MUNICIPAL BONDS IN TROUBLE

"It has been a constant theme in the news for some time that state, county, and local governments are under severe pressure because revenue and revenue projections are falling far short of spending plans. Here in California we are facing a budget deficit of about 25%. Can you imagine? I have heard that some California bonds, I presume the most recently issued, are yielding over 8%. That’s tax free . . . if you can collect. Yes, munis are insured, but the problem is nationwide, and the ability of insurers to meet their obligations must be coming into question.

The following is a chart of the Municipal Bond ETF. While it is down only about 8%, the perspective offered by the chart shows it has fallen off a cliff..."

at http://pragcap.com/municipal-bonds-in-trouble