A couple of months ago, I was at Starbucks listening to someone about Stocks these people bonds, he and his girlfriend or boyfriend had worked hard and were concerned about the Stock Market. They wanted something minimal risky. He liked the concept of the tax benefits of installing municipal bonds and stated that he thought he was forced to purchase local muni-bonds to a great safe haven. Okay to confirm, let's talk shall professionals?
Hey before, I be prepared to talk about Birmingham ING, or the capital associated with Pennsylvania; Harrisburg as in some heavy hitters, big the area bankruptcies, let's go ahead and get out on the Disused Coast in California. We all heard about Stockton CA which includes a 291, 000 and deeply with debt, albeit with a Topic Train terminal soon, then came the cool little resort capital of scotland - Mammoth Lakes CA, that is not so great but understandable down to seasonality, weather, and economic issues lessening vacation travelers compared to that altitude - but and also another fairly large merchants 209, 000 in population is filing chapter nine all the way to San Bernardino CA -- ouch!
The other saturday, I was speaking on a financial adviser who employed a client sell all of their muni-bonds, the financial adviser was happy throughout the commissions and re-invested the profit in more secure best corporate bonds. Good moment in hindsight, because this latest San Bernardino NASA'S DISCOVERY bankruptcy is liable mainly because one which causes involving cascading effect, similar from what Meredith Whitman had riled markets about last year. As more cities incapability, the cost to borrow goes up, meaning the payback price is greater, and fewer buyers all of the bonds, thus, a migration not such financial vehicles.
Okay explanation, where is a city to move? Good questions, and with the concept of a still down in a multitude of locations, there are fewer sales and profits for property tax, and also the economy is still distraught so retail sales are also down, so too consequently are tax revenues. I've yet to see of a California city anywhere that did not have a pension and even legacy cost problem. The result San Bernardino city authority voted for chapter 9, however , they had no choice, the creditors want their money - $43 million of it, and sooner than seldom go to. So, 3-months no fork out, no pension contributions, and then judge huge cutbacks too, along with, the bankruptcy.
Why now? Well, the city local authority or council noted; accounting errors (sure blame it of accountants), deficit spending (gee, in whose fault is that), pensions (city unions again), and debt costs (something that a great number of cities are also getting to now). So, regarding my title that will person I met at Starbucks some time ago, well; "I wouldn't if i were you! " Please consider and this also and think on the.
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