni bonds. I was thinking of moving into munis myself, but if this property deflation carries on too long..."

REVENUES WILL NOT NECESSARILY FALL, SINCE MUNICIPALITIES CAN SIMPLY RAISE THE MILL RATE TO COMPENSATE FOR FALLING ASSESSMENTS. MOREOVER, EVEN IF THERE ARE FORECLOSURES, THE FORECLOSING BANK OR SUBSEQUENT OWNER WILL HAVE TO PAY THE BACK TAXES ON THE PROPERTY LIEN.