-- 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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Financing current expenses with bond proceeds is not a recipe for success.
Caveat emptor:
“Fitch noted that the negative outlook it assigned in May reflects the city’s lack of progress toward permanent and impactful solutions to its structural budget gap, estimated at more than $1.1 billion for 2026.”
Chicago has no ability to pay its debt, this is fraud.
No it’s not. No one forcing people to buy this paper. They are buying it with the additional risk to capture the additional premium. The free market at work.
Buyers are informed and know the risks of investing in a city as poorly run as Chicago.
“Justin Marlowe…pointed to the CMF’s Muni Index, which showed double-digit positive changes for most of the nation’s top cities between April 16 and June 18. New York City saw a 44.15% price improvement. Boston saw a 38.8% improvement, Houston a 27.91% improvement, San Francisco a 33.59% improvement and Columbus a 26.17% improvement.
Chicago, by contrast, saw a 1.35% improvement.”
This counts as ‘leadership’ to Illinois Democrats.
What a misleading headline. Triple B credit? Negative outlook? 200 basis points above a good AAA rate? The fact that there are some bottom feeders willing to buy this paper does not warrant a headline that in any way makes Chicago’s finances look acceptable.
Be prepared, Chicago will declare bankruptcy.