The state of California has joined the bailout cue. Governor Arnold Schwarzenegger yesterday warned Treasury Secretary Hank Paulson the state may need an emergency loan of as much as $7 billion from the federal government within weeks.
Subprime has found a new victim, reports Bloomberg: municipal bonds. Already, the amount of municipal bonds that have defaulted this year is three times that of 2007.
So far this year, $736 million in municipal bonds have defaulted. That doesn’t necessarily mean they didn’t pay investors; they may have just drawn down reserves. That’s what happens just before they stop making payments to bondholders.
I don’t know about you, but I’m not earning much interest at the bank these days. Fortunately, an extraordinary “return-on-your-cash” alternative has come up in the last month.