LancasterOnline.com:News:WANNA BET? Pennsylvania local governments risk it all on swaps they don't understand: "Since 2003, more than 500 municipalities, school boards and municipal authorities across the state have gotten involved in complex "interest-rate- swap" deals, according to information provided by the Pennsylvania Department of Community and Economic Development (DCED). A swap is the equivalent of a bet: Public officials bet that interest rates are going to move in a favorable direction. Some Pennsylvania public officials have won that bet. Others have lost, big time...
'The real impact of the [economic] meltdown is going to be on school boards and municipalities, not just in Pennsylvania but across the country,' Cox said. Jefferson County, Alabama, has been teetering on the edge of bankruptcy for more than a year because its officials bet, and lost, on swaps.

'The worst,' said Cox, 'is yet to come.'"
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Yes, it is. There will be another wave of foreclosures of Alt-A loans; a whole lot of local governments will be in serious trouble over complicated swaps that gave them cash up front and now are bad propositions; and the nation's community associations are facing the biggest challenges to their existence that they have ever known.