Gregory:

It's been a fine time to buy muni's.

Maybe, but here are a few points to consider:

1. Sure, junk bonds are starting to lose value and/or default, and even some of the higher quality corporate bonds are looking risky. GM is a good example, although their bonds have been downgraded over the years. However, muni's took a beating earlier this year too, so they are not immune to volatility. Not to mention that muni's can also default, albeit a smaller risk.

2. If there is a credit crunch and an economic slowdown, how are municipalities going to borrow money to fund programs? If home prices continue to fall, if the stock market continues to fall, if inflation continues in the double digits, if oil continues to rise, and if unemployment continues to rise, how will muni's be protected? The way I see it, it's either sink or swim for the whole economy.

3. If the US dollar continues to decline, so will muni's (along with corporate bonds, treasury bonds, and even those beloved TIPS), since they are denominated in US dollars.

The bottom line is, if the economic slowdown gets worse, there won't be any place to hide, as one asset class will have an impact on another and the US dollar will impact other countries in this global economy. I'm not making any predictions on either continued economic weakness or a recovery, but if there is continued weakness, it will not be possible to find a safe haven.