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Another reason to avoid California municipal bonds
Old 01-26-2009, 12:06 PM   #1
Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Houston
Posts: 1,406
Another reason to avoid California municipal bonds

Did anyone else see this article?

California Towns Bail Out Auto Dealerships -

Cities are now making loans directly to auto dealerships at below market rates. This seems like one of the worst possible ideas...forcing the taxpayers to assume debt-like returns in exchange for taking on equity-like risk. This makes me not want to own any munis at all, if they are essentiatially going to use my money to invest in junk bonds. Not to mention crowding out of private lending activity (no wonder the banks aren't making any loans - why should anyone borrow from them when they can get subsidzed loans from the govt?).

This will end badly for the dealership, city, and taxpayers.
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