State and cities are in a world of pain at the moment as they face another year of gut wrenching (and politically unpopular) service cutbacks and layoffs. Once again they must balance their budgets in the face of possible declines in Federal funds to states and drooping real estate tax revenue. That cold reality combined with the prediction of influential analyst Meredith Whitney that numerous municipal bankruptcies could be coming down the pike, fueled a three-month long drop in municipal bonds. In the last two months, $25 billion has also been withdrawn from mutual bond funds.
Could this be a buying opportunity? Continue reading