It is exemplified by the recent retweet by Joe Weisenthal:
Agree RT @PragCapitalist: Bigger concern from muni fallout is higher taxes. Not defaultsThis really comes down to guys who aren't crunching the numbers. Meredith Whitney is crunching the numbers. She is very bearish. Others, who are in a position to know details the most of us are not privy to, tell me the situation is worse than most imagine. They tell me we may have a year or two before the problems develop, but that taxes won't do it. Indeed, they tell me there is no easy solution.
The only "solutions" I see are massive money printing by the Fed, which devalues the dollar domestically by more than 50% or a default on the pension obligations owed by the states. Neither option is the type that will sit easy with those concerned.
Weisenthal is way off on this one. The numbers that are owed are staggering, especially when the pension liabilities are taken into consideration. In fact, just as Whitney has been saying, the degree of the crisis is unkown because of the poor records being kept at state and local levels. Those in the known tell me the number is obviously staggering, but just how staggering, no one knows.
Bottom line: This is not the time to buy a muni bonds even to use as scrap paper. TOTALLY AVOID THE MUNI MARKET. All munis will get crushed once the panic starts. There may be some bargains in the panic, but that's way down the road.