By: Mark Glennon*
Why didn’t somebody think of this sooner? Mayor Emanuel has proposed authorizing the City of Chicago to buy bonds issued by Chicago Public Schools. (The full, proposed ordinance is linked here.) The same taxpayers can be both lender and borrower! No need for the muni market and their blather about junk bonds. And no need for those boring, pesky offering statements and disclosures — CPS and the city can just use mirrors. Heck, why not take the idea further and let Chicago’s pensions buy the city’s bonds?
The basic concept is perfectly sound. Only a science-hating skeptic who never played a simple shell game would fail to grasp its simple elegance, shown on the right.
The politics of it are appealing, too. Everybody believes in pulling yourself up by your own bootstraps, right? Same idea. Up we’ll go.
Yet, some say Chicago has gone mad. Ha! About as mad as this dog. Even he understands the concept. Attaboy, Rahm.
http://https://youtu.be/XoS-MCnTPtQ
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.
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.
I guess the city treasury needs more alpha.
Right?
If Rahm did his time at Goldman Sachs- He must understand what he is doing in the bond market?
Not at all. He does understand this would help kick the can until he is out of office, allowing him to blame bankruptcy on somebody else.
It’s a miracle! Let submit Rahm for the Economic Nobel prize.