If you know anyone that owns municipal bonds as an investment, you may want to run right to
them and show them this blog.  I am going to make a flat statement; the next big crisis to hit
is going to be the collapse of the municipal bond market.  If you are older or have parents
or grandparents who are retired, it is likely that they own these bonds in their investment
portfolios.  They have long been considered the safest of investments and are tax-free to boot.
However, like most things in these times we live in, the time has come to re-examine the possibilities regarding the safety of these bonds.

Simply put, municipal bonds are the kinds of bonds that are issued by a municipality when they want to build everything from roads to sewers to schools to airports to public transportation and that are backed by the taxing power of the entity issuing them.  I am being simplistic in this short blog.  There are more details and flavors of these bonds but here is the simple point that I want to make; most of our cities and states are insolvent and have no way to continue to make the payments.  There are over $3 trillion of these bonds outstanding, and even those that are insured will not be safe as the insurer itself may not have enough money to make the bonds good.  Across the country, cities and states are raising taxes to make their bonds good among other things, but there have already been a record number of defaults this year, over 250 versus the normal 30 or so, and it is going to get worse.  Raising taxes never brings in more money.  It is the curse that politicians never want to acknowledge; the higher you raise taxes the more ways are found to not pay them.  Unless there is a major recovery, and this is the bet that your broker is making I guarantee you, there is no way that most municipalities are going to be able to make good on these bonds much longer.  It is a crisis that is unfolding.  Even if the feds step in, and they will at first, the prices of these bonds are going to plummet.

Now, most advisors see this coming but will say that it is too soon to worry.  Baloney!  This
is the refuge of the mediocre.  If an advisor gives what is standard advice and he/she is wrong,
they will assert that everyone else was wrong too.  Well, maybe so but that won't get your money back once it is gone!  My advice is to sell every last single municipal bond anyone owns before it is too late.  Does that make me radical?  Yes, but in my opinion I am right too!  I have no desire to run with the herd of sameness.  My job is to protect you, my subscriber.  Get out of "munis" now if you or your grandma owns them.  You will thank me for it very, very soon.