Warren Buffett Comment on Muncipal Bonds

Warren Buffett famously called derivatives “financial weapons of mass disruption” way before anyone realized the systemic danger they posed. Regarding municipal debt, I think the following statement spoken at yesterday’s Financial Crisis Inquiry Commission will prove equally as prophetic:


“If you are looking now at something that you could look back later on and say, ‘These ratings were crazy,’ that would be the area,” Mr. Buffett said about state and local government bonds. “If the federal government will step in to help them, they are triple-A. If the federal government won’t step in to help them, who knows what they are.”