Municipalities Bonds Crashing

[Ares]

This is ugly stuff folks.....

<img src="http://market-ticker.org/akcs-www?get_gallerynr=1010"/>

This chart is in fact much worse than it first appears - that break has now taken out critical support from 2008 before everything fell apart!

<img src="http://market-ticker.org/akcs-www?get_gallery=1011"/>

It's not alone either:

<img src="http://market-ticker.org/akcs-www?get_gallery=1012"/>

I have warned of the potential risk in these funds and municipal bonds as an asset class before.

The fact that no realistic action has been taken to address these issues, and that they may rotate into United States credit - that is, Treasuries, forcing big reductions in spending, is a serious problem.

Folks, the States are absolute pikers when it comes to this - The Federal Government is literally borrowing 40% of every dollar it's spending at the present time. This cannot continue indefinitely, and yet if it is pulled back GDP is going to instantaneous collapse by a double-digit percentage and the stock market will implode as profits go down the toilet immediately.

Is this a "sure things, short the farm" play? No. As we've seen the goofballs in our government are hellbent for leather on continuing to play Ponzi, borrowing ever-more in a furious (although ultimately futile) attempt to prevent recognition of the fact that we simply do not have the final demand and cannot manufacture it via borrowing on a durable basis to support our claimed "output" and "profits."

Bernanke, Obama and Congress think they're Khan - and invincible.

They're all wrong - The Market is in fact Captain Kirk.

http://www.youtube.com/watch?v=wbtvQUYXbQk

http://market-ticker.org/akcs-www?post=177327

[7th trump]

Engineered destruction.
Any half wit can put two and two together and understand that by outsourcing a mighty industrial complex we had here in America is like building a bridge to span the Mississippi river out of tooth picks.
What kind of idiot doesnt understand you cant outsource a countries back bone which happens to be the worlds reserve currency.
Just another example of idiots in charge having the mindset of "to big to fail".

[Neuro]

Those graphs bodes bad times ahead, we have seen nothing yet! My bet is that the Fed will very soon start buying those as well, or social security payments will cease, schools close, police and fire departments can't fill up their cars and trucks, water and sewage systems malfunctioning... But JPM had a good year!

[palani]

police and fire departments can't fill up their cars and trucks, water and sewage systems malfunctioning.
We appear to have a liquidity problem.

[Fullpower]

When the central banks are done creating the "liquidity problem", a QUADRILLION digital dollars will not be worth a pack of chewing gum.

[DMac]

Those graphs bodes bad times ahead, we have seen nothing yet! My bet is that the Fed will very soon start buying those as well, or social security payments will cease, schools close, police and fire departments can't fill up their cars and trucks, water and sewage systems malfunctioning... But JPM had a good year!



The FED, via CONgress, seems to be positioning itself to not bailout munis:

Newt Gingrich Pushing Bill To Allow States To File Bankruptcy Allowing Them To Renege On Pension And Benefit Obligations (http://www.zerohedge.com/article/newt-gingrich-pushing-bill-allow-states-file-bankruptcy-allowing-them-renege-pension-and-ben)

[Low_five]

So this means people dont want city loans? Which means no big projects? No excuses to raise taxes for a new road or school? Why dont people want to loan to cities? Why is this scary?

[Twisted Titan]

Bbbbbbbbbbut Warren Buffet Buys Munis

They are backed by Tax revenue!!!

T

[mick silver]

The more the government tries to "help" us and "protect" us, the worse things get.

[Twisted Titan]

Whats the Yield on a Munis about 3-6%???

Was it 74% ???

Because that is what Silver did over a 12 month period.

TAX FREE.

T

[RJB]

So this means people dont want city loans? Which means no big projects? No excuses to raise taxes for a new road or school? Why dont people want to loan to cities? Why is this scary?
It basically means infrastructure will collapse due to "austerity" type measures so they can still pay the interest to the banks for the money they printed from thin air.

So while roads fall apart, people lose their pension that they worked and payed for 30 years... Everyone is told that all is good because JP Morgan, et al see increased profits. Because the bankers NEVER suffer austerity unless the people wake up.

[Neuro]

Austerity measures for a banker should involve a noose!

[gunny highway]

i'm on the design side of the development business and started my career about 15 years ago. back then there were three sources of funding for projects: private funds, banks loans and municipal bonds. then in 2008 the housing market tanked which consequently caused banks to quit funding all the speculation. one funding source eliminated and i'm out of a job. the next year we start our own firm, going after primarily privately funded projects. they are few and far between which forced us to add municipal work to our portfolio. like it or not, govt money (a lot of it) is out there if you know where to look, and you have to go to towns, counties and states to get it. knowing what i know and believing what i believe makes it gut wrenching to do this but, a man's gotta eat. the charts in this thread do not bode well for this funding source. it would appear that this option will disappear in the near future leaving private "money" as the only thing driving the development business. this is how it should be, but it has been forced upon us and the majority of our clients are hesitant to pull the trigger on much more than conceptual designs. of course you'll always have federal stuff but it's so hard to get that work it's not worth trying unless you know someone. things are drying up and the future seems uncertain.

[DMac]

People don't want to loan cities money (muni bonds) because cities now have expenditures (ex. salaries+pensions) which are far exceeding revenue (taxes).

Newt proposing a bill to allow state bankruptcies is a plan to allow states to reneg on their future obligations (pensions).

The pension bubble is going to bust in the next few years.