By Catherine Austin Fitts
For many years, municipal bonds have been a mainstay of American retirement portfolios. However, as the mortgage markets melted down from serious, systemic fraud, some analysts predicted that we would see a similar meltdown in the municipal market.
Of course, mortgage fraud depended on the MERS system creating a way for federal agencies and Wall Street to circumvent local government controls. That circumvention did not happen in the municipal market. Despite the budget struggles that state and local government are managing as they and we adjust to a changing economy and federal fiscal and monetary debasement, the municipal market has managed to avoid most of the pitfalls experienced in the asset backed markets.
It was Joe Mysak, Municipal Market editor for Bloomberg and author of the Encyclopedia of Municipal Bonds: A Reference Guide to Market Events, Structures, Dynamics, and Investment Knowledge who challenged the dire warnings, insisting that significant financial defaults would be more limited and that municipalities would manage through. He was right.
Joe and his team have just published their Municipal Market First Half 2014 Stat Book. Joe joins me this week for a Municipal Market Overview. We cover all the issues – from market performance, to the big defaults – Detroit and Puerto Rico – to the latest developments in federal tax and bond regulation, the condition of state and local pension funds, more budget challenges and the outlook for increased infrastructure investment. Even if low yields have kept many of us out of tax-exempt bonds, this market is an important window on what is happening on the ground in North America. Talking with Joe is always fascinating – his insight is rich with history and network.
In Money & Markets this week I will discuss the latest in financial and geopolitical news.
In Let’s Go to the Movies, I will review Mayor Cupcake, a family comedy about a local baker whose kids nominate her to serve as Mayor of her small town. She proceeds to restore the town budget to a lawful basis. On one hand, you might think it is silly. On the other hand, if we could turn loose a similar process across the country, we could return integrity to a meaningful portion of the economy. Mayor Cupcake implies that local guys are skimming. I believe they only get a small cut – that a major portion is going to the folks at the top. Whatever the allocations, Mayor Cupcake is a reminder that rejuvenating the economy on Main Street requires integrity in the dimes and dollars of local finances. I live in a town with a Mayor and city council members I trust to watch every penny. It is a good feeling – like the one you get watching Mayor Cupcake – and a feeling I wish for all of us.
Please post or e-mail your questions for Ask Catherine. Talk to you Thursday!