jk
12-20-07, 07:10 PM
so, first i read this:
Top-quality, tax-free municipal bonds currently yield virtually as much as comparable Treasury securities, whose interest is subject to federal income taxes. .....
Only on rare occasions do tax-exempt state and local bonds trade at the same yields as taxable Treasuries. It's invariably because of problems in the municipal market. .....
As with almost everything that's befallen financial markets this year, munis' woes can be traced to the meltdown in subprime mortgages and structured finance. The sorcerers and their apprentices took once safe, stolid munis and leveraged them in structures that depended on the London interbank offered rate. So, your local school district's bonds were influenced by what happened an ocean away.
Then, insurers of municipal bonds diversified into structured finance, specifically collateralized debt obligations backed by subprime, much to their dismay. That's important because roughly half of munis sold in recent years were covered by insurance.......
States and municipalities also have suffered collateral damage, literally and figuratively, from the mortgage mess. Florida localities that stashed their liquid balances in a supposedly safe short-term fund staged a virtual run when they found the fund's assets were tied to risky subprime-backed investments, resulting in a temporary halt in redemptions. Other state investment and pension funds also may be saddled with risky, losing subprime-related investments......
James Lynch, publisher of the Lynch Municipal Bond Advisory (www.lynchmunicipalbond.com (http://www.lynchmunicipalbond.com/)) and a veteran of the tax-exempt market, cautions against jumping in at this time. He thinks long-term yields are headed higher, which would hurt the value of all long bonds, whether taxable or tax-exempt.
Moreover, Lynch sees states and municipalities confronting increasing economic pressures, notably weakening tax revenues and under-funded retiree health and pension plans. from barron's online
then, a few minutes later, at a [very] different site, this:
My opinion is that the first victim of the mounting counterparty risk is the municipal bond market. It’s a huge market, something like a trillion $ or so. When municipalities can’t refinance the debt at reasonable terms they will (and already are) cutting costs. I think we should expect some reductions across the board, from firefighting to road works. This cost cutting will break the shopping confidence among millions of public sector workers. If you need to update your driver license you better do it now before they suspend that activity.http://theroxylandr.wordpress.com/
Top-quality, tax-free municipal bonds currently yield virtually as much as comparable Treasury securities, whose interest is subject to federal income taxes. .....
Only on rare occasions do tax-exempt state and local bonds trade at the same yields as taxable Treasuries. It's invariably because of problems in the municipal market. .....
As with almost everything that's befallen financial markets this year, munis' woes can be traced to the meltdown in subprime mortgages and structured finance. The sorcerers and their apprentices took once safe, stolid munis and leveraged them in structures that depended on the London interbank offered rate. So, your local school district's bonds were influenced by what happened an ocean away.
Then, insurers of municipal bonds diversified into structured finance, specifically collateralized debt obligations backed by subprime, much to their dismay. That's important because roughly half of munis sold in recent years were covered by insurance.......
States and municipalities also have suffered collateral damage, literally and figuratively, from the mortgage mess. Florida localities that stashed their liquid balances in a supposedly safe short-term fund staged a virtual run when they found the fund's assets were tied to risky subprime-backed investments, resulting in a temporary halt in redemptions. Other state investment and pension funds also may be saddled with risky, losing subprime-related investments......
James Lynch, publisher of the Lynch Municipal Bond Advisory (www.lynchmunicipalbond.com (http://www.lynchmunicipalbond.com/)) and a veteran of the tax-exempt market, cautions against jumping in at this time. He thinks long-term yields are headed higher, which would hurt the value of all long bonds, whether taxable or tax-exempt.
Moreover, Lynch sees states and municipalities confronting increasing economic pressures, notably weakening tax revenues and under-funded retiree health and pension plans. from barron's online
then, a few minutes later, at a [very] different site, this:
My opinion is that the first victim of the mounting counterparty risk is the municipal bond market. It’s a huge market, something like a trillion $ or so. When municipalities can’t refinance the debt at reasonable terms they will (and already are) cutting costs. I think we should expect some reductions across the board, from firefighting to road works. This cost cutting will break the shopping confidence among millions of public sector workers. If you need to update your driver license you better do it now before they suspend that activity.http://theroxylandr.wordpress.com/