Quick! Borrow More Money!
- Chicago is looking to the $3.9 trillion municipal-bond market for options to close its ballooning budget deficits, Chief Financial Officer Jennie Huang Bennett said.
Options on the table include selling pension obligation bonds, as well as refinancing general obligation and sales tax-backed bonds, Bennett said in a telephone interview on Wednesday. The refinancing of a yet-to-be-determined amount of debt is targeted for the fourth quarter, she said, adding it could save as much as $100 million in the 2020 budget.
Mayor Lori Lightfoot on Monday projected that the 2020 deficit in the corporate fund, which accounts for most services the city offers, would expand to almost $800 million from a June projection of $700 million. The gap would reach $1.2 billion in 2021 with revenue losses connected to the Covid-19 pandemic making up 65% of the hole. A complete budget proposal will be released in October.
Guess who else doesn't think it's a good idea? Actual finance people:
- Pension obligation bonds come with risk, especially for Chicago. Proceeds from the sale would need to be invested in such a way that returns exceed the bonds’ fixed interest rate, a tough target given how much the city pays in yield penalty because of its fiscal troubles. Pension bonds contributed to municipal bankruptcies in Detroit as well as Stockton and San Bernardino in California. The Government Finance Officers Association has advised against them.
So you can bet the farm that Chicago will probably try it.
Labels: money questions, pension
posted by SCC at 12:05 AM
63 Comments:
What ever happened to the money from the sale of the Skyway and all of the parking meters?
anyone bother to ask that piece of shit Daley?
pension obligation bonds = lottery tickets (same chance of getting your money back)
Chicago is now West Detroit
Groot trying to out Detroit Detroit? Bold strategy, let's see if it works.
Maybe the City could sell Buckingham Fountain, Navy Pier, Lake Shore Drive, Filtration Plant and pumping stations, or the EL system. We are sooooo fucked.
Gruit find some other bullshit program to establish— like free dog neutering on the tax payer dime. City residents who are experimenting should get tax payer hormone therapy, And tax payer funded ubering to the store. It gets pretty ridiculous guys the ways they find to get rid of money
Rumors has it that Groot will extract two teeth from each Chicagoan and then sell them to the tooth fairy in hopes of plugging the budget gaps.
"close its ballooning budget deficits"
STOP CLOSING THE BUSINESSES YOU DUMB FUCKS.
Gee wiz government tax revenues are down. Why can that be? I know the solution. Let's raise taxes.
Groot, Pigster, just fucking quit, resign, get the fuck outta dodge...
What?!?! When the f*** did we ever let facts and math get in the way of what the machine wants? Sista sledge gets what sista sledge wants
I have my masters in Finance. The whole key to it is indeed, the fixed rate that needs to be beat. Beating 3% a year is pretty easy with a half-competent fund manager. The S&P500 has returned 12%/year for the past 10. Since Chicago tends to borrow at 8% a year on general obligations, that’s a much more difficult benchmark to beat than 3%. Note, we need more control of our retirement system and we need to entrust it to actual intelligent professionals. The city makes moves like pulling funds from Ken Fischer (a reputable manager) because he made a gender joke on a conference call. Retirement funds are not protest symbols to be flung around by the city. The idea is not necessarily bad so long as the numbers are right. But with this city, numbers never look good.
Chicago is like the bust out uncle who always wants to borrow $20.
Only he’s run out of naive, enabling family members.
None of my degrees are in business or economics......but, I have an idea.......fucking open everything back up! This was a ducking scam from the start and it continues to be
$3.9 Trillion
How much is that?
That's the market cap of Apple and Amazon COMBINED.
Plus, you're still $140 Billion short, so Steak Daddy would
have to kick that in. Go figure. How did we get this short?
Crooked politicians.
We blew up the US economy for 10,000 actual covid 19 deaths? That's the number of people that died because of covid 19, so far. The rest died from co morbidity's which mwhich actually killed the deceased. Not to mention the many that were shot or killed in car accidents and such that happened to test positive and of course, since there is a financial bonus attached to covid positive deaths, voila! Covid 19 death.You can't even trust the number of covid cases because of all the false positives and the reports of positive test results from tests that weren't actually performed.
You keep rewarding bad behavior and fiscal irresponsibility it only gets WORSE!
groot can do as that idiot newsom in kalifornia proposed. tax citizens who leave or left.
how about an f and a u.
I wonder how much money the dems pushing for federal bailout of poorly managed states have invested.
Of course they will try if since they already KNOW that there will be a very bad outcome from the plan. They are Democrats and thus cannot help themselves from doing stupid stuff. You can't fix stupid but you can kill stupid or at least not reelect stupid. But somehow they have held power in city for about 100 years, long before all the Free Stuff voters took charge. Guess that means for over 100 years the Chicago voters have been STUPID, must be something in the Lake water.
