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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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“This takes the bonds out of default; we’ve paid off the police pension at this point and they’re funded; we’re paying down the fire pension,” Fioretti said. “Things are going very well for Harvey right now.” So Harvey hasn’t been paying bondholders but pensioners continued to get paid. It’s almost like pensions are paid first. Pension intercept law did its job. Clearly the state would rather have cities default on bonds rather than file bankruptcy. This is a recipe for dealing with future municipal financial difficulties. Tell bond holders to pound sand and keep paying pensioners. That has to be… Read more »
A rather emotional response, PPF. I am not so persuaded by your arguments. Harvey is simply a miserable place to live. Yes pensioners have been protected but Harvey is not thriving by any measure. Moreover, Harvey can’t realistically access the bond market in the future, having to beg for money for others under the phony auspices of “investment”. Pensions are not the cause of Harvey’s misery but they prevent moving forward. Not a story to gloat over unless you are a retired police officer in Henderson NV expecting your check to come through.
Not emotional but just factual. I’ve been saying all along that pensioners will be paid first and Harvey is just the latest example. Many commenters on this site have been giddy over the possibility of pensioners being broke in the street. These people are delusional to the actual situation regarding pension debt. Hopefully my comments will wake up a few of these ignorant commenters but probably not likely. Their ignorance is deeply ingrained. That comment is not directed at you or others that understand this situation. This is not gloating but rather educating all the commenters that believe that pensioners… Read more »
Harvey is like the kid who brought a can of Coke on the field trip in 1968, then shook it up and sprayed everyone, and now everyone since has to bring Hi-C and Capri Sun on the bus ride to the Field Museum. Harvey won once, everyone else pays.
Actually, bond issuers will begin to write in investor protections on each bond to prevent the same thing from happening again. Over time, those protections will be included in all future bond issuances going forward. This is more of a lessons learned for bond holders who have a history of turning past losses into future wins.
Both the bond markets and unions will apply the lessons learned:
Bond buyers will learn not to give actual value (money) in return for a promise to pay.
Unions will learn that it is not necessary to give full value, but the promise to pay will be enforced.
Nixit, I saw the Harvey treasurer with a cardboard sign and pail at the 147th Street exit ramp.