Since we are on a bit of a streak on the topic of market reflexivity and the muni bonds let’s stay on the topic.  Apparently the volatility this publicity the muni bond market has attracted has brought out defenders.  These defenders fault Meredith Whitney for both not understanding the true nature of the muni bond market and the strident tone she used.  Everyone recognizes that there are significant budgetary issues at the state and local level, just at the level (or fashion) Whitney implies.  Indeed a rise in tax revenues may help alleviate some of these problems.  Part of the issue may have to do with the generally poor level of financial disclosure these entities provide. On the other hand George Soros seems to agree with Whitney.  In today’s screencast we once again examine the muni bond debate.

Items mentioned in the above screencast:

The effect of volatility on muni bond prices and ETF NAVs.  (Morningstar)

Meredith Whitney dissed.  (CNBC)

Don’t forget that tax revenues are on the rise at the state level.  (Credit Writedowns)

Vanguard does not “anticipate a rash of muni bond defaults.”  (Vanguard)

Bond Girl, “Alas, the only discipline for a bad call is time.  I look forward to Whitney’s explanation in roughly eight months as to why she provoked so many people to dump money-good bonds for no real reason.  (self-evident also Money Game)

Fears about a lack of financial disclosure on the state and local level.  (WSJ)

George Soros compares the muni bond situation to the Euro crisis.  (Money Game)

Daily chart of the iShares S&P National AMT-Free Muni Bond ETF (MUB). (Finviz)