The municipal bond market is not driven solely by the need for better roads, bridges, sewers, and schools. It is also driven by the willingness to pay for them, and taxpayers seem to be behaving responsibly these days. New-money bond financing is up.

The increase in new-money bond sales is the one bright light in a gloomy world of lower total bond volume, rumored layoffs and cutbacks, and pessimism in the muni business. It's like 1986 and 1987, but different -- bond volume is dropping faster, but bond prices are not dropping as fast.

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