Relevant:
- Auction-Rate Market Shrinks by 18% Amid State Probes
- Auction Market Shrinks by $51 Billion, With Failure Rate at 71%
- Auction Supply `Tsunami' Foreshadows Deeper Municipal Losses
- Brazos Trapped by Auction-Bond Yields Above Student-Loan Rates
- Detroit 'Contagion' Spreads; Widely-Held Puerto Rico Muni Bonds Collapse
2008-04-28 — bloomberg.com
U.S. municipal borrowers from New York to Los Angeles pushed down yields on auction-rate bonds to the lowest in 11 weeks by moving to eliminate at least $55.3 billion, or 33 percent, of the debt they had in the market.
This is the funny part (in a sad sort of way):
More than three dozen schools, hospitals, museums and local governments including American University in Washington and Puerto Rico tapped reserves, investment funds and credit lines to bid on their securities, Bloomberg data show.
That's like getting a cash advance on credit or raiding your IRA to put a down-payment on a house to lower your mortgage -- not really a sustainable solution. These public institutions are betting big that that the problems are just temporary.
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