Tuesday, August 21, 2012 – 11:15 a.m.
It’s been less than a week since Moody’s Ratings published a report highlighting the growing problem of more municipal bankruptcies occurring in the state of California.
A worst case scenario of 20% or cities could see problems. About 10% have already indicated they’re having cash flow problems.
Now comes news from the Daily Ticker that billionaire investor Warren Buffet’s Berkshire Hathaway (NYSE: BRK.A) has dumped $8.25 billion in credit default swaps used to insure the company’s municipal bond portfolio.
Keep in mind the entire municipal bond market is more than $3.5 trillion in size, but neverless, there is a real problem here.
Fresno and San Jose have been showing signs of distress recently.