As Vallejo, We Go

Via Ace, remember those Halcyon Days of Yore when Muni Bonds meant all was safe and good in the world for your nest egg?

Er, now, not so much

But, but, munis always pay back almost 100 cents on the dollar, even in bankruptcy, right? Wrong. Bankrupt Vallejo just filed a POR to pay back unsecured creditors between 5 and 20 cents. “The city regrets that it cannot pay a higher percentage,” Vallejo officials said in the court filings.

Yes, those Muni bonds backed by the full faith and credit of, er, well, they seemingly lack both faith and credit.

The uncontrolled, unchecked, un-reined-in spending by corrupt and incompetent public officials (it’s awfully hard to tell the difference between them) is starting to boomerang back with a vengeance, and if interest rates start to rise then the cost of financing the US’ debt will bankrupt us fairly quickly. We must cut spending, not merely “reduce the rate of increase” but actually cut spending, deeply and immediately and start paying down the debt.

Also do make sure to read the Prodigal Meep at Dan’s Place for much more data and analysis.

You know, I seem to remember reading some where about seven fat and happy cows who were like totally eaten up and consumed by the seven thin and scrawny cows that came after them. Much wailing and gnashing of teeth was also involved, iirc.

6 Responses to “As Vallejo, We Go”

1. mojo says:

   January 20, 2011 at 10:51 am

   As far as Vallejo goes, shutting down Mare Island Naval Shipyard didn’t help. It was THE major employer.

   Part of the “Peace Dividend”.

   Thanks, Bill.

2. Mr. Bingley says:

   January 20, 2011 at 11:25 am

   As we in NJ are discovering now that the shutdown of Fort Monmouth is really kicking in.

3. Yojimbo says:

   January 20, 2011 at 12:59 pm

   Fort Monmouth isn’t part of any “Peace Dividend”, it’s part of the price for the “Surrender Dividend”.

   Isn’t paying down the debt just eliminationist rhetoric?
   Kill, kill,kill. Mongerist!

   It’s just like you to gloss over the positive aspects of these chapters. Worry over whether or not your particular muni bond is subject to alternative mini is just part of the past.

   /It’s always sunny in Tucson.

4. Yojimbo says:

   January 20, 2011 at 1:14 pm

   And if the economy really kicks in and the velocity of money increases dramaticaly we will be in deep yogurt as well as prices and interest rates jump. I’m not seeing too many soft landing zones out there.

   But we’re in the very best of hands.

   /It’s always sunny in Tucson.

5. meep says:

   January 20, 2011 at 6:37 pm

   Thanks for the link.

   Part of the Vallejo problem was the firefighters got extremely piggy. But they aren’t alone in the public sector.

   Once the tide goes out, you’ll see who was swimming naked, as it were…. and the federal tide is going going gone with the Repubs in the House.

6. California’s fiscal future… and that of other states/munis | POWIP says:

   January 21, 2011 at 8:13 am

   […] to Coalition of the Swilling for the link here, and the link to the Zero Hedge […]