Kiplinger makes the case
that even with the budget problems at many cities, municipal bonds are still a safe place for your investments. Here's an excerpt:
So has the muni-bond market become a much riskier place to invest? The answer is yes and no.
Consider this bit of context. Historically, default rates in the muni-bond market have been remarkably low. For example, from 1970 through 2009, Moody's calculates, just 0.06% of investment-grade muni bonds defaulted within ten years after their issuance, compared with 2.5% of similarly rated U.S. corporate bonds.