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A Heady Time for Muni Bonds

California's largest current public works project: construction of the new $6.4 billion eastern span of the San Francisco–Oakland Bay Bridge, which is due to open in 2013
California's largest current public works project: construction of the new $6.4 billion eastern span of the San Francisco–Oakland Bay Bridge, which is due to open in 2013Photograph by David Paul Morris/Bloomberg

The prophecy, however dire and seemingly made-for-prime-time-TV, sounded reasonable enough: A financial crisis that starts on Main & Wall and jumps the pond to Europe will inevitably take down U.S. municipalities that had borrowed more than they could ever hope to repay.

Hence, Meredith Whitney, one of the prescient doomsayers of the crash, took to 60 Minutes in December 2010 to warn of “hundreds of billions of dollars” of municipal defaults within the following 12 months. Not only did this not transpire, but the $3.7 trillion muni market is loving life right now.