-- Connecting the dots between our economy, government and business --
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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If this was a Republican teachers union with an unsustainable budget scheme, a federal judge would step in and institute an oversight decree because children are being harmed.
But because it’s the Chicago Marxist teachers, they have free rein to play in their sandbox as long as they’d like. The children are just collateral damage.
The real “villain” here might be the bond market which keeps allowing the related governmental bodies to issue debt, all the while pretending that the CPS debt is divisible from the city debt (and vice versa), and ultimately from state and federal debt. The most mobile citizens are the most economically successful–they can move even one block from the City and avoid CPS and City debt obligations. Local government debt is ultimately the obligation of the same benighted citizens and should be rated differently than corporate debt obligations. None of this house of cards stands alone.
Sounds like the Treasury Department needs to place an inquiry with the bond rating agencies. I would love to see how closely they’re tied into the entities they’re rating.
Rating agencies are hired and paid by the entities they are rating.
Now that is funny! Thanks
Do rating agencies probe “underneath” the financial reports and actuarial studies in order to evaluate their validity or do the agencies simply accept those reports as rendered? Do the agencies have any legal risks (e.g., to bondholder-victims of default) if the bond interest and principal are not paid? Do securities regulators (e.g. the SEC) regulate or monitor these agencies? Sometimes it seems like a circle of responsibility and blame where investment managers and advisers rely on bond ratings which in return rely on CPAs and actuaries hired by the issuer. The result is that there is little real protection for… Read more »