It has been three weeks since Meredith Whitney warned of municipal-bond-market Armageddon on "60 Minutes," but her comments are still reverberating. On a New Jersey commuter train one evening last week, a municipal-bond pro lamented to a friend that he is still "spending a lot of my time running around rebutting what she was saying."
A particular bone of contention: Ms. Whitney's assertion that 50 to 100 municipalities could go under, leading to "hundreds of billions of dollars of defaults." The muni pro fumed this forecast was completely unfounded and that "60 Minutes" picked "the one person out there crying wolf." He may be right. Ms. Whitney's calls have hardly been perfect. But, just as many now point out muni defaults have been negligible in the past, homeowners were told until 2006 that U.S. prices had never fallen nationwide. The wolf sometimes does show up at the door.
overheard@wsj.com
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