Author Topic: This Is How A State Goes Bankrupt, Illinois Edition  (Read 167 times)

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Online catfish1957

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This Is How A State Goes Bankrupt, Illinois Edition
« on: October 26, 2020, 12:08:59 AM »
I typically don't like to reference or give credence to the click-baitish Zero Hedge site.  But this particular article gives a decent rundown and analysis of how the fiscal idiocy of democratic run states, and at the worst of the worst...  Illinois



https://www.zerohedge.com/markets/how-state-goes-bankrupt-illinois-edition

<snipit>
Somewhere back in the depths of the 20th century, a bunch of governors, mayors, and public sector union leaders got together and cooked up one of history’s greatest financial scams. They would offer teachers, cops, and firefighters extremely generous pensions but would avoid raising taxes to fund the resulting future obligations. Grateful workers would vote to re-elect their benefactors, while taxpayers would appreciate the combination of excellent public services and low taxes.

The beauty of the scheme flowed from its demographics: Most of the original public sector workers were young and therefore decades away from retirement, so the crime wouldn’t be discovered until long after the architects retired rich and revered.

Now, however, those baby boomer workers are retiring and the scam is revealed for all to see. Even in the absence of a pandemic lockdown, mass defaults on state and city obligations would be inevitable in the coming decade. But with the lockdown, they’re coming next year.

CHICAGO (Reuters) – Illinois is scheduled to sell $850 million of bonds on Tuesday as investors demand fatter yields for the state’s debt due to increased worries over its deep financial woes, which were exacerbated by the coronavirus pandemic.

Ahead of the competitive sale of general obligation bonds due over the next 25 years, the spread for Illinois 10-year bonds over Municipal Market Data’s benchmark triple-A yield scale has widened by 10 basis points to 281 basis points since Oct. 1.

Illinois is the lowest-rated state at a notch above junk due to its huge unfunded pension liability and chronic structural budget deficit. All three major credit rating agencies assigned negative outlooks to their ratings in the wake of the pandemic.

Earlier this month, a Citi research report said Illinois is “almost guaranteed” a credit rating downgrade to junk if a constitutional amendment to replace its flat income tax rate with graduated rates fails to pass on Nov. 3. The ability to tax high earners more would increase revenue by an estimated $3.1 billion annually.
The state continues to delay tough decisions with a number of speculative revenues as part of its current budget, including additional federal aid...”

The last remaining escape hatch for the worst-run cities and states is a massive (easily multi-trillion dollar) bailout by the only remaining entity with access to that kind of credit, the federal government. After the upcoming election, whichever party ends up in charge will face the specter of bond defaults and mass layoffs in Illinois, California, New York, New Jersey, Connecticut, and Kentucky, among many other places.

====================================================================================

Alex, I'll take democratic miserably run states for $1000

What you have ladies and gentlemen is the politcal reality and root cause behind the gridlock in the present COVID-19 bill.  This is a Nanzy P desperate attempt to kick the can down the road, and not face the music of massive layoffs of government workers in blue states. 2022 isn't that far away. 


I display the Confederate Battle Flag in honor of my great great great grandfathers who spilled blood at Wilson's Creek and Shiloh.  5 others served in the WBTS with honor too.

Offline LegalAmerican

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Re: This Is How A State Goes Bankrupt, Illinois Edition
« Reply #1 on: October 26, 2020, 12:11:47 AM »
Should have said the MOST CORRUPT STATES.........we know who runs them too.   

Online IsailedawayfromFR

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Re: This Is How A State Goes Bankrupt, Illinois Edition
« Reply #2 on: October 26, 2020, 12:27:23 PM »
Coming to a state near you.
“no punishment, in my opinion, is too great, for the man who can build his greatness upon his country's ruin” ~  George Washington

Offline rustynail

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Re: This Is How A State Goes Bankrupt, Illinois Edition
« Reply #3 on: October 26, 2020, 12:44:24 PM »
Ernest Hemingway — 'How did you go bankrupt? Two ways. Gradually, then suddenly.'

Online LMAO

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Re: This Is How A State Goes Bankrupt, Illinois Edition
« Reply #4 on: October 26, 2020, 07:48:25 PM »
From the article....

" Illinois is scheduled to sell $850 million of bonds on Tuesday as investors demand fatter yields for the state’s debt due to increased worries over its deep financial woes"

This is how a debt crisis will come nationwide.

The big crime in this election cycle is no mention of our close to 30 trillion dollar debt. Neither candidate has uttered one sentence about it. In fact, both offer more unsustainable spending
I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom. My aim is not to pass laws, but to repeal them.

Barry Goldwater

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