Moody's already has has the City rated at junk (although the other two agencies have not yet made that leap, mostly for financial reasons which are probably too detailed for this response but I'd be happy to expand in another reply). We all know the financial condition of the city and the state. It already takes a hell of an interest rate to entice someone to consider buying a general obligation bond of the state or city.
What's more, Illinois tax policy does not allow for tax free interest in Illinois bonds by Illinois residents as many other states do. Why does this matter? Because, while may are moving, Illinois still has a LOT of rich people. You know who buys munis? Rich people. You know whose munis Illinois rich people WON'T buy? Illinois'. Take a look at the portfolio of a New Yorker and it is loaded with New York bonds. Why? It is a high tax state and by loading you muni portfolio up with NY bonds you avoid the state tax that would be charged on that income. Yes, muni bonds, while tax free at the federal level, are taxable at the state level in most circumstances.
Except in states that exempt taxes on their own bonds.
The morons running this state are so stupid, they can't even figure out that if they changed this one provision, they would probably increase the natural demand for their bonds. But as it stands right now the investor class views Illinois as less appealing than any other state in the country.
They are waiting to see if Biden gets elected no need to borrow then as the fool will bail them out. But if Trump gets elected then by November 5th the bonds will be in play. What premium interest rate will they carry? the one thing you know will happen if Biden gets elected is the markets will crash and there is no way that the city will be able to cover the interest payments and bankruptcy is that much closer. Good Democratic plan though all the makings of a Perfect Storm. Will be fun to watch it all crater.
Maybe they can invest in balloon candle and teddy bear concessions?
So you can bet the farm that Chicago will probably try it.
Labels: money questions, pension
If there's one thing a democrat knows how to do is spend other peoples money besides of course burn loot and murder...
Lease out your parking meters. What's that ? Never mind.
Pension member should be filing for court orders to stay these purchases!
Yes in the City of Detroit they did the exact same thing and sunk them further into debt!
But if the members of the Pensions asked a court to stay the purchases and ask for
Evidence of the need the City Finance Officer would need to draft an explanation of needs!
This would kick Lightfoot in ASS to show how mis managed city accounts are?
Also show how the Finance dept. has failed to collect funds that city needed to survive!
If city is at fault for mis management of funds they cannot file for bankruptcy!
Lightfoot started off on wrong foot when she stopped collections on water bills and scofflaw violations!
Income to the city that was vital! And proof of mis management!
Do not let her off the hook! She is trying to short the Pensions you worked for!
Read about it online Detroit played this same game!
Last I checked Illinois couldn't qualify for junk bond rating. Even China didn't want to loan us money. The last place on earth that loans money is an org in the fed. First state to have used it.
beetlejuice has no real options. Maybe get loan from state, who in turn gets loan from feds OR live within a budget.
Talked to a neighbor who is cfd,rumor has it the command staff will be asked to take unpaid furlough days next year. I’m betting cpd will be next.
The sooner we get to bankruptcy, the sooner we get rid of these political parasites.
These blood suckers make a fortune in kickbacks from municipal offerings, this is Groots turn at the payoff game.
Every stat about this plandemic is bogus. Chicago just had one of the nicest summers ever, but Groot and JellyBelly kept it locked down with threats of disaster that never occurred. I drove through the city yesterday and all I could see was lost revenue from this fraud. Closed stores, closed restaurants, closed museums. The downtown restaurants are gone forever. Less than 10% of the office building population has returned and will never return to pre-covid levels.
Democrat politicians are desperate to hold on to power. That is what this is all about. They're destroying lives and livelihoods for their own narcissistic ends. They are low life despicable humans who don't give a rat's ass about you or your family. They think you are morons who will do whatever they say. And you usually do.
MASK UP BITCHES!!!!
I have a secure retirement. My wife and I saved our money and invested it wisely. For anyone who depended on a government funded pension you will be out of luck.
Better give CTU another raise to stay at home....
Re-evaluate how many teachers you really need now. Start there.
This rotten piece of sub human flesh is purposely trying to bankrupt Chicago. She leaves in 3 years with a nice fat mayoral pension.
No, no, don't borrow....I've got an idea.
Why doesn't she sell off the parking meters to private investors? Oh, wait....
Ok, maybe she can sell the Skyway to private investors. Oh, wait.....
No, even better, she can decriminalize possession of all amounts of dope and just let offenders go with fines, costs and "convenience fees".... never mind.
My clout said we must vote for Biden to get a bail out, and so I can get my gold braided pension. Please vote for Biden. You aren't a racist are you?
A loan to the city under Groot is the same as burning your money, without the warmth.
hahaha....
THANKS, OBAMA!
