Market Curiosity: Exploring Markets And Systems

January 2, 2011

Muni debt: starting to trend down?

Filed under: Just Watching — Tags: , , — Jeff Fitzmyers @ 1:33 pm

From GEAB N°50

Just guessing, but the chart indicates -4.8 billion. Using the average of 2009 on the chart as a reference, this recent outflow represents about 3 months of inflows. Does not seem to be a huge issue.

... SEC Open Meeting on Municipal Securities Disclosure on 26 May 2010, there were approximately $2.8 trillion outstanding in municipal bonds.

So about 0.17% was withdrawn. And muni bonds are down 6% in the last 2 months. It doesn’t seem too much — the 2008 decline was about 15% in 2 months with more volatility and about the same outflows. (I have no idea what this means to the opaque OTC debt market.) The big question: “Is this a new trend?” If withdrawals continue on for another month, I would assume fireworks are near.

Factoids from the link above:
– Municipal bonds have been issued by US local governments since 1812.

– In 1902, muni debt was US$2.1 billion or $27 per capita. By 1927 the amount rose to $14.9 billion or $125 per capita. Now it’s $9,300 per capita. Currently per capita income is $46,000. Per capita national debt (not including a lot of unfunded liabilities) is $45,000.

References: Dollar Death: Muni Bonds (3)

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