The "safe" municipal bond market might not be so "safe".

I wrote this post 1 1/2 years ago.

Considering the melt down in the municipal auction markets last week, this might

be the beginning of something big. Or maybe not. There are 2 sides to every trade. A Winner, and a Loser!

The debt auction market in the U.S. is the largest Ponzi scheme in the history of the art. As long as new buyers come along to buy out the (previous suckers) maturing bonds, everything goes swimmingly. When those buyers don't show up... well, just check out what happened in the muni auction market last week. Buyers were not willing to commit capital to bail out the previous dimwits.

("Dimwit" is how I would define anybody willing to hold U.S. dollar denominated debt for the paltry interest now received for holding what is essentially toilet paper. That's just me.)

This might not be a big blow up, but that remains to be seen. In this environment, it pays to view all credit instruments as toxic waste until proven otherwise.

Yours for better world,

Mentatt (at) yahoo (d0t) com