;)
The 'ol game of "Scoop and Toss." Perfected in Chitcago! What a mess we're in...
All these companies and sports teams /athletes have poured cash into BLM.. ask BLM for the money
“ So you can bet the farm that Chicago will probably try it.”(SCC at 12:05 AM on Sep 4, 2020)
- you can bet the farm, three chickens and a cow CHINA will probably be the only investor pool. Ground floor opportunity for the ChiCom to establish a central hub. Nobody else will trust Larri to dig out of this economic hole. Machine holdovers likely suggested uncle Larri to try the ShortShanks “global” jet setting tours, something so far she has yet to do to drum up global business opportunities with us...in these challenging times.
The brightest and the best :
Larri has Rahm holdover, Jennie Huang Bennett, a former CPS finance guru...yeah, she solved ALLL CPS financial woes before coming to work for the City, (she now qualifies for two pensions) quick recap of CPS: she worked under both Byrd-Bennett indicted and Janice Jackson, who’s chief of staff now under corruption investigation. And we’re to believe CPS board leaders Don’t Know Nuttin bout nuttin.
Low interest pension bonds and low interest in funding pensions.
Let’s have CFO Jennie Huang Bennett broker a deal, something Rahm’s (CFO Carol Brown) people tried (Aug2018) and Failed two years ago now that the clock is running out...again. The shenanigans are back. They’re only selling point is low interest rates, probably offset by huge commissions of course, the old switcheroo’ would be locals reselling bonds to ChiCom...if that allowed, I don’t know.
Reminder:August 2018:
Pension bonds in Puerto Rico, Detroit and Stockton, Calif., contributed to their bankruptcies, prompting some fiscal analysts watching Chicago’s moves to urge caution. “City officials emphasized massive pension payment increases due in 2021 and 2023 — $369 million and $339 million, respectively,”
Who’s looking to buy some stocks and bonds from a big city in decline, run by an angry, walleyed toad....hmmmmm.
Larri’s version for a GoFundMe resource. If that don’t work, sell The Water and the sand.
It would be bad enough if this was a straight financial deal, but Chicago being Chicago, and Lightfoot being Lightheaded, you can bet the deal will be done at the most disadvantageous terms for Chicago taxpayers. On the bright side, if the deal is done, I am certain some politically connected Chicago firms and individuals will reap some big $$$ out of this deal!
We have to pay taxes of vehicle we purchase out of state, how fair is that.
Borrowing in the hope that you can kick the can down a road a few more years has been the preferred means of dealing with excess government spending for a long time.
At some point, the real problem is going to need to be dealt with and it is going to be really unpleasant.
The city is extracting about the maximum amount of money it can extract from the taxpayers without having the taxpayers just leave in droves. We are already seeing a few leave.
And you can only notch up fees so much before that chases people out too.
At some point one has to look at the spending side of the budget. You can't change the expenditures all that much that are there to pay off existing debt. If the city defaulted on paying back debt there would be no lenders willing to hand the city more money to spend so that part of the budget is safe from any serious cuts.
There are minor cuts you can make here and there but about 75% of the city budget other than for dealing with existing debt is expenses associated with employees so the only place that any serious cuts can be made is there.
Based on my quick analysis of the city budget and how much the city needs to cut to pay for its pension obligations and revenue shortfalls, I think about a 25% cut in the numbers of city employees is the order of magnitude that would be needed. The number might be off one way or the other. Maybe it is 20%, maybe it is 30%, but in any case it is a big number.
I doubt that the police and fire department are going to be immune to these cuts, as the other city unions would have a cow if police and fire employees were exempted from the cuts to come.
I suspect the first round of cuts will be in the form of inducements to retire early. This pushes the cost off the city operating budget into the pension plans, but gives the city at least some room to maneuver. History suggests that cost effective inducements to retire will typically not reduce the head count enough so a hiring freeze will also be necessary.
They may be able to avoid layoffs depending on how many extra retirees they manage to get. Typically people who are close to retirement are the most expensive employees the city has so having them move on is financially better than laying off those who were hired latest.
Junk bonds for a junked city.
mass layoffs coming and pension changes,lawsuit city!
Lightfoot destroyed Chicago's ecomony in last 6 months, beyond that, democrats couldnt turn a profit in the last 3 years which have been bull markets, all they do is spend and steal, wait until the markets are bear. Stop voting democrat!
Now Groot will have someone to blame when the city goes belly up and we become Detroit. Some nameless, faceless, hedge fund will be the villain not the incompetence of generations of Democratic leadership.
We are all tired of this bullshit COVID NONSENSE. Hey fatass, stop inflating all these numbers at these college campuses with your saliva testing, testing kids twice a week so you can inflate your numbers. Hey U of I, nice policy you are promoting on anonymous tip lines to rat out friends who get together in a group and have a couple of beers. Sounds like something communists would like, pretty soon we will have children snitching about their parents and friends. Wait to go Illinois.
