JDzBrain
Active Member
Municipal Bonds are not "paid back" by tax payers period! They are tax exempt bonds...issued in varying denominations that are SOLD to private citizens, mostly those with disposable income as a tax shelter OR that earn a set interest rate that is generally MUCH lower than that of the rate of return for normal market based investments and mature at a set rate until they reach their full maturity, usually 10 or 20 years. At which point, they can be cashed in for the face value of the bond.The bonds are to be paid back in part by tax dollars. And ultimately its the taxpayers credit that is on the line. if the arena fails and the bondholders get screwed, do you think that makes them more or less likely to invest in such issues in the future?
You are getting paid back good dollars with bad, INFLATED dollars, but they are tax free. Which is the appeal to the rich, but the reason that bonds have become dinosaurs to the average investor.
If the revenue or general obligation bonds fail...they are NOT PAYED BACK BY TAXES and the bond holders are NOT screwed. The issuer MUST take out an insurance policy on the bonds to get a sufficient credit ratings by the rating agencies so that folks will buy them in the first place.
HERE, read it for you self if you think I'm full of shit!