31October

Irrational Stupidity

Bondguy,
Municiple bonds are not as stable as you think. Many depend on revenue from tolls, ticket fees, and sales tax. If people can no longer mortgage their house to buy beer and go to the game, then flexible-revenue munis are damaged.
As a fiscal analyst/accountant for a state government, I learned that legislators apparently make revenue assumptions while on meth. I called my city administrator and mayor; they blew me off -- Guess who is laying off cops now. I publicly called out the chair of my state's Senate finance committee to explain a $493 million overspend. He said it was a suprise. (I no longer work for the state.) These officials stared at us blankly when we told them what was going to happen and said, "We'll issue more bonds to cover it." NOBODY IN GOVERNMENT BELIEVES THAT THEY ARE SPENDING REAL MONEY, AND THEY WILL NEVER STOP INFLATING GROWTH PROJECTIONS.

Responsible government spending means nothing when elections are at risk. Therefore, the state constitution will hold back $10B of debt as well as a sheet of toilet paper would.

You demean the author. Remember, Great Britain once had the largest economy on Earth. It collapsed pretty quickly. It had more industry and less debt than California.

Are California bonds safe? I don't know; ask the investors in Orange County bonds.

I would place my faith in a profit-driven enterprise before government buffoons. Yes, I own MET.PR.A and MET.PR.B, and yes, there is a risk.