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 ...
I hope so. The sooner the Ultimate Breakdown comes, the better.
IBD EDITORIAL PING
I continue to believe that NY, Il, and CA, and by inclusion NYC, Chicago, and Los Angeles, will get federally guaranteed bonds before the end of Baraq’s term.
These three states are the bedrock of Democrat electoral strategy and will be protected at any cost.
The major difference between Chicago and Detroit is that Chicago still has a tax base which is strong enough, relatively, to more than compensate than the difference in liability. Chicago may not be in a good position, but a one-dimensional use of stats won’t present reality.
That high? You'd think Fitch would've learned its lesson in the mortgage-backed security debacle.
Political pressure can be intense on the rating agencies. Remember this is the Chicago mob running DC.
Maybe that’s the real reason that the Fed is printing trillions of $. Those bonds will come from Yellen.
I thought Rahnmadamading-dong was a big mouthed
blowhard but his brother, the one with the MD on
the other side of his E-manual, has him beat all
ta....hell. I’d bet his med school professors and
classmates just hated him.
Good point.
What I don't understand is how can the entire state be junk bond status and Chicago (gee, a part of Illinois) be A-??
IBD EDITORIAL PING
I live in the People’s Republic of Chicago and watched how 200,00 people left the city in a decade. The tax base is fleeing, voting with their feet.
Does anyone want to buy tickets to the new ballet, “The SS Chicago Meets an Economic Iceberg”, with Rahm Emanuel as the lead ballerina?
First 10 people get a free TuTu.
Every day is a sweet day
at Ben & Janet’s
(until someday when the cruel justice of the markets finally falls like the sword of judgement)
Both brothers aren’t faring too well right now are they? That’s a good thing for those liberal lollipop lickers
>> a one-dimensional use of stats won’t present reality.
Your zero-dimensional claim with no supporting evidence (e.g. links) doesn’t present reality either.
So put up, or STFU.
Chicago is not Detroit, at least not yet. Chicago has a fairly good tax base, and people are not leaving the city in droves, not by a long shot. And Chicago has its beautiful lakefront, and a lot of rich people living in the city. And it is not all black like Detroit, it is a potpourri of multicultural residents. It’s tax base is not shot. You are wrong in your assessment, you don’t live here, and you were rather nasty to boot to someone who gave an accurate assessment of the city. By the way, the State of IL is not junk bond status either.
Illinois has lots of problems, but there are a lot of cities that will fall like a deck of cards before Chicago will. Illinois needs to get rid of all Dem rule and then things will get better. However, the Dems have stacked the deck by district gerrymandering, so it will be difficult to get rid of the infestation of Rats. Chicago is a beautiful city with lots of history, and I hate having the city and the state being given such a black eye by the likes of Obama and his thugs having once lived here. I hope Obama retires back to Hawaii from whence he came, or back to Kenya where he was born.
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