-- Connecting the dots between our economy, government and business --
Comment: "Junk debt secured with sales-tax revenue. Sounds familiar," says the WSJ. Indeed. Only Wirepoints and a few lonely voices in the General Assembly were questioning the new securitized bonds from the start -- when legislative authorization was first proposed.
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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“Voila, Chicago’s financial magicians spun junk into gold.” Yes, that they did. Traders are so desperate for money they can’t see the forest for the trees.
This is eerily reminiscent of the NY TImes article from 2008, “Given a shovel,Americans dig deeper into debt,” featuring the lady who keeps her phone in the refrigerator.
https://www.nytimes.com/2008/07/20/business/20debt.html
Good article. In 1989 the prime rate was 10.5% today 4.75% yet Illinois is still paying 1%/month after the first 90 days (12% thereafter/yr.) in late fees they owe to vendors or anyone else. That was the year they instituted the 3% compounding. In 1989 that was fine but the 3% was never indexed to any measure of inflation like CPI/Prime/Libor/etc. Anyone could get 4 or 5% in savings accounts or MM Funds and now are close to zero. For years interest rates now are close to zero yet 3% compounding was still being paid and 12% for late payments.… Read more »