Book Review: Encyclopedia of Municipal Bonds

By David Merkel from The Aleph Blog

Joe Mysak is one of the true experts in the municipal bond markets, journalist or not.  He has covered municipal bonds at Bloomberg since 1999, and has covered municipals since 1981.  I have read his work for over 12 years, and I have been impressed.

So when he writes an encyclopedia of Municipal Bonds, it’s gonna be dull, right?  There are entries that are short to define simple but important concepts, but the glory of the book are the long articles, because they describe how the municipal market evolved its structure.

It’s not a dull book, if you want to understand how the Muni market came into existence, and how it acts today.


The long articles are the best, and they include:

  • The Arkansas Default in 1933
  • Auction-rate securities
  • Bell California pay scandal
  • Chapter 9
  • Convention Centers (stop the madness)
  • Default (and why it is different for munis)
  • Escrowed to Maturity
  • Garbage bonds
  • The Implosion at Heartland
  • House Museums
  • How Initiatives and Referendums Could and Could not affect muni financing.
  • Muni bond insurance — a topic I have often criticized.
  • Jefferson County, Alabama
  • Pension bonds, particularly those of New Jersey
  • Orange County’s default
  • Pension obligations, and their effect on munis
  • Moody’s changing their ratings for munis in 2010.
  • The effects of derivatives on naive municipal executives, who thought the got it.
  • Tobacco bonds.
  • Tourist attractions (bad bets for muni bond financing)
  • Yield-burning. (using the tax-exemption to earn arbitrage profits of some kind.)

It is the controversies and legal cases of the bond market that have had the most impact on how the market behaves today, and that is how the book covers its topics.

I learned a lot from reading this, and most muni investors would learn still more.  This book is well written, and explains the issues in detail, without resorting to unnecessary verbiage.



Who would benefit from this book

Most investors in muni bonds would benefit from this book.  If you want to, you can buy it here: Encyclopedia of Municipal Bonds: A Reference Guide to Market Events, Structures, Dynamics, and Investment Knowledge (Bloomberg Financial).

Full disclosure: The publisher asked if I wanted the book.  I said “yes” and he sent it to me.

If you enter Amazon through my link, and you buy anything, I get a small commission.  This is my main source of blog revenue.  I prefer this to a “tip jar” because I want you to get something you want, rather than merely giving me a tip.  Book reviews take time, particularly with the reading, which most book reviewers don’t do in full, and I typically do. (When I don’t, I mention that I scanned the book.  Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.  Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.  Whether you buy at Amazon directly or enter via my site, your prices don’t change.


David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent “due diligence” on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, “The markets always find a new way to make a fool out of you,” and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures.
Also, though David runs Aleph Investments, LLC, his blog is not a part of that business. His blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David’s has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions.

Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal “advice” in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.


Leave a Reply

Your email address will not be published. Required fields are marked *