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by bjnortier_hn
5683 days ago
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The question around the [ir]rationality of markets is irrelevant. Markets determine the cost of borrowing. If California wants to lower the cost of debt, or maintain the current (low) cost, it must value the opinion of the markets. The calculation of the author, with state debt costing $6billion a year, assumes a constant cost of borrowing into the future! Investors have been selling municipal debt in the past two weeks, which will result in higher borrowing costs [1]. The same thing happened and is happening with the PIIGS, where those in power have been complacent about their ability to service debt because of the assumption of constant debt servicing costs. [1] http://search.ft.com/search?queryText=muni&ftsearchType=... November 25, 2010
US muni bond funds lose another $2.3bn
November 18, 2010
US muni bond funds see record outflows
November 16, 2010
US muni bonds see biggest drop since 2008 |
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