Debunking the Muni Bond

HIlarious---after the lead SEC Commissioner states that the muni-Bond market is illiquid, opaque, and huge, and "recommending" that investors deserve full disclosure like in other financial markets.

However, this plays out at the same time as the Economic Hit Man recommending that financial advisors be absolved of all liability in recommending muni-bonds.   Many muni-bonds income will be exempt from the new 3.8% Obama tax hike.

Individual investors hold 75% of all the Muni Bonds, aha!  I have discovered the true "retail" market. It is large too, a $3.7 trillion market

HERE IS THE REPORT
http://www.sec.gov/news/studies/2012/munireport073112.pdf

The powers that be want to consolidate power.   They have been taught that the current world set-up is a free for fall of power and corruption, and they might as well dance while the music is still playing.

After all, what is there to lose----if you get caught there are two options:
If Private....you resign from the board, take your $18M parachute and go chase some concubines around in Uruguay or whatever.

If Public, you go in front of a sham investigative committee, get them to create some additional withdrawal of public freedoms to "crack down", and then you resign so that you can be hired by the industry that you were formerly regulating and thus "go to heaven" as it is called in the corrupt world of government and nuclear cartel such as the TEPCO / Gov arena.

But I digress, after Commissioner Walter declared them illiquid and opaque, without protection of investor disclosure, then she jumps into the Kumbaiya land of wishful thinking (and responsibility avoidance)....

....not necessarily proposing extensive new federal regulations and that it couldn’t expand its authority over the market much more without action from Congress. She said the integrity of the market would be best served by having the participants in bond transactions “join hands” to improve their practices voluntarily

But these bonds are safe right?   Not so.

A handful of municipalities have recently tried to get out of their obligations to bondholders by declaring bankruptcy. And bankers have gone on trial for taking advantage of cities and states through bid rigging. 

 Beyond just these problems, financial firms charge big markups when investors buy and sell the bonds, and of course most of this is hidden in the details.

So next time your broker is pimping out some Muni's, think about saving 3.8% on income of say 5% on your principal.   So on 100k investment, $5000 income per year and you can save 3.8% of that or roughly $200.

So for a $200 savings, you can place $100,000 at risk.    And the Economic Hit Man is pushing things this direction.    Makes you say Hmmmmm

Its a win-win-win-win though   

1) Financial advisers continue to make huge money, thus helping to pump up the US GDP reports

2) Municipalities get to go back to spending money like drunken sailors getting the union guys off the bench and getting money to flow into union coffers which then flows in to campaign contributions thus also helping to consolidate power,

3) Retail money is brought off the sidelines and "into play" increasing the liquidity of these bonds like a melting bowl of jello that Lucy can pull the rug out form more easily, and let the HBB distribute their Muni bond holdings.

4) As Muni's go bankrupt, the Fed can jump into "saving" bond holders at 80cents on the dollars while extracting power and debt over the Municipalities to keep them in line, more power consolidation at the Federal level.    The New World Disorder Embryo.