Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: KyrosL who wrote (71959)	1/3/2010 8:50:19 PM
From: Webster Groves	Read Replies (1) of 74559

Certainly munis have historically been good investments for those tax adverse. The strength of the muni, however, relies not on inherent value, but rather the taxing power of local governments. With the Feds mandating that states and localities fund their entitlement grants, the stress on local government has never been higher. On this basis the muni is not the rock it once was. You appear to be relying on the Feds to guarantee the munis. I do not share your optimism. Munis pay interest at non-zero rates and that is not part of the Fed's current plan. wg PS - Of course if Goldman Sachs faces a potential loss on munis, then my view is irrelevant, and so I'll spot you a 30% chance the Feds step in circumspectly.

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