Mamdanis muni bond problem is slowly worsening heres how it could come to a head

Hemingway said bankruptcy happens “Two ways.Gradually, then suddenly.” The same could be said for fiscal crises – a lesson that Mayor Zohran Mamdani appears to have missed while immersed in Africana Studies in college, bond experts tell On The Money.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 — he’s unaware that he can’t arrest Benjamin Netanyahu for “war crimes” that 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 “working class”.He’s also clueless about the nature of something known as “capital flight,” including how it goes down before it’s too late to stop.

He thinks business leaders love his socialism and as proof, they haven’t all bolted for the proverbial door. 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 – and “then suddenly,” just like bankruptcies.

That’s 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.The “slowly” part is something we’ve 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, investors are worried that Mamdani’s budget math isn’t working, and they’re selling debt. This week’s latest numbers (through July 17) show another round of price declines, with the “yield” or interest rates needed to convince people to buy city general...