Last week Harrisburg announced it will not make a payment on a bond the city guaranteed.  This may lead to Harrisburg declaring bankruptcy.   I am concerned that municipal bond investors will begin to ask, “if Harrisburg, the state capitol of Pennsylvania, can go bankrupt, then we must consider all Pennsylvania municipal bonds as having a higher level of risk”.  This thinking will result in Pennsylvania bonds paying higher interest rates than other states.  Those investors who already own Pennsylvania municipal bonds will experience a drop in value of their bonds.