The Irregular Blather June 28, 1931

No Journal was published Sunday, June 28, 1931. A brief blather on contemporary matters. One of the things that's been striking me reading the 1931 news recently is the number of municipal bonds that are having some kind of trouble; I summarize most of those items to give a feel for what that kind of crisis looks like day-to-day. While I'm not giving investment advice here and urge everyone to do their own due diligence, it occurs to me that the municipal and state bond markets now just possibly may not be adequately pricing in the risk of trouble down the line, especially since that trouble appears to be looming fairly clearly. The more reassuring commentary on the matter usually points to the very low historical default rates for municipals. It's kind of disturbing, however, to look back on how many of our recent bubbles and financial fiascos cited similar reasoning, i.e. safety based on historical data when much of that data was compiled under different circumstances. Like, for example, how a geographically diversified mortgage security was safe because house prices had never declined across the whole US at once ...