-- 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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Lack of an orderly process of managing insolvency (aka bankruptcy) is not protection against insolvency. Furthermore governments have a long history of insolvency — insolvencies accompanied by chaos and tremendous human costs. There is no reason to believe our governments are different. See “This Time Is Different: Eight Centuries of Financial Folly” by Carmen M. Reinhart, Kenneth Rogoff, 2009. Orderly processes now are much better than digging from chaos later.
Anono- Great question, and the short answer is “chaos,” I’m afraid. Maybe I need to do a Part 2 on this elaborating on the scary eventuality.
So what happens when a unit of government starts not paying, getting sued, judgements on it etc?