Posted on 11/14/2013 5:03:32 PM PST by raptor22
Fiscal Disaster: A major credit rating agency has just given Chicago, with more general obligation debt per capita than Detroit, its second triple-notch downgrade in six months. Its bonds are perilously close to junk status.
Citing skyrocketing pension costs and a lack of meaningful solutions, Fitch Ratings lowered Chicago's debt to A- from AA- last week, making it the second serious downgrade since July.
The move by Fitch follows a triple downgrade of Chicago's bond rating by Moody's Investors in mid-July.
Moody's cited the city's "very large and growing" pension liabilities and "significant" debt service payments, among other factors.
The steady financial decline of the nation's third-largest city prompted us in early August to say Chicago was well on its way to becoming the next Detroit, a bankrupt monument to the perils of Democratic governance, a one-party Democratic town in arguably the bluest of blue states. And Chicago's mayor, former White House Chief of Staff Rahm Emanuel, learned financial discipline at the feet of the master — President Obama.
Like the president, Emanuel could claim he inherited the city's financial mess from his predecessor, but that would require blaming another Democratic mayor, Richard J. Daley.
Interestingly, Democratic governance is a common thread running through America's urban problems.
As the Chicago Tribune noted in its recent report on the problem, "Broken Bonds," Chicago's outstanding debt on general obligation bonds has quadrupled during the past 18 years, reaching $7.2 billion last year.
With interest, that amount nearly doubles. The city has more general obligation debt per capita than any of the 10 largest U.S. cities except New York.
(Excerpt) Read more at news.investors.com ...
>> is no[t] bolstering one’s own case.
I’m not making my own case! I’m agreeing with the author’s (common sense) case. What’s wrong with that exactly?
Or are you prepared to argue that unsustainable debt is actually sustainable? THAT ought to be good...
>> I’ve brought four links to the ball-game with countervailing stats.
Yes, and not particularly compelling ones. So?
>> Google is your friend
Proofreading is your friend. Lackadaisical unconcern for your blather is your enemy.
You seem to be counting a great deal on common sense and “FACTS” (meaning, so far as I can tell, that the person who wrote the article is dead on the money).
Have you been to both of these great cities? I have. That metropolitan Chicago has 275% of the Detroit metropolitan area’s GDP (from the story posted by flag-lady) doesn’t begin to tell the picture. The Detroit metropolitan area, both form what I have read and what I have seen, is a big donut—there is a worthless hole in the middle which doesn’t have much value—and that is where the city debt must be paid from. I am sure that a much higher percentage of the metropolitan area’s GDP may be found within Chicago’s city limits.
>> “FACTS” (meaning, so far as I can tell, that the person who wrote the article is dead on the money).
FACTS don’t “mean” anything. Facts are, simply, facts. By definition, facts are “dead on the money”. You never refuted one single fact the author mentioned in your arguments. Nor did you employ any of the author’s facts in your own discussions. Why?
>> Have you been to both of these great cities?
Yes. Both.
>> That metropolitan Chicago has 275% of the Detroit metropolitan area’s GDP &etc
You’re going circular on me... we’ve already been here. There is no benefit whatsoever in comparing Chicago “pre-collapse” and Detroit “post-collapse”. None whatsoever.
Yes, in my typing, I left off a t—mea culpa. Very good of you to note that.
There is a big leap from “unsustainable debt” (any debt that is increasing is arguably unsustainable, which places Chicago into a category with tens of thousands of other organizations) to “NEXT.”
The author is not arguing that Chicago has an unsustainable debt, the author is arguing that Chicago is NEXT.
If you don’t think that the ratio of debt to tax base is relevant, that is your prerogative, but I happen to think that it is of some concern—and so does the author of the article, at least implicitly, as he lets NY off the hook, even though its per capita general obligation debt is worse than NY’s (in the last sentence of the article as posted)—he doesn’t say why, but the very logical reason is because NY has an even higher tax base to draw off of.
Outside of the fact that Chicago has been downgraded, the article mentions, by my count, exactly four facts involving numbers having to do with debt, only one of which compared Chicago to any other city—the one noting that Chicago is second among the 10 largest cities with regards to general obligation debt.
