Meredith’s muni bond meltdown scenario: paranoia?

By Prieur du Plessis, on January 25th, 2011 posted in: Bonds, Investment

Discussing whether Meredith Whitney’s predictions on the muni bond market are overblown, with Thomas Doe, Municipal Market Advisors CEO, and Doug Dachille, First Principles Capital Mgmt CEO.

Source: CNBC, January 20, 2011.

The chart below, courtesy of Barclays Capital (via Business Insider – Clusterstock) illustrates the “The Meredith Whitney Effect”.

Click here or on the image below for a larger chart.

Source: Barclays Capital (via Business Insider – Clusterstock), January 20, 2011.

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Walter Waddell

January 25, 2011 at 6:46 pm

It’s not that the Muni’s will default. It’s the Muni’s will raise taxes and fees on the individual to cover their default, who in turn will reduce his consumer demand for “Chinese junk”, lose his job, and generally fall from the middle class and into bankruptcy and government dependency.

All this economic talk is an exercise in “kicking the can down the road”. JM Kenyes told you as much: “In the long run, we are all dead.”