Guess fucking what? That $3.9 T Municipal Bond Market ain't
what it used to be. Why? The fucking riots and the shot
in the foot shutdowns. That's fucking right. No longer can
financial people just buy bonds off the shelf. Gotta screen
municipalities for warts. Like Portland. Like Seattle. Kenosha.
Too fucking bad if your advisor put you into those bonds.
Headline: Feds Kill Portland Shooting Suspect Michael Reinoehl.
But that won't help your bonds.
The problem is that there are too many assumptions.
1. That over an extended period of time ### percent can be achieved. A big bear market comes and you are losing 10% a year and still have the interest to pay on the loan. Look at the 70s and 80s for examples.
2. Assuming that market conditions are favorable. What if the top 20 hedge funds, advisors and money managers are all led by M/2s? Do you think the Pension Fund will go along with that is this age of PC.
3. Doing this is just kicking the can down the road.
Only a fool would lend money to someone who cannot repay it.
TRANSLATION
Any bonds issued would be destined for default.
a message to the dumb scum sucking democrats in charge. you want tax revenue? open up the stores. you pieces of democrat shit are the cause of the problem.
Anonymous said...
What ever happened to the money from the sale of the Skyway and all of the parking meters?
anyone bother to ask that piece of shit Daley?
9/04/2020 12:09:00 AM
How much money in TIF Districts how about stop funding them!
To the Democratic drum beat of tax and spend now add tax, spend And borrow. What could go wrong with that plan? Great idea, why not borrow double what deficit will be so you have lots more to waste on all your voters Free Shit. But mist say has only irked for the last 100 years in Chicago so why not more of the same on a grander scale. They will have to have several hundred million to throw at Obama pilgrimage site and another 100 million for the Casino.
When the floor eventually falls out its going to be really really bad.....
All this systemic racism I hear about in city. Was that a Democratic plan? They have been in charge for almost 100 years in Chicago. Therefore systemic racism is a Democratic problem nothing to do with Republicans at all. Sorry but sometimes the truth can be very painful.
Selling pension bonds good idea except given how city works that owns ion money will wind up in community for worthless do nothing programs. Selling point will be it is for the kids. Then nothing to show for the investment except empty promises and empty pockets when time comes to pay off high interest bonds. Any borrowed money will be squandered, the Chicago Way in action. If by some miracle the money hits the pension fund it will be siphoned off by some connected financial con man. Your screwed no matter what they do.
I heard she wants to sell Midway Airport. Southwest Airlines operating at half of its capacity wit damn near empty planes. Concessions are closed. Who is she going to sell it to?
Dayum, am I glad I got out in the 80s.
Now I can laugh at the frivolous incompetence in the rear view mirror.
Barry O'Roach Clip
What's that about slavery?
Oh that's right. No slavery lineage in his family.
Martha's Vineyard welcomed him with open arms.
(And we still have no clue about his fucking grades)
Bald Head Bonds
They're safe until they miss an interest payment.
Wonder how much Groot pays to have her money managed.
She's too busy screwing up people's lives to do it herself.
Anonymous said...
I heard she wants to sell Midway Airport. Southwest Airlines operating at half of its capacity wit damn near empty planes. Concessions are closed. Who is she going to sell it to?
9/04/2020 05:48:00 PM
Wow the former airport (midway) manager landed well 6 figure pension told to get out while she can and boom look at her now from popcorn sales concessionary who says you need that phone call?
https://www.xcedgse.com/news/erin-odonnell/
Hmm collusion? Just axin!
The best part is all those California cities mentioned here are shit holes with the highest crime rates in the country/state. I know because I'm a cop in Stockton. After the bankruptcy we had over 70+ murders in the city and 12+ murders in the county. City of 300k and county under 700k at the time. Seems like when you run out of money to pay cops they leave, and crime spikes! Weird... Almost like they are related?...
nonymous said...
All this systemic racism I hear about in city. Was that a Democratic plan? They have been in charge for almost 100 years in Chicago. Therefore systemic racism is a Democratic problem nothing to do with Republicans at all. Sorry but sometimes the truth can be very painful.
9/04/2020 04:12:00 PM
Yes, systemic racism, no jobs, poor schools. But, wait a minute. Chicago is a black run city in a black run county, a democratic black run city/county that is. These folks have controlled the schools for decades have had a major voice in how the city and county are run for decades and powerful influence in how the state is run. So, a black person can't get a job because of poor education cries racism and who is to blame? The criminal justice system is not fair to blacks? Well, ask Judge Evans about that. He runs things there. Oh, yes, white privilege and Trump. Now that is the art of deflection
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