Muni sweeps: “Picture a better America”

May 3, 2011

American City and County reports on a wonderful photo campaign launched by the Association of Equipment Manufacturers (AEM) to highlight America’s crumbling infrastructure.

I predict the category “One bumpy road” receives a lot of submissions. Here is how it is described by the AEM:

Disintegrating roads are a fact of life for almost everyone. Some have even rewarded us with a flat tire or worse! Send a photo of a decaying bridge or road; show Congress the consequences of their inaction.

The campaign was developed to push Congress to pass a fully funded six-year highway bill by Sept. 30.

Get clicking.

Retail buying of individual bonds about doubles

Municipal bond mutual funds have sustained about 24 weeks of outflows. Meanwhile retail purchases of individual bonds have about doubled in the same period. We’ve got some real bargain hunting going on.

From Bloomberg:

Buyers of individual bonds through discount brokers have been “aggressively” accumulating issues in the last few months, said Chris Shayne, senior market strategist for Mill Valley, California-based BondDesk Group, a bond marketplace that works with dealers, financial advisers and discount brokers including New York-based E*Trade Financial Corp. Individual investors cannot purchase bonds directly with BondDesk.

The ratio of buy orders to sell orders, a measure of investor demand, from do-it-yourself investors jumped to about 6 in February from 3.6 in November, according to data from BondDesk, which has about 30 percent of municipal-bond market transactions.

What Wall Street thinks

An excerpt from an excellent piece by Peter Harkness at, who writes “The Truth about Bankruptcy”:

A couple of months ago while skiing in Utah, my son and I shared a lift with a lean, athletic-looking man in a fancy one-piece outfit. It turns out he was an investment banker from New York City.

After the obligatory jokes about how unpopular investment bankers are, I asked for his take on municipal bonds: Were they as shaky as some analysts and politicians were warning? He laughed, noting that munis now made up more than half of his personal portfolio. But, I asked, what about the interview on 60 Minutes where a Wall Street analyst warned of a coming wave of state and local bankruptcies amounting “to hundreds of billions of dollars’ worth of defaults?”

“I hope the analyst issues more warnings like that,” he replied, “because I’ll just keep on buying at a third off where the price ought to be.”

And as our lift mate skied off, he added, “That analyst is a complete idiot.” I guess New York investment whizzes don’t mince words.

Where will the cash go?

Reuters reports:

The U.S. municipal bond market is entering its spring-summer period when big amounts of cash flow into investors’ pockets from bond coupon payments and redemptions.

Coupon payments alone for May, June and July should mirror the $21.3 billion paid out during the same period in 2010, according to Municipal Market Data.

But 24 consecutive weeks of sizable outflows from municipal bond funds could indicate the money will not be returning to munis.

Or those coupon payments could buy more individual municipal bonds. Stay tuned.

The State of Preschool 2010

The National Institute for Early Education Research has published:

The 2010 State Preschool Yearbook is the eighth in a series of annual reports profiling state-funded prekindergarten programs in the United States.

This latest Yearbook presents data on state-funded prekindergarten during the 2009-2010 school year. The first report in this series focused on programs for the 2001-2002 school year and established a baseline against which we may now measure progress over nine years.

Tracking these trends is essential, since changes in states’ policies on preschool education will influence how successfully America’s next generation will compete in the knowledge economy.

Mini sweeps

CNBC: US Debt Rating Should Be ‘C': Independent Agency

ZeroHedge: Treasury Cuts Its Borrowing Need Estimate By Half, To Suspend State, Local Gov’t Funding Due To Upcoming Debt Ceiling Breach

MSRB: MSRB Recognized for Commitment to Municipal Market Disclosure

American City and County: Bonds take a blow

The Detroit News: Detroiters split on Bloomberg idea to repopulate city with immigrants

Ipreo: New municipal issuance calendar

One comment

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GRRR … more one- sided, obsolete arguments for throwing good capital after bad by the vested interests, in this case auto- and heavy equipment manufacturers.

The world exists for these exalted entities at the expense of all else. This is what a hundred years and a trillion barrels of oil wasted and wasting in our space- ship’s atmosphere have bestowed to all of us: cities filled with potholed streets which must be repaired at all cost with more streets added into the bargain!

All of this in the name of ‘growth’ and ‘progress’. Fix the street and Utopia will happen! What are you waiting for!

The costs of this nonsense are beginning to be felt but the denial industry is larger than the auto and infrastructure industries.

The wolf is not quite yet at the door and its ears are not quite yet in the hands of the US establishment so the ‘borrow, then spend on waste’ continuum will proceed … until it physically cannot anymore. Hopefully, there will be something marginally useful left to work with in this country after that happy day passes.

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