The next Greece may be in the U.S.

MarketWatch ^ | June 30th, 2015 | By Ellie Ismailidou

[Mariner]

When Chicago Public Schools announced on June 24 that it would borrow $1 billion to make a $600 million-plus pension payment due June 30 an eerie feeling spread across bond investors and taxpayers alike.

It was the same feeling that gripped investors when Moody’s Investors Service downgraded Chicago’s credit rating to junk based almost entirely on the city’s pension problems.

The fear was that elevated pension costs, in cities like Chicago, might push these public entities into insolvency, wiping out much of the holdings of municipal-bond investors.

Once a sleepy corner of the municipal bond market — often not even properly reflected on cities’ balance sheets — public pensions have recently turned into the biggest headache for taxpayers and municipal-bond investors, threatening to bring down the finances of U.S. cities and states.

[driftdiver]

I don’t think buying is part of whats being discussed. US Govt taking and then transferring ownership.

I’ll see if I can find a link.

[SaveFerris]

[When Chicago Public Schools announced on June 24 that it would borrow $1 billion to make a $600 million-plus pension payment due June 30 an eerie feeling spread across bond investors and taxpayers alike]

It’s the Chicago way.

Yes, the USA will go the way Greece is going. The numbers tell the whole tale.

[driftdiver]

http://www.wnd.com/2013/01/china-poised-to-play-debt-card-for-u-s-land/

Not the best source but this is what I was referring too.

[SaveFerris]

Pretty much.

[Fractal Trader]

Anyone who buys municipal bonds is stupid.

There are insurance products for municipal bonds. Might not be able to trust them, though, when the SHTF.

[SaveFerris]

[I don’t always borrow money, but when I do... I borrow $400 million more than I actually need.]

Stay in unrecoverable debt, my friends.

He’s the most debt-leveraged man in the world.

(to follow your theme)

[Opinionated Blowhard]

I’m confused. I mean, I understand that we’re screwed, but I’m still confused...

Just think of the scene in Goodfellas where the mobsters were looting the restaurant and stripping it bare of everything that was worth anything before they torched it.

[SaveFerris]

[Anyone who buys municipal bonds is stupid.]

Municipal bonds, Ted. Your best investment.

Decision to proceed is yours.

It’s a different kind of flying...Altogether!

(waits for response)

[SaveFerris]

They know they’re gonna crash big time, so they got themselves $400 million of the next $600 million right now.

[moovova]

“He’s the most debt-leveraged man in the world.”

I’m not the most money-savvy person in the world, but the one thing I recognize about borrowing more cash than you need is that it will get frittered away.

And, while you may not wind up with anything to show for it...you still owe it.

[SaveFerris]

I think they’re doing the “go big”.

I predict some of that extra $400 million will find its way to ... other places not originally-intended or designated.

(cough)

[Farmer Dean]

The union heads want their cut of the action.

[riverdawg]

Well, I suppose that no scheme from this administration is to be considered too absurd. The problem for China is that trade is a two-way street. Yes, China has bought a large amount of U.S. debt, lending us money to fuel our demand for Chinese goods. But, in order to sustain our purchases of their goods (and their output and employment at current levels), the Chinese have to do something with the dollars they receive. China can buy more of our bonds or it can buy more U.S. produced goods (narrowing the trade deficit) or buy more U.S. assets like equities and real estate or, realistically, some combination of these three things. Those are the alternatives for China; it's just balance-of-payments arithmetic.

[Joan Kerrey]

so they got themselves $400 million of the next $600 million right now.

You can be sure that there won’t be $400 million found anywhere when the time comes for the next payment.

[SaveFerris]

Yeah, I’m sure it was their “justification” to get it.

And I also agree, it’s going to “disappear” somehow before then.

[Myrddin]

China is buying gold with the soon to be worthless dollars. BRICS goes live on July 8. China has a large pile of gold and a desire to make the yuan a gold-backed dominant currency. The days of running the printing press with reserve currency status are drawing to an end.

[cherry]

the only way to fix this is to stop funding lavish defined pensions from the get go...all govt employees should be simple 401k that they must contribute to....

govt is merely a tool to give to their favorites and take from the taxpayers left holding the bill.....

[cherry]

I'm glad you mentioned military, one of the systems that it totally unsustainable but people won't admit it....

there is no feasible way 30 or 40 somethings should be able to collect pensions from the govt....total insanity..

[Oatka]

The only way to fix this is to quit buying the friggin' bonds!

That's what I was wondering - how many times do those bond holders have to be hit with that 2x4? Or is it that there are so many sheep out there ready to be shorn that there is always a fresh supply?

[RipSawyer]

They needed to have enough left over to throw wedding parties for all their gay friends.