-- Connecting the dots between our economy, government and business --
Chicago is in bad financial shape, with an unsustainable pension burden and a towering debt load. Yet the city will shortly issue bonds that are likely to be rated as supersafe, even though similar investments have lost money.
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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Fool you once shame on me, fool me for over forty years shame on you. If anyone expects the bond holders to be given any consideration because of “protections” when the default comes they obviously are not paying attention to the judicial environment in Illinois. When the crows(politicians and lawyers) circle the future carcass of Chicago picking the financial bones clean the interests of the bond holders will squashed by the weight of voters damaged by a threatened reduction of their benefits. When the choice whether to continue paying for benefits and services or for legally contracted interest on debt… Read more »
Bond ratings are a game played, just as are stock analysts’ ratings.
Underlying validity is nonexistent. We live in the shadow of industrial-scale rationalizations for folly (for example, lending money to systems governed by corruptocrats, inveterate liars and scumbags.)