{"id":5255,"date":"2026-07-24T14:09:21","date_gmt":"2026-07-24T14:09:21","guid":{"rendered":"https:\/\/metrotransitreview.com\/?p=5255"},"modified":"2026-07-24T14:09:21","modified_gmt":"2026-07-24T14:09:21","slug":"mamdanis-muni-bond-problem-is-slowly-worsening-heres-how-it-could-come-to-a-head","status":"publish","type":"post","link":"https:\/\/metrotransitreview.com\/?p=5255","title":{"rendered":"Mamdani\u2019s muni bond problem is slowly worsening \u2014 here\u2019s how it could come to a head"},"content":{"rendered":"
\n

Hemingway said bankruptcy happens \u201cTwo ways. Gradually, then suddenly.\u201d The same could be said for fiscal crises \u2013 a lesson that Mayor Zohran Mamdani appears to have missed while immersed in Africana Studies in college, bond experts tell On The Money.<\/p>\n

Read more Exclusive | Filmmaker Sophia Maddox \u2018devastated\u2019 and \u2018dumbstruck\u2019 to learn her grandfather was Charles Manson<\/a><\/p>\n

Our socialist boy mayor is woefully ignorant of the basics of municipal governance, they tell me, and further proof was provided in a remarkably bizarre interview he recently gave to the New York Times. Despite the softball questions, Mandani stepped on more than a few landmines \u2014 he\u2019s unaware that\u00a0he can\u2019t arrest Benjamin Netanyahu for \u201cwar crimes\u201d\u00a0that exist only in the tiny brains of his fellow travelers on the far left because of something known as diplomatic immunity. He struggled to define what constitutes \u201cworking class\u201d.<\/p>\n

He\u2019s also clueless about the nature of something known as \u201ccapital flight,\u201d including how it goes down before it\u2019s too late to stop. He thinks\u00a0business leaders love his socialism\u00a0and as proof, they haven\u2019t all bolted for the proverbial door.\u00a0<\/p>\n

Yet talk to anyone who has studied the various fiscal crises of cities, including our own back in the 1970s. They will tell you that capital flight and the fiscal calamities it produces starts slowly \u2013 and \u201cthen suddenly,\u201d just like bankruptcies. That\u2019s because over time, if you tax and spend into oblivion, not enough people are left to pay the bills of all those on the dole.<\/p>\n

The \u201cslowly\u201d part is something we\u2019ve been chronicling on these pages, with taxpayers and businesses leaving the city while private sector employment remains moribund. And it can be seen now in the recent declines in New York City municipal bond prices. As we reported last week,\u00a0investors are worried that Mamdani\u2019s budget math isn\u2019t working, and they\u2019re selling debt.\u00a0<\/p>\n

This week\u2019s latest numbers (through July 17) show another round of price declines, with the \u201cyield\u201d or interest rates needed to convince people to buy city general obligation debt spiking to 3.46% from 3.34%.<\/p>\n

\u201cI think there is concern over stagnant private-sector employment in NYC and growing welfare rolls during a period of relatively strong economic growth nationally,\u201d said Richard Farley, author of \u201cDrop Dead: How a Coterie of Corrupt Politicians, Bankers, Lawyers, Spinmeisters, and Mobsters Bankrupted New York, Got Bailed Out, Blamed the President, and Went Back to Business as Usual (And It Might Be Happening Again)\u201d, a book that chronicles the 1970s meltdown.\u00a0<\/p>\n

\u201cThe bond market obviously pays very close attention to all these data points-and they\u2019re pointing in the direction of increased credit risk and therefore higher yields,\u201d Farley told me.<\/p>\n

And yet Mamdani seems oblivious to it all. As he told the Times: \u201cWhen I was running for this office, I would hear time and again what a catastrophe it would be if I were to win, when it came to capital flight, when it came to crime. And what we\u2019ve seen is so much of what is fearmongered around has very little relationship to reality.\u201d<\/p>\n

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True, Mr. Mayor, there is still a bid for NYC debt, though if you understood the way the municipal-bond market works, particularly here in New York City, that bid should be a hell of a lot stronger. In other words, the fiscal cliff is gradually approaching.<\/p>\n

Here\u2019s how you know it. First with all the taxes he\u2019s proposing, NYC muni\u2019s should be a safe haven since their returns are triple-tax-free. Since the financial crisis of the 1970s, when the city flirted with bankruptcy, the state placed safeguards on NYC debt with bond holders getting first dibs on taxes before they are used for other purposes.<\/p>\n

\n<\/div>\n

And yet, NYC muni\u2019s are getting \u201cyippy\u201d as they say in the bond market, with prices starting to crater as investors ask whether Mamdani\u2019s socialist spending and budgeting \u2013 riddled with gimmicks and propped up by state aid \u2013 means the city\u2019s fiscal trajectory is heading toward crisis.<\/p>\n

The last time this happened in the 1970s, there was a slow burn toward insolvency when in 1975 the big municipal bond investors just stopped buying our debt. Then what was happening gradually, happened suddenly: A full fiscal meltdown.<\/p>\n

There were massive layoffs of the people who make the city work (everyone from garbage men to cops), little spending on infrastructure (roads and bridges decaying) until a coalition of Wall Street types and state officials (think Lazard Freres\u2019 Felix Rohatyn and former governor Hugh Carey) put together a bailout package combined with plenty of austerity. This, mind you, was only after many painful years.<\/p>\n

Just to be on the safe side, I asked the city\u2019s alleged fiscal watchdog, comptroller Mark Levine, who is directly in charge of the bond sales, if maybe the mayor is having just a few bad weeks in the markets.<\/p>\n

As of publication: Crickets. Maybe Levine knows something that he\u2019s afraid to say.<\/p>\n

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Hemingway said bankruptcy happens “Two ways. Gradually, then suddenly.” The same could be said for fiscal crises \u2013 a lesson that Mayor Zohran Mamdani appears to have missed while immersed in Africana Studies in college, bond experts tell On The Money.<\/p>\n","protected":false},"author":1,"featured_media":5254,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,27,28],"tags":[],"class_list":["post-5255","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-charles-gasparino","category-on-the-money"],"yoast_head":"\nMamdani\u2019s muni bond problem is slowly worsening \u2014 here\u2019s how it could come to a head - Metro Transit Review<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/metrotransitreview.com\/?p=5255\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Mamdani\u2019s muni bond problem is slowly worsening \u2014 here\u2019s how it could come to a head - Metro Transit Review\" \/>\n<meta property=\"og:description\" content=\"Hemingway said bankruptcy happens "Two ways. 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