America's Spain: California - NASDAQ.com: "How safe are municipal bonds? The correct answer is that it depends on who you ask. Politicians say munibonds are still a good bet. Credit raters say that a AAA-rated bond is safer than a B- rated bond and actual credit risk is relative. Financial intermediaries (salespeople) promote munibonds (Nasdaq: FHIGX) for their tax free income. Let's take a quick look at California to see what's really happening in the $3 trillion munibond market. Case Study: The Republic of Kalifornia California is home to 37 million Americans and is a case study in fiscal insanity. On November 16, 2011, the Office of Legislative Analyst released a report forecasting a budget deficit of $3 billion at the end of 2011-12 and an operating shortfall of $9.8 billion by 2012-13. Today, California's actual budget deficit is now a $16 billion headache (up from $9 billion in January)."