Next Financial Crisis: Municipal Bonds

America's cities and towns have issued nearly $3 trillion in municipal bonds, yet are facing shrinking revenues, budget shortfalls and enormous pension obligations. There are fears that the next financial crisis will be municipal bankruptcies.

The financial crisis has hit cities hard: foreclosures, housing abandonment and shrinking tax bases. Now there are fears that they will be unable to meet their financial obligations.

"Cities across America are facing dire financial distress. Meredith Whitney, a banking analyst turned independent adviser who correctly predicted the banking meltdown, has issued an Armageddon-like prediction of mass municipal defaults. Others - notably Newt Gingrich - have suggested that state governments as well as cities should be allowed to file for bankruptcy. Congress held a hearing to examine the idea.

Americans, still reeling from the devastating impact of the mortgage debacle, are fearful that the next economic disaster is only a matter of time. To anyone reading the headlines of budget deficits and staggering pension liabilities, it takes little imagination to conclude that the next big one will be government itself. If muni bonds were to default (causing investors permanent harm, as distinct from the temporary discomfort of price fluctuations), ordinary Americans would lose big."

Full Story: Broke Town, U.S.A.


Prepare for the AICP* Exam

Join the thousands of students who have utilized the Planetizen AICP* Exam Preparation Class to prepare for the American Planning Association's AICP* exam.
Starting at $245
Book cover of the Guide to Graduate Planning Programs 4th Edition

Thinking about Grad School?

The Planetizen Guide to Graduate Urban Planning Programs is the only comprehensive ranking and listing of graduate urban planning programs available.
Starting at $24.95
City Plate table setting

New Arrival! City Plates

City downtown cores printed on gorgeous decorative collectible porcelain plates.
Women's t-shirt with map of Los Angeles

City T-Shirts for the ladies!

Women's Supersoft CityFabric© Fashion Fit Tees. Now available in six different cities.