With central banks around the world ready to hit the panic button, investors are scrambling desperately for yield ahead of the next orgy of global easing. How desperate are they? So desperate, in fact, that even some of the bond world’s smelliest garbage — i.e., debt paper issued by Illinois and the city of Chicago — is attracting sufficient buying interest to lift bond prices and push down yields. A dearth of supply has caused investors to get a little crazy, according to Justin Land, chief municipal strategist at Wasmer, Schroeder & Co. “The muni market is not showing a lot of discipline in pricing,” he said, euphemistically, “because there’s so much money chasing so few bonds.”
Would you plunge head-first into this financial landfill just because everyone else is doing it? Land’s firm evidently has no qualms despite the fact that Illinois paper carries the lowest rating of any state, and Chicago is not far behind. Both consistently spend more than they take in, and neither has a clue about how to turn things around.
Not Just Illinois
Like most of the money being borrowed by state and local governments these days, whatever Illinois raises will go mainly into distressed pension plans. Chicago Mayor Rahm Emanuel took another route in his last fiscal act as mayor, however, foregoing a $10 billion bond that had been earmarked for pensions. This task will fall to his successor, who could conceivably have the distinction of presiding over the bankruptcy of America’s third-largest city. If investors clamoring for Illinois debt just to eke out a few extra basis points know better, they certainly are not acting like it. Their heedless behavior is not confined to Illinois either; it is happening all over the country, pushing muni bond funds higher (click on inset to see bull market target) and yields to their lowest levels since last August. Although it’s a shot in the arm for financially strapped cities, investors’ inattentiveness to risk suggests the muni-bond binge will not end well.
The posters and Rick are so correct indeed, and to add placing our history today in the contents about the early 1960’s to turning really sour by the end of that decade is a good analog.
The nation is clearly divide towards the ‘greater’ degree then most pass American history.
This downward cycle will surly consist of many factors as others in the pass had done, the primary one of class and race warfare to a greater degree then economic warfare.
100 years ago, 80% of the American population own their own business, today that number have move towards only 20%. Owning your own business didn’t mean that you where rich and in fact many times as today you worked harder and longer than the regular working person. But, the fact was it’s yours and in some small why you had a say in the direction of how you wanted to live your life along with your family. It was this time in American history when the USA dollar became the reverse currency of the world, and only 50% of the nation could read and write.
America has and is moving into another direction as then, many will not like it but it will happen anyway maybe suggesting that the time when the nation could not read and write was somewhat better in a way. Things always stay the same, because they are always changing in some way.
Moving ahead lets us not to forget as just how great this nation is and will forever be, America is not something you can hear and or see its deeper inward toward being the very soul of all the world. There are 2 civil right symbols in all the world, 1st the American Flag and 2nd the Nations Anthem. Many know longer the history and thoughts of our Anthem at Fort McHenry they are lost somewhat to many, but enough of us still understand what the words mean.
——–Today with 7+/- billion people in the world, the top world wide 1% earners stand at a yearly gross earnings of 29k per year, here in America our people on welfare make that much in many cases. An, American can get food stuffs at will at any time of the day, air conditioning and heating systems in homes are common. Running water for toilets and bathing within every home in America exist today, free education to the age of 12 grade. Our America society has grown towards the admiration of all the world (even though many will not suggest so), we Americans today live as well as the Great Pharaohs of long ago.
America will never fall, because from the very beginning we as Americas will never allow a majority to take hold and rule with absolute power.
Have a great week end Ben, John Jay and of course the host Rick.