Municipal Bond Forum

Meredith Whitney, the banking analyst who is predicting massive defaults, is like Nouriel Roubini (the economics professor): She got one call right — just one — and now she thinks she’s a genius and an expert on everything. She’s better than Roubini, but that’s like saying the 1963 Mets were better than the 1962 Mets.

I.F., New Jersey

Although The New York Times may not be a great financial reporting organization, their recent article says municipalities are having great difficulty, all of which is not news. They view this as trouble ahead. Any comment?

M.K., New York

I have about $200,000 invested in several municipal bonds with Wells Fargo Advisors. On “60 Minutes” Sunday, they said there is a growing problem in the muni market, with several states not being able to fulfill their obligations. A major problem was predicted in this market within the next 12 months. What do you think? Should I divest my holdings?

B.S.

I live in California and all of my investments, $400,000, are in long-term California muni bonds for income and easy transfer to my daughter. I’m concerned that all of my eggs are in the basket of California. Should I spread my bond purchases into other states in case California runs into financial difficulties?

C.K. California

Your article on the value of munis right now is on the money and you bring the hay to the barn before it gets wet. Love your insight.

G.P., Wisconsin

What is your feeling on tobacco bonds – buy, hold or sell? Prices are way down. How much risk is there in holding?

R.L., Florida

Does FMS rate the bonds independently or do they rely on S&P, Moody’s and Fitch for their ratings? And, where is the “sweet spot” for munis now when looking out over the yield curve?

C.N.

Please address the issue, recently described in The Wall Street Journal, that the bond rating agencies rely on state and local governments to provide updated financial information and that, in most cases, the agencies are basing their evaluations on information that is out of date.

G.S., Florida

I have an account with your firm and all is going well! But I read a story in The New York Times recently quoting a hedge-fund manager who lays out a depressing sequence of events. He says governments can’t borrow much more and are being forced to print money. He says that will be followed by a new bubble in long-term bonds, which in turn will cause currencies to collapse. If that happens, how could municipalities cope? I realize your view that long-term bondholders keep bonds to maturity and collect the interest, but if currencies are in bad shape, doesn’t that undermine the merit of holding municipal bonds?

J.D., Virginia

I read your article on GM, I recently purchased GMAC smart notes B/E monthly survivor option. coupon 7.50% due 11/15/17. How is this bond impacted by the things mentioned in your article.

W.N., Florida