I was wrong. The great Credit Expansion Finished didn’t end with the financial crisis; the great Credit Expansion merely took a reprieve. While the effects of the reprieve were mighty indeed, with stock and bond prices plunging, I was wrong to believe Credit Expansion Finished. Total credit (debt) has now soared to new highs largely taking stock and bond prices right back up with it.
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Posts Tagged ‘Credit Expansion Finished’
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Exceptional Exceptions
In a world that includes dozens of US Treasury bond issues (but just one credit) or hundreds of Corporate bond issuers, Municipal bonds offer tens of thousands of different credits, terms and conditions. It is these differences, rather than their similarities, between issuers and issuances that account for the robustness of the municipal bond market. (more…)
A Liability for Every Asset
One of my strengths (and weaknesses) is that I was trained as an accountant. Double entry accounting follows specific rules. The rules of accounting, like other endeavors, do ebb and flow over time but Assets are always the sum of Liabilities and Equity. (more…)
Municipal Bonds Are Unique
Municipal bonds have been in the press more often lately. The Federal Reserve recently published a report on defaults in the municipal market precipitating arguments as to what constitutes a default as well as what constitutes a municipal bond. Such arguments bolster our position that while municipal bonds in the aggregate total almost $4 trillion, the marketplace is highly fragmented and the marketplace is a collection of tens of thousands of unique financial instruments too numerous to count. (more…)
Bankruptcy: When The Can No Longer Can Be Kicked
As the financial crisis enters its sixth year we find municipalities and their bonds increasingly in the news. Municipal woes appear to be on the rise. Therefore it is important to realize how unique each municipality is as well as how unique all of their municipal bonds can truly be. There is no such thing as a generic municipality nor is there any such thing as a generic municipal bond. Every municipality is different. Every municipal bond is different and therein lies the opportunity for you, the municipal bond investor.
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