The Little Book of the Shrinking Dollar: What You Can Do to Protect Your Money Now

Things Aren’t Looking Good over in Muni-Land

Municipal finances in the various states of the union are also deteriorating rapidly.

These muni bonds fund everything from sewers to schools. Any infrastructure project happening in the state depends on this money as much as it does the handouts from the federal budgets.

Only nine states’ general obligations earn a AAA from S&P.

What are the criteria? These are states who depend less on the federal government for their revenue and can balance their books well enough to weather federal funding cuts. (We wouldn’t give overmuch attention to the rating itself . . . but we do consider their factors perfect checkboxes for your own list, should you decide to go the muni investing route.)

Meanwhile, dozens of states and local governments teeter on the verge of bankruptcy.

The worst case of 2011 was the capital city of Pennsylvania: Harrisburg. The state’s ready to rush in and take over the city’s finances. Meanwhile, Jefferson County, Alabama, filed the biggest muni bankruptcy filing in U.S. history. Cities like Providence, Rhode Island, and Detroit, Michigan, are poised to follow. Some black marks here are being in a state with the largest unfunded pension costs in the union or defaults on infrastructure bonds.

States like California and Illinois have hit rock bottom junk bond status. So we’d stay far away from them. Consider crossing New Jersey, Ohio, Michigan, Georgia, New York, Arizona, Connecticut, Ohio, and Florida off your list (unless ...