"US States Likely to Defy US Downgrade to Keep Top Credit Ratings"

[Xan]

"Defy" I believe is the wrong word here; what they seem to be saying is that states will be keeping their pristine credit rating even as the federal government does not.

https://finance.yahoo.com/news/us-state ... 15923.html

Does that really make a lot of sense, that the states could be more reliable at returning nominal dollars when they can't print and the feds can?

[yankees60]

"Defy" I believe is the wrong word here; what they seem to be saying is that states will be keeping their pristine credit rating even as the federal government does not.

https://finance.yahoo.com/news/us-state ... 15923.html

Does that really make a lot of sense, that the states could be more reliable at returning nominal dollars when they can't print and the feds can?

It does because I think that all of them have to balance their budgets. Therefore, no unrestrained spending.

Also, I believe that defaults on municipal bonds are rare.

The threat of New York City around 1975 is now 50 years ago.

[Xan]

"Defy" I believe is the wrong word here; what they seem to be saying is that states will be keeping their pristine credit rating even as the federal government does not.

https://finance.yahoo.com/news/us-state ... 15923.html

Does that really make a lot of sense, that the states could be more reliable at returning nominal dollars when they can't print and the feds can?

It does because I think that all of them have to balance their budgets. Therefore, no unrestrained spending.

Also, I believe that defaults on municipal bonds are rare.

The threat of New York City around 1975 is now 50 years ago.

Surely such defaults are a lot more common than defaults on loans given by currency issuers denominated in the currency they issue.

[ochotona]

Does that really make a lot of sense, that the states could be more reliable at returning nominal dollars when they can't print and the feds can?

I bought some short-term munis in an ETF, it's the iShares IBM* (* is a wildcard) family of ETFs. Choose your maturity. I'm keeping the term short, 1-2 years, so IBMF, IBMG, IBMH. These ETFs have ~1000 bonds in them, and are liquid (unlike bonds, where you may be a poor bid).

In a taxable account, if you're in the 22% tax bracket, the after-tax yield is OK. for me, the point is not to max out the yield... the point is to not depend on the Federal Govt 100% for your fixed income.

[yankees60]

"Defy" I believe is the wrong word here; what they seem to be saying is that states will be keeping their pristine credit rating even as the federal government does not.

https://finance.yahoo.com/news/us-state ... 15923.html

Does that really make a lot of sense, that the states could be more reliable at returning nominal dollars when they can't print and the feds can?

It does because I think that all of them have to balance their budgets. Therefore, no unrestrained spending.

Also, I believe that defaults on municipal bonds are rare.

The threat of New York City around 1975 is now 50 years ago.

Surely such defaults are a lot more common than defaults on loans given by currency issuers denominated in the currency they issue.

What you say makes sense but it seems that a municipal default is quite rare?