One of the higher mysteries

Duff McDonald, Fortune (via Ritholtz):

To readers of the business press, the story is a familiar one: fifteen months ago, superstar analyst Meredith Whitney rocked the world of municipal finance with a December 2010 prediction on 60 Minutes that a wave of municipal debt defaults was headed our way. Her forecast was quite specific: “You could see fifty to a hundred sizable defaults,” she told her interviewer, correspondent Steve Kroft. “This will amount to hundreds of billions of dollars’ worth of defaults.”

If you followed Whitney’s advice and didn’t buy munis (especially after her prediction sent the market crashing), you missed one of the better investments of many a year.

Or maybe not. The way that municipalities avoided defaulting was by putting off vital infrastructure and reducing critical services. When the streets are awash in sewage, or rats make the tony side of the city into their playgrounds, maybe people will discover that they actually like paying taxes.