[rdcbn]

True but you missed a point. Much of the money that financed the bond expansion came from Institutional investors who were controlling pension and retirement funds. A large of portion of peoples pension and retirement funds are invested in munis because of what should be their low risk.

Irresponsible and unsustainable municipal hiring and compensation packages are destroying the finances of the municipalities. In effect, they are damaging their own retirements savings

To complete the circle of disaster, the very same government employees who are destroying the finances of the municipalities, which will lead to bond defaults, have much of their pensions tied up in munis

[Presbyterian Reporter]

“”A large of portion of peoples pension and retirement funds are invested in munis””

____

There is no basis for a pension plan to own municipal bonds. A pension plan does not need tax free income nor does an IRA need tax free income as the IRS taxes the pension plan or IRA distributions as taxable income.

[dennisw]

You can never say “the government”. We have the Feds, we have states and counties. We have cities. We have semi-governmental authorities and hospital districts that tax us and collect tolls with counties and states being on the hook for them

What you say is true for the most part. We have thousands of distinct governmental entities in America so policies vary widely as to how their workers pensions are funded. For example if CALPERS screws up mightily it has recourse and can go to California counties and cities and demand they make up for the shortfall. Many government workers are protected like this. Say the Munis in their pension’s portfolio take a dive....The pension fund can extract money from the taxpayer to make up for this. Some government workers have no such pension protection

The Feds will just print more money for their retired workers

[bruinbirdman]

"To complete the circle of disaster, the very same government employees who are destroying the finances of the municipalities, which will lead to bond defaults, have much of their pensions tied up in munis "

But they also have written into their contracts that if the pension funds come up short, the taxing ability of the state must make it whole. And the courts back 'em up. Virtually all civil servant pension fund management is a state function.

Municipal bankruptcy does not negate pension liabilities.

yitbos