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This blog post originally appeared on RealMoney Silver on Oct. 14 at 7:50 a.m. EDT.

I have tried to stay upbeat throughout the current financial crisis, but our credit and equity markets have suffered a massive heart attack, and the recuperative period will be lengthy not only for the aforementioned markets but for the real economy.

The economic reverberations will be vast; a period of subpar economic growth and substandard returns is ahead of us.

One area that concerns me -- and it is an area that is rarely discussed -- is the municipal bond market.

The problem began with the

auction rate securities

market in early 2008, and anyone who has investments in municipals are aware of the recent carnage -- many closed-end municipal bond funds are down 20% in a month, and many individual municipal bonds have also had haircuts in price.

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It is my view that many of the rating issues witnessed in other debt markets (e.g., mortgage and bond insurance) now exist in the municipal bond market as the recent price weakness in municipals is signaling pressure on municipal finances.

If my town of East Hampton, N.Y., is an

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, then a painful period faces our country's municipalities.

The coming subpar economic climate, which will be characterized by an extended period of lower tax receipts (sales, real estate, etc.), will put pressure on municipal budgets -- specifically, their interest-paying ability and, in the fullness of time, their ratings.

I would no longer rely on guidance from brokers when it comes to municipal holdings, as may have been the case with many prior investment vehicles into which they likely put you. Quite frankly, they, their firms and the ratings agencies are proving to be ill-qualified in their selection and analysis.

Caveat emptor.

Doug Kass writes daily for

RealMoney Silver

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Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd.