how much debt do we need anyway?
Barney Frank’s track record as a financial analyst is, shall we say, mixed. The House Financial Services Chairman said for years that a collapse of Fannie Mae and Freddie Mac would pose zero risk to taxpayers,well that dodn’t work out to good and he isn’t jail yet?
Yes, its low until it's not. Anyone remember Orange County? Or how about WOOPs Bonds?
Paying a higher rate is the market's way of punishing an entity for its own mismangement and bad decisions. Once again, we'll have the gov't rewarding failure.
What's wrong with this picture?
Idiot. Insurance would mean the granting of a put to the bondholders, making the bonds effectively riskless. Like other options, it has value because of the possibility it will be paid off. It costs money!
Further, making municipal bonds riskless will effectively remove a major restraint on borrowing, because lenders won’t have to worry about default. It will be Freddie/Fannie all over again, only worse, without oversight, and bigger.
It should also be noted that municipalities are most likely to have problems when a systemic economic event (e.g., severe recession) occurs. That means that when the payoffs become necessary, they will be huge, and come at just the time when the government is short of money (unless it prints it).
What a dangerous, incompetent, nutty jerk!