The qualification “second” and limiting things to “10 largest” do not seem very helpful in making the case that Chicago will be NEXT (meaning first) among ALL major cities (unless by major cities you mean only the 10 largest and can make a case that the one that Chicago is behind has some other strengths). There is no particular need to refute any facts from the article because none of the facts actually make a real good case for NEXT.
>> You seem to be counting a great deal on common sense
Hieronymus, in post #33: “...the observations of someone with common sense... may be worth taking into account...”
So, which is it? Common sense is to be discounted? Or common sense is to be exalted?
Or would you prefer to choose either valuation for common sense, based on its utility to your argument at the moment? :-)
>> ...any debt that is increasing is arguably unsustainable, which places Chicago into a category with tens of thousands of other organizations...
According to the author, Chicago has “... more general obligation debt per capita than any of the 10 largest U.S. cities except New York.”
Not in a category with tens of thousands... but rather, NUMBER TWO in a category with TEN.
i.e. NEXT.
Or maybe third? I’ll take next after next.
“http://www.businessinsider.com/chicago-is-not-the-next-detroit-2013%22
Whoops...
The page you are trying to reach cannot be found.”
Actually, I made it all up, statistics, the whole article. I concocted it out of whole cloth. Now here’s a piece of advice. Google it, lazy tick.
>> Google it, lazy tick.
Really? YOU screwed up and that makes ME lazy?
Who the hell do you think you are anyway? Suggestion: proofread your crap, dumbass. Typical liberal attitude.
By the way you forgot to copy your sock puppet MinuteGal on your post. I guess that’s my fault too huh.
State government and city government are separate entities with separate credit.
According to the author, Chicago has “... more general obligation debt per capita than any of the 10 largest U.S. cities except New York.”
Not in a category with tens of thousands... but rather, NUMBER TWO in a category with TEN.
Umm—no. The category in paragraph five, the doom and gloom paragraph, was NEXT Detroit—not next of the top ten cities to do something or other. Detroit fell out of the top ten sometime around 1970, IIRC, and is presently sitting at 18.
If Cleveland, or for that matter, Sacramento, Birmingham or Memphis, goes into a death spiral first, I would say that the article’s thesis is off.
Yeah, Chicago is in a bad way. So are a lot of other places. Chicago has many more resources to bring to the table—competent people exist, and if brought in, have resources (such as a tax base and having control of the Illinois government) that may be employed in dealing with the problem. That flaglady thinks a number of other Illinois cities are in worse shape does not surprise me—I have a friend who works for Joliet and they sound like they are in real bad shape.
NEXT also makes a difference in that depending on how the first two or three go, others may alter their behaviour.
>> Detroit fell out of the top ten sometime around 1970, IIRC, and is presently sitting at 18.
Do you realize that when you continually compare “the Detroit that was” with “the Detroit that is”, you’re weakening your own argument? You have a tendency to do that.
>> If Cleveland, or for that matter, Sacramento, Birmingham or Memphis, goes into a death spiral first, I would say that the article’s thesis is off.
Wait... we’re talking not merely “cities that go bankrupt” but rather “cities that go bankrupt that are in Detroit’s class”. None of the cities you mention have the “iconic American city” status of Detroit. Hey, Stockton went bankrupt... no one compared Stockton with Detroit. At least not in the states, eh? By the way, whether or not the “heart of rock ‘n roll is in Cleveland”... Cleveland is NOT a city in the same class as Detroit and Chicago.
Detroit is in decline. Chicago is in decline. It does not follow that Chicago is the next Detroit. I am not arguing against Chicago being in decline—I am arguing that there are many places in decline, and so attaching NEXT to a prediction requires that one make a solid case.
You bring up the idea of a city that goes bankrupt in Detroit’s class, and by Detroit’s class you mean a top-drawer city—yes, Detroit was that —in 1950, when it peaked at number five among U.S. cities by population. You’re right—Cleveland was in the same class—it was number 7. Detroit has dropped 13 spots, Cleveland 41. Clearly, Detroit has had a much rougher six decades (Sarcasm on).
