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If you go to Sacramento this week, don't be surprised to hear champagne corks popping and chants of "We're #2! We're #2!" The cause for celebration? Illinois has overtaken California as the worst credit risk among American states.
As of Monday, the credit default swap spread for Illinois general obligation bonds climbed to 313 basis points for a five-year contract -- meaning a bondholder must pay over 3% of the bond's face value per year to be insured against default.
That's a higher price than for all but seven sovereign entities tracked by CMA, and slightly higher than California, whose five-year CDS spread sits at 293. Investors rate Illinois's debt as slightly riskier than Iceland's or Latvia's, but not quite as big a gamble as Iraq's.
Illinois has the second-largest debt, though it is not nearly the second largest state. And is far more corrupt. The ongoing trial of former Gov. Blagojevich reveals how it was necessary to bribe the Governor to get State aid during his six years in office. And his predecessor, Ryan, is already behind bars for similar activities. So there has been a decade of corruption in the Governor's office. I doubt "Ah-nuld" could be as much of a crook.
Well, the whole world is reeling from manipulative speculators who first sold the bonds on the market and then bought insurance hoping that they would go into default. The Euro-Zone as well the US Govt are both trying to clamp down on these speculators right now.
And as far as California, the state has NEVER missed a bond rerepayment and there is no real risk that California will default on its outstanding bonds.
Much of the crisis is attributed to shady bankers trying to scare people.
Amen brother! Illinois has an unemployment rate 2-3 points above the national average. Not high taxes: the Tax Foundation reports it is 30th. But the atmosphere of corruption is a deterrent. Who wants to locate where infrastructure improvements require a bribe?
As an illinois native the issue is really this:
Chicago now has the largest mexican population outside of la.
Lots of illegals and "new faces" that shall we say, were not there 15-20 years ago.
As a result the state is learning just what strains a massive underclass can have on infastructure and other things.
Theres simply not enough money in the pot to go around
Funny thing is congressmen from California tried to warn people back in the late 80's, and congressmen from illinois, georgia, ohio,etc. couldnt have cared less.
"Thats a cali4nya problem" I believe was the popular thing to say
Sort of as popular as , "as goes california so goes the nation"
Last edited by NorCal Dude; 06-24-2010 at 09:15 PM..
Given the topic of the thread (the economic problems of Illinois and California), uh, no, we don't wish to be like you, at all. Sadly though, our economic problems are rather similar, so it is an unavoidable comparison. ugh.
Way to show though to the entire internet that you don't have much of a clue on the economic problems of Illinois, or California.
I would say the gun laws are pretty much on-par with each other.
Being born in IL and having been raised in a rural area of CA, I feel interchangeable.
As an illinois native the issue is really this:
Chicago now has the largest mexican population outside of la.
Lots of illegals and "new faces" that shall we say, were not there 15-20 years ago.
As a result the state is learning just what strains a massive underclass can have on infastructure and other things.
Theres simply not enough money in the pot to go around
Funny thing is congressmen from California tried to warn people back in the late 80's, and congressmen from illinois, georgia, ohio,etc. couldnt have cared less.
"Thats a cali4nya problem" I believe was the popular thing to say
Sort of as popular as , "as goes california so goes the nation"
According to the 2006-2008 American Community Survey, there were about 1.5 million people of Mexican origin in Illinois, making the state having the largest Mexican community in the nation outside Cali, Texas, and Arizona.
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