Indiscriminate Selling in Munis?

Capital will do what is necessary to protect itself. While the Fed talks about balking at the prospect of bailout out the States, it is foolish to think they've adopted a wait-and-see approach here. If selling becomes indiscriminate, there's little the Fed, Chinese, Japanese, et. al. can do to stem the slide. Armstrong latest commentary correctly cited that the city of Detroit suspended all debt payments in 1932. They did not resume payments until 1963 when through the power of time and currency devaluation allowed the payments to become manageable again.

Headline: Whitney Defends Muni Call, Sees 'Indiscriminate Selling'

Financial analyst Meredith Whitney is sticking by her call that the nation's municipalities face a wave of defaults, despite a wave of criticism over her prediction that hundreds of local governments would not meet their obligations.

In fact, she took the forecast a step further and said when the defaults begin in earnest, it will mark an exodus from the muni bond market.

Source: finance.yahoo.com