Cleveland WAS a city in the same class as Detroit, unless two spots make such a huge difference—in which case the author of the article shouldn’t be talking about top 10 cities but top five cities.
That said, I do not think that by next Detroit the author meant next really, really iconic city to file for bankruptcy but rather next city to hit an economic state which is apocalyptic and causes an effective collapse of society. Cleveland and St. Louis (which was at #8 in 1950 and has since dropped an even 50 spots) have, like Detroit, lost well over half of their population.
In fairness, I should note that my digging around has also unearthed the fact that Detroit was number 10 in population in the 2000 census, so the slide over the last 12 years has been notable—but the glory days are long gone. Cleveland and St. Louis once were glorious as well, they have just had a longer slide.
There is so much vacant land in Detroit that there is talk of establishing farms in the city—I don’t see Chicago headed that way anytime soon—Cleveland maybe, Chicago, no.
BTW—
When it comes to iconic American cities, I do have a certain perspective. While I do sport a Canadian flag on my home page, I grew up in the states, have seen 45 of the lower 48, and have lived in a variety of regions. Stockton isn’t so big a deal, not because it is Stockton, but because Sacramento and the Bay Area are the nexus (nexi) of the area economically etc. It is essentially a cultural suburb or exburb.
In addition, Stockton’s overall economic plunge wasn’t of Detroit’s magnitude.
Yes, Detroit once, briefly, aspired to be the Paris of the West, and had a decent run from 1941-1968. However, fundamental to the steep decline of Detroit was a very badly handled racial question, and that happened back in the 1960’s. Chicago is still a world class city. Detroit, as of 1970, couldn’t legitimately aspire to that status.
In some ways, in terms of being a world-class contender, it is worth noting that the archbishop of Detroit was named a cardinal back in 1946 (and at that time there were less than half the number of cardinals that there are presently). The present archbishop was not a Cardinal, and the last time one was elevated was 1994 (after his predecessor was put in charge of Vatican finances, which, ironically, he did a very good job of cleaning up).
It was on the cusp of world class in 1946, and had residual glory that clung around for a while.
If you are talking cities that have aspired to be world class at some time in the nations history, but are no longer, I would include Boston, New Orleans, Philadelphia, Baltimore, and St. Louis (which peaked at number 4 in the 1870’s, and is now back to its 1870 size).
Houston is probably the closest contemporary analogy to Detroit in its hay day. An important regional city, which may or may not be something more in the future. World-wide—well, New York is 18th population wise, and LA 52nd. There are reasons (including history) for moving these and Chicago higher than their population warrants, but Houston has a long way to go.
“zero will bail the ballerina out”
That’s tu tu much!
nyuck, nyuck, nyuck
Aren't ALL big cities?
No, she isn't.
I live in Wisconsin, but my job is based in Chicago, so I travel there (downtown) a lot. Chicago is dead, but the corpse doesn't quite know it yet. Crime is running wild but they are doing a pretty good job of keeping it hushed up, i.e. ignored. The inability of democrat-run cities and states to live within their means is well documented and on display here. flaglady thinks it can't collapse financially, but that's her heart talking and not her brain.
In reality, it almost can't NOT collapse. Barring a federal bailout, it will indeed collapse. The only way to avoid this is to massively curtail spending. If anyone thinks that crime will stay the same or go down once that happens they are delusional.
Detroit used to be a nice city as well. but even nice cities can't evade cold reality.
Exactly.
What happens to home values in Chicago if they double the property taxes? What will happen, is a sizable percentage of people won't be ale to live in them anymore and they will become vacant. When homes are vacant the neighborhood property values go down, causing more vacancies. As vacancies increase, crime moves in. As crime moves in, yet more people leave. That sound is Chicago circling the toilet. We don't call it Shitcago for nothing. LOL
So, you're argument is that you think that author is incorrect that Chicago is "next". That is not a ringing endorsement of their viability and really irrelevant. Being the city to fail after the next city fails doesn't matter a whole lot. Dead is dead
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