Skip to content

State Budgets

It seems that state governments will provide the next wave of crises to rival that of the Eurozone.  Unfortunately for states, they cannot inflate their way out of debt without help from big brother Federal Government.   It is no wonder that investment banks have tried to get me long the Muni/Libor basis because of the attractive “relative value”.  I have a feeling that they are merely trying to facilitate a way for smart investors to short the municipal/state bond markets.

Be Sociable, Share!

Posted in Markets, Politics.

4 Responses

Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.

  1. Randy Woods says

    Ironically, there is an ad in bold letters that promotes the purchase of muni bonds online immediately below your visual aid. Are you “trying to facilitate a way for smart investors to short the muni bond market” by allowing google to promote the purchase of muni bonds to your readers? Buyer beware. Some people are looking out for you (ST); others are out looking for you (Google).

  2. Travis Robinson says

    I’ve heard there are significant limitations on how the federal government can come to the aid of California (just a hypothetical example). Would you happen to be privy to what they can and cannot do when it comes to bailing out a state government? I would imagine a full bailout would wreck any incentive whatsoever for a state to act fiscally responsible.

  3. SurlyTrader says

    I think it will be very difficult for the Federal Government to turn a blind eye to states and municipalities after bailing out banks, general motors, AIG etc. That seems a bit perverse. From an indirect standpoint, they need to spark inflation to make past debts smaller and they need to spark employment so that tax revenues increase. Cross your fingers.

  4. SurlyTrader says

    Google is probably shorting the Muni market. I heard they started up a hedge fund…

Some HTML is OK

or, reply to this post via trackback.

Get Adobe Flash player
Copyright © 2009-2013 SurlyTrader DISCLAIMER The commentary on this blog is not meant to be taken as an investment advice. The author is not a registered investment adviser. There is no substitute for your own due diligence. Please be aware that investing is inherently a risky business and if you chose to follow any of the advice on this site, then you are accepting the risks associated with that investment. The Author may have also taken positions in the stocks or investments that are being discussed and the author may change his position at any time without warning.

Yellow Pages for USA and Canada SurlyTrader - Blogged