Municipal Bond Insurance Downgrades: The Next Hit for the Taxpayer | Corrente

Municipal Bond Insurance Downgrades: The Next Hit for the Taxpayer | Corrente: "Municipal Bond Insurance Downgrades: The Next Hit for the Taxpayer

Corporatism Economic Apocalypse Department of All The Damn Gall
Mon, 11/10/2008 - 12:31pm — BDBlue
The economic meltdown isn't limited to the bailout. We're going to be paying for the risks taken by banks and insurance companies in lots of ways. Such as having to pay off 30 year bonds in 10 years. That will cost you. And I do mean you. (The cuts in programs are just starting.)
Here's how it works....

Wait, how can insurance companies that never pay claims be in trouble?

Earlier this decade, they started insuring something besides municipal bonds: subprime-mortgage-backed securities. Enough said.

Like requiring them to be paid by the municipality in 10 years instead of 30. So instead of paying $1 million a year, a school board might have to pay $2 or $3 million a year on the bonds.

Where do you suppose the school is going to get that money?

As the NPR reporter says, "It's as if you bought auto insurance, and then your insurance representative came over to your house, got liquored up, totaled your car, handed you back the keys and said, that'll make your rates go up.""