My take on this is that in both stock and bond markets people are taking profits as the opportunity arises, having sustained loses that they are trying to ameliorate. Since muni funds are essentially liquid, they are prone taking hits. Shareholders selling off affects the entire fund negatively – at least in the short term. I also think that as the political and economic situation stabilizes, investors will regain confidence and more investment will take place for growth. Those of us in higher tax brackets still see municipal bonds as a good investment.
As John has emphasized, some states are, however, in a more difficult situation than others. Stalwart states have a better chance of rebounding sooner.

Thank you TML

sorry about this question, Would you kindly commment on these nearly fixed income vehicles: – cprm or c-m, now priced ~ 15.5/share, called @ 2013 for 25 dollars/share, 8.5% annual return, graded A1 by Moody
- citprc or cit-c priced @ 25.5, called @ 2015 @ 50dollars/share, annual 8.75% return, graded BBB by Moody you can buy one share or 10 millions shares in both cases once they are due they will turn into stock values prices for “C” and you can sell at that time

I believe they are not FDIC but they are backed by their companies [although CDs at citibanks are fdic]

Negatives are: the company can fail [which I don't think will happen since ~60% of bad news are behind us, Stocks will probably go up next year anywhere from 30 to 100%, Gov will always bail them out since they are the backbone of the economy, the companies can "reduce" the annual rate [which I don't think will happen] if they have bad profits/bad quaters {They still give the 8.75% even though through the sept/october of 2008 bad news quater}. These are consider somewhat aggressive but if a major thing occur, the Stocks companies usually will pay dividends for their bonds holder first, then the PREFERRED STOCK HOLDERS 2nd, then the stock holders last. They can cut rate of dividends for stock holders first but they don’t do it for bond holders or prefer stock holders if something happen to them [BAC did this when i bought their stocks]

I think these are ok to include in your overall profolio. If my calculations are correct, you’ll gain 190% excluding tax if you hold citprc until 2015 when it’s due [if we don't have any major black swan events]. It’s somewhat better than bonds because you have to spend a minimum of 5K for every new bond, but this one you can spend 25 dollars to buy one share or one millions to buy many shares so it’s a good vehicle investment strategies.

Thank you for your suggestions about these vehicles.