Municipal Bonds for Junk Collectors
Poor financial management exists at all levels of government. City politicians have to buy votes too. Also, local politicians and bureaucrats are more likely to be naive in their thinking about where the money will come from to pay for everything. It’s no surprise, then, that we have cities staring bankruptcy in the face, including a state capital.
The reasons for the financial distress are typical of government incompetence: Underfunded, overly-generous pension obligations and hugely expensive infrastructure improvements, e.g., a whiz-bank trash incinerator.
Harrisburg, Pennsylvania may put their parking garages on ebay or Craigslist to raise money. The City Controller is recommending bankruptcy. I say go for it – as a wake-up call to voters around the country that bad government has real economic consequences.
I’m now officially gun shy about muni bond funds. The tax free yield is not high enough to compensate for the risk.
Meanwhile, we continue to look for ways to lower our monthly hit and increase our ROI. I returned some surplus equipment to Comcast last week which will lower our cable bill by $37. There is still more more work to be done on that account.
We are also firing Bank of America, replacing it with a community bank with a high interest checking account. The rate – 3.78% – can’t be touched by the Internet banks that many PF bloggers like to push.