If the finances of the states were a listed ETF I would short them to zero - their true value. All of the states are bankrupt, some more so than others, and anyone who lends them money can kiss it goodbye.
While I agree fully with the author's central theme, I believe the first sentence is misleading.
Bonds, as with common stocks, are generally sold and bought. In other words, for every bond holder who sold his bond, someone else bought it.
I suspect the author intended to point out that many investors who own bond mutual funds liquidated their holdings, preferring 'cash' to municipal bonds.
In other words, for every seller, there must be a buyer.