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Friday, January 14, 2011

Another Amazing Chris Christie Moment

Jan 14th, 2011

Does Gov. Chis Christie (R-NJ) have any clue how necessary municipal bonds are going to be for his state's survival over the next several years? Perhaps I should rephrase the question; 

Does Gov. Christie have any idea what municipal bonds are or how investors in this particular market respond to politicians when they say stupid things?

"Yesterday we noted how a New Jersey muni bond offering was pulled just a few minutes after Chris Christie said at a town hall that healthcare costs were threatening to "bankrupt" New Jersey.

Now it's a little unclear if the connection was real. For one thing, yesterday was an ugly day in the muni market. For another thing, everybody knows that healthcare costs are a huge issue everywhere. And beyond that, people also know that words like "bankruptcy" may be a bit hyperbolic.

Still, all the talk of muni bankruptcies aren't making muni bond salesmen happy.
Bloomberg quotes head of bond trading at Deutsche Bank Private Wealth Management in New York, Gary Pollack, as saying "He is scaring some people when he says the state is going bankrupt... it wasn't timed well."

You have to feel for muni bond dealers right now: The media drumbeat is relentless about how ugly the muni situation is, and of course they're accustomed to selling munis as tax-free safe-havens, so obviously they're going to freak out when a borrower is using that kind of language, even if the causality is nonsense."

It would appear that Gov. Christie just doesn't get the interconnectedness of the issues facing New Jersey.

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