No, not that Bonds.  One of the school finance issues that I hope one day to understand better is the bond market. Every interaction convinces me that it is a place where taxpayers and schools get taken advantage of, or, more to the point -- let themselves get taken advantage of. For example, I’m told that some public entities agree to pay an interest rate of X on their bond, allowing their broker to sell it for a lower rate (X-Y%) and pocket the difference (Y).  On a really big bond, even a small difference can mean a lot of money. And this is in addition to any fees or commissions.  What's worse, the school district might not ever know what it's lost or that it created this windfall.

One of the costs of low ratings is the need to buy bond insurance.  I'm unsure how much the public sector needs bond insurance at all, although I understand having it allows you to avoid making certain commitments about revenue streams and repayment. Warren Buffet is looking to compete in this market with a low-cost product that would just be for public bonds. Apparently the costs of private sector mortgage insurance are driving up costs all around for this service and Buffet, as a new entrant, can charge a lower rate by carving out the safer public sector bonds.  But, to the extent it's necessary,  I'm struck by one blogger's proposal to have public bond issuers self-insure, and  wonder about having the feds do it as a service for every state and locality.  It turns out I wasn't the first to think that (see the comments though).

Update: See Joe Williams.  He's really the funniest education blogger.