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In Illinois and Chicago, the government has been playing games like declaring pension holidays where the contributions shift to the future. The unions control
by sct202 7y ago
In Illinois and Chicago, the government has been playing games like declaring pension holidays where the contributions shift to the future. The unions control a large base of voters and haven't objected, even though this basically endangers their retirements. There's going to be a point where the funds will literally run out of money, and I doubt that there will be enough things to tax in a year to make up the difference that should have been paid in over decades.
- toomuchtodo 7y agoWhat boggles my mind is that bond rating agencies rate Illinois debt at any rating that allows continued borrowing when it is so obvious how bad and deep the financial hole is. Disclaimer: actively seeking ways to short Illinois/Chicago.
- lotsofpulp 7y agoThey are rating the chances of default. The bond purchasers will be paid, one way or another. Privatize the parking meters (like Chicago already did), the roads, the water utilities, etc. It's the people who live there that will pay for the deficit via increased taxes and fewer services.
- toomuchtodo 7y agoSo why are property values not reflecting this? Irrational market?
- cdfky 7y agoAll markets are irrational. It will take time
- lotsofpulp 7y agoThey are. From all the data I can see, property values for almost all areas in the Northeast and Rust Belt in general are declining (in real terms), except for certain few rich areas in and around the big cities that the richer populace is “escaping to”. I’m writing from mobile, but compare the Fed’s analysis for home prices by state. Even Buffett says he’s looking at state finances when deciding investment options, and if he’s saying it, surely other organizations are too. It will be a gradual accelerating decline though (barring effects of natural disasters), since people don’t just up and move.
- toomuchtodo 7y agoCheck out downtown Chicago and the western suburbs. Prices are not going down. If anything, they’re more inflated than ever.
- lotsofpulp 7y agoI specifically conditioned out that situation: >except for certain few rich areas in and around the big cities that the richer populace is “escaping to”
- toomuchtodo 7y agoSorry I didn't pick up on that. The areas I refer to in the Chicago western suburbs aren't particularly rich (Aurora, IL, for example).