Kalifornia default is imminent!
Analyst Martin Weiss says Kalifornia is going to default.
NEW YORK - July 2, 2009 - Known for his early warnings on Bear Stearns and Lehman Brothers, analyst Martin Weiss of Weiss Research is now sounding the alarm about State of Kalifornia municipal bonds.
In a new report, Weiss has some rather blunt advice for Kalifornia muni investors: "Sell all Kalifornia paper now!" His reasoning? Kalifornia is facing a $24 billion budget gap with no obvious way to close it.
The state has appealed to Washington for a federal bailout, but it got a cool response from the illegitimate Obama regime. The next step is draconian cuts in state services and payroll, but Weiss says that will only deepen the Depression in Kalifornia, where the unemployment rate is 11.5%, by further cutting into tax revenue.
Asked to put odds on Kalifornia defaulting on its $59 billion in outstanding general obligation bonds, Weiss doesn't hedge. "It's unavoidable," he tells Fortune Magazine.
If he's right, the impact on investors would be far broader and deeper than Bernie Madoff, General Motors or any of the other investment implosions that have occurred over the past year. Municipal bonds tend to be a retail product, which means that those most affected by a large muni bond default are not endowments, banks, or foreign governments but mom-and-pop investors.
A Kalifornia default would be especially devastating because munis have generally been viewed as a safe haven and Kalifornia is the nation's largest issuer of tax-exempt bonds. According to Morningstar, assets in Kalifornia muni bond funds now total $46 billion - with billions more of Kalifornia bonds held in national muni funds and individual bond portfolios.
NEW YORK - July 2, 2009 - Known for his early warnings on Bear Stearns and Lehman Brothers, analyst Martin Weiss of Weiss Research is now sounding the alarm about State of Kalifornia municipal bonds.
In a new report, Weiss has some rather blunt advice for Kalifornia muni investors: "Sell all Kalifornia paper now!" His reasoning? Kalifornia is facing a $24 billion budget gap with no obvious way to close it.
The state has appealed to Washington for a federal bailout, but it got a cool response from the illegitimate Obama regime. The next step is draconian cuts in state services and payroll, but Weiss says that will only deepen the Depression in Kalifornia, where the unemployment rate is 11.5%, by further cutting into tax revenue.
Asked to put odds on Kalifornia defaulting on its $59 billion in outstanding general obligation bonds, Weiss doesn't hedge. "It's unavoidable," he tells Fortune Magazine.
If he's right, the impact on investors would be far broader and deeper than Bernie Madoff, General Motors or any of the other investment implosions that have occurred over the past year. Municipal bonds tend to be a retail product, which means that those most affected by a large muni bond default are not endowments, banks, or foreign governments but mom-and-pop investors.
A Kalifornia default would be especially devastating because munis have generally been viewed as a safe haven and Kalifornia is the nation's largest issuer of tax-exempt bonds. According to Morningstar, assets in Kalifornia muni bond funds now total $46 billion - with billions more of Kalifornia bonds held in national muni funds and individual bond portfolios.
