MESS A L'ORANGE

BANKRUPTCY WAS PAINFUL. BUT COULD THIS WEALTHY COUNTY'S REACTION BE EVEN MORE EMBARRASSING?

What could be more benign than that boy scout of financial instruments, the municipal bond? What town has not floated an issue to build a road? What little old lady (or big mutual fund) has not heard an accountant extol "munis" as the most foolproof of investments? Lending to companies is risky: they fold overnight, leaving squabbling creditors. But municipalities don't disappear from the map; and knowing they will borrow more tomorrow, they will do anything -- even raise taxes-to avoid defaulting today.

Or so it seemed until an extraordinary vote last Tuesday in Southern California's Orange County. Since its former...

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