But how do two supposedly intelligent people collaborate on a short editorial and both not realize that what they are writing is ridiculous?
Richard Riordan and Tim Rutten in the Sacramento Bee, on whether to default on municipal bondholders instead of cutting pensions:
Some will argue that it’s better to hurt “fat cat” investors than retirees on fixed incomes. That’s nonsense, however. The majority of municipal bonds are purchased by funds whose shares are held by private pensions and individual 401(k) accounts precisely because they’ve been seen as low-risk investments. That means that trying to resolve a municipal bankruptcy entirely on the backs of bondholders just spares one group of working people by hurting another.That's nonsense, however. Municipal bonds are tax-free (other than the short-lived Build America Bonds), so it would be financial malpractice to put them in a tax-sheltered account such as a pension fund or 401(k). The tax-free status is of most benefit to high-net-worth investors, and that's who owns the vast majority of municipal bonds (whether through a fund or held directly).
There are plenty of reasons not to advocate default before pension cuts. But pension funds and 401(k)s holding muni bonds is not one of them.