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Muni Bond Market Imploding: How to Play It? -- Seeking Alpha : "While it was readily apparent years ago, and we were reminded again during the 2008-2009 financial crash, markets had temporarily forgotten that municipalities across the nation are virtually insolvent and should already have declared bankruptcy. If they have not yet “restructured” their debt, they should and they will. After decades of politicians writing checks the future generation couldn’t pay by way of lavish public spending sprees, unsustainable defined benefit programs for public workers and lousy investment schemes (Wall Street Collects $4 Billion From Taxpayers as Swaps Backfire), current investors are rightly questioning the ability to meet these debt obligations in the future. Who Will Blink First? This has traditionally been a calculus..."

Norton's comments: For all these financial instruments that created so much liquidity in the market these last few years, there are no buyers: mortgage-securitization market structured-investment-vehicle market collateralized-debt-obligation leveraged-loan markets auction-rate securities market credit-default-swap market (is dying) from MSN 2/29 Jon Markman: "...Government-sponsored mortgage lenders Fannie Mae ( FNM , news , msgs ) and Freddie Mac ( FRE , news , msgs ) have caught a break, to be sure, with caps on their lending levels lifted this week, but business is still so poor, largely because of the corrosive effects of their credit derivatives books, as I explained in December , that they will still have a hard road to climb after the rally fades. And most vividly, far from the gaze of dewy-eyed equity investors, the credit markets continue to crash. Auction-rate securities -- municipal bonds bought as cash equivalents through mainstream brokers because of bonds' mo...