CBO Recommendation to Munis - Default!

In the worst possible form of kicking the can down the road, at the worst possible time as well (given the lofty overvalued condition of the stock market), To Pay New York Pension Fund, Cities Borrow From It First.

By James Kwak A couple of days ago I criticized Mitt Romney for thinking that eliminating the deductions for mortgages on second homes and for state and local taxes would pay for his 20 percent rate cuts. But there’s a more important general point to be made.

In a much needed development U.S. Local Governments Cut Payrolls to Lowest Level Since 2006 U.S. local-government payrolls fell to the lowest level in more than six years in a sign that municipalities still face fiscal strains almost three years after the end of the recession.

Bruce Krasting submits:Big dump in Muni world of late. As previously noted there are many factors influencing pricing. Declining credit quality and increasing supply are the big issues. But there is more at play in this story than just the traditional fundamentals. The wild card is our old friend CDS.

Hollywood is making the case that the growing popularity of U.S. films in China is a boon to both countries.

The granddaddy of property tax revolts is now underway in North Dakota. The North Dakota group, Empower the Taxpayer writes "On June 12, 2012, the voters of North Dakota will have the opportunity to make North Dakota truly 'Legendary', as the first to pass a state constitutional amendment that will abolish the property tax, prioritize spending by the legislature, and finally give local governments something they never had: true local control over spending."

Hickey and Walters (Bespoke) submit: Below is a chart highlighting default risk for sixteen states that we have credit default swap (CDS) pricing for. The number next to each state represents the cost per year to insure $10,000 worth of state bonds for 5 years. The higher the price, the higher the default risk.