Tuesday, February 12, 2013

Trouble ahead for muni bonds?

Apparently in California some towns have gone exotic with their muni bonds, borrowing today and deferring payments for 20 years.  If the bills don't come due for another generation, no doubt spending will go up sharply.  One town will eventually make payments of $1 billion for having borrowed $105 million.

I don't think this is a good idea.

1 comment:

JLM said...

Followed the link to the Times article and learned that California lifted the ban on this nonsense in 2009. Yet The Times says school districts in CA have been selling the bonds since 2007. Huh?

Whatever the timeline, truly a case of "irresponsibility on steroids."