Re: NY Municipal Bond Prices

On Fri, 29 Feb 2008 17:00:14 +0000 (UTC), Abu Dufus
<cripples.and.shutins@xxxxxxxxxxxxxxx> wrote:

Sellers outnumbered buyers 4.3:1 yesterday. It seems that foreign interets
are dumping their muni's for what ever they can get for them, mainly because
Bond insurance is not reliable and depends only on a very low default rate
and the "bailouts" which are running up against some problems as of this
morning.
The .1% historic muni default rate is expected to rise to over 6% when
unemployment accelerates, house values REALLY drop and local tax revenues
dry up. New York City, Seattle and most of Oregon and Washington will
probably escape without defaults. New Jersey, Michigan, Ohio, California
and Florida will probably account for a disproportionate number of defaults.

The expected 35%-60% drop in muni prices will have an interesting effect on
pension plans and retirees who snapped up munis when Greenspan caved into
the banks, builders and lenders in the 2002-2004 time frame and dropped t-
note rates to 1%. It seems that the pension plans and some overseas
interests have already started a panic run for the muni exits.

Thanks for the analysis.

It would seem at this time, if he doesn't need the money, it's best to
wait this thing out and not take a capital loss?
.