Most of the munis are probably held in funds. The way it’s probably going to work is that the defaults will be allocated to the widows and orphans, and the ones that are good will be allocated to Goldman and Soros. But how many folks are going to call up their plan administrators and say ‘get me out of munis’. And those that do will probably be talked out of it by folks emphasizing the risks and the lack of return from other investments.
The international banksters will be eating a lot of mutton this winter, as the sheep are going to get slaughtered.
If there were just ‘one’ area to pick that would be sure to cause severe calamity in the economy it would be Muni’s. As you state, they are ‘so’ embedded in portfolios, especially portfolios of the conservative and less than active investor, that this will go down largely unnoticed until the market collapse and only then will the aforementioned investor start to wonder about their empty accounts. This situation has crisis written all over it....