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-- protests against deep budget cuts may be raging across the country but Fed Chairman Ben Bernanke sees a silver lining in the severe steps.
-- employed by many states to reduce spending.
Bernanke saying those reductions may provide a big boost to the two point seven trillion dollar.
-- -- -- should investors bet on Ben and looked -- -- -- the -- -- -- didn't see him look at our golden bears panel Spencer -- they can backtrack and Liz MacDonald Spencer do you like communities here they are cheaper than they were just before banking analyst Meredith Whitney started talking down.
And that's right I I am not a fan a municipal bonds here at all there are so many better options than the current market environment.
Then municipal bonds quite simply crisis is looming in the miss a ball -- With interest rates that are surely headed higher and state deficits that are out of control I would not want to be inadmissible that right -- -- hasn't that news been -- in the Muni bond market and isn't it.
I don't you want to buy low.
-- I loved -- low I would of rather ball Munis when Bill Gross said to get him in the end December David all right.
Redemptions was it -- what you say this the average investor does the wrong thing at the wrong time and the everybody was getting out of Munis.
In the third week of January it the redemptions -- three point seven billion now they're down to about two Billy and I actually like.
-- I'll tell -- -- I when I was twenty.
I was broke when I'm fifty I had cash flow problem right there's a big difference.
Eighty or 90% of people in Ohio still have a job and they can still the attacks which were trimming government we're getting it right size I like I like -- a lot and I think he's still think it's got some time to run.
-- municipal bonds.
Right now only what one billion have defaulted so far compared to what she had what -- -- it's -- would be hundreds of billions Adori over been doing insane 100 billion over several years of it.
-- five -- -- a sound that bad I mean give -- you know it doesn't sound that bad this even at the height of the crisis that was eaten half billion went through the -- to have a hundred billion.
-- have to have forty Detroit's -- the same debt level as Detroit.
To default so -- that does seem kind of out on the margins even Moody's and Fitch is saying.
It will be a -- -- default epidemic but gotta -- it talking up on guys on Wall Street there's say.
And it's not the states you gotta -- that its local towns.
It's a local towns that overbuilt during the housing bubble and built and as sewer lines and housing developments that they can't float right now and so they're saying this really is -- -- -- be picking up pennies in front of steam rollers and that's me gotta watch out for.
But Spencer you can pick and choose I mean that is that's the beauty of any market you don't have to get the whole thing for example way Indiana I think I believe now as -- triple -- rating so what if you just take.
Those states that are doing a right thing isn't there -- bet there.
Boy it's great in theory.
I just really doesn't work an actual market trading all we have to look to as the crisis that we've seen over a couple years ago in the stock market is that when we see a problem in one area.
Everything is sold out just with with without a second thought and if we had one noticeable market one major market a California and Illinois.
I have real concerns about the fault.
You would see every level of municipal debt sold without a second thought.
And so that's why in theory it's okay that -- to try and find a stronger parts of municipal of that but if we saw one cracked develop -- would let all.
Bernanke is weighing in now I remember in the early two thousands every time Alan Greenspan opened his about the market took off he if he endorse something like this -- Will Bernanke kept the same affect.
I really don't think -- have -- panic on what about -- I think absolutely I think Israel had that effect -- states aren't going bankrupt if you want to be really cautious -- general obligations from states.
And death and taxes are sure not tell you what else is -- -- drink water and then they get rid of it so guess what by water district or am I sure district and you're good.
Why don't -- what I would be really selective about the water and sewer district because some of those towns overbuilt and there's nobody left attacks.
I mean even attacked Mike Tyson -- -- let's -- turn out the lights.
I mean that's -- really well that they got to think about it.
And I think is something -- -- you lose some of these bonds.
Are about as transparent as a bucket of molasses or collateralized states of Arizona bonds collateralized by some housing development and -- -- Just a little moment and yeah financial form like anybody else you got to leave it that banks short balls of bear.
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