Jordan Hayes
CB says:
> I'm trying to think what "privatized" means here.
A local government decides they want an airport. They raise the money through taxes, then operate it through user fees. Sometimes they run a deficit and the local tax base pays up. Sometimes they need an upgrade, and they get a block grant from the Federal Government, which got its money from taxes. One day they wake up and say: we're broke, but we have this huge airport! I know, let's sell it to someone else and get all "our" money back.
^^^^^ CB: Thanks , Jordan. So, bonds are not "privatized". The municipal asset is sold to private interests.
I'm just thinking that the bondholders don't have to worry much about the bonds being paid off by the municipality , if that is what terrified Ferenc Molnar; although , as you say, state and local governments have been going broke and if they go to bankruptcy maybe Ferenc Molnar's concern has something to it as debts are forgiven in bankruptcy. I don't think the bankruptcy law provides for state bankruptcy only municipal.