Overcoming the massive muni defaults

Source: static.ddmcdn.com

We tend to consult with our friends over at FMSbonds, Inc. quite a bit here at KriKnows. Not only are they knowledgeable in municipal bonds, but their opinions are often interesting — at least to us.

Last month, James A. Klotz of FMSbonds took a look back to Meredith Whitney’s “infamous predictions of massive muni defaults” from a few years ago.

“’I expect multiple municipal defaults to trigger indiscriminate selling, which will prompt a federal response,’” Whitney wrote in a Nov. 3, 2010, Wall Street Journal op-ed piece.

Of course, Whitney’s prediction wasn’t entirely accurate.

“The selling did happen, of course. But investors who heeded her forecast sacrificed billions of dollars when prices rebounded. The defaults never happened, the federal government never got involved—in fact, prices soared as yields on municipal bonds tumbled to historic lows,” writes Klotz.

Klotz goes on to explain Whitney’s backlash a bit more in depth. Head over to the FMSbonds website to read on.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: