Anyone else concerned about the illinois budget standoff? (Chicago, Oregon: homes, bankruptcy)

[IrishIllini]

Originally Posted by MSchemist80

Indeed I was looking at possibly adding Vanguard High Yield Municipal Bond fund to my taxable portfolio and then I saw major holding Chicago Board of Education and decided god no. You'd have to be very brave to consider buying Illinois bonds but I'd feel more comfortable in the stock market. At some point no amount of high interest will attract investors.

They're still frothing at the mouth to loan the city/CPS/state more money. I just wish someone would cut us off...

[chet everett]

Originally Posted by IrishIllini

They're still frothing at the mouth to loan the city/CPS/state more money. I just wish someone would cut us off...

Anybody who has watched documentaries or well done movies that involve somebody with a "gambling addiction" knows that that so long as the the gambler continues to go to work and get paid the loan shark will be happy to keep loaning out money. They may have the "muscle" intimidate the guy if he says he can't pay but the loan shark will not generally bust the arm of somebody with a job, nor will they repossess their car if that is needed to get to work.

Loan sharks LOVE a gambler that has a profitable "family business" and just like in the Sopranos they will happily exploit that legitimate business in a "bust out" -- https://en.wikipedia.org/wiki/Bust_Out#Title_reference Like it or not that is EXACTLY what Richie Daley did by selling off the parking garages, meters, and SkyWay -- The great sell-off: Chicago auctions city assets - CSMonitor.com No surprise the cash from those assets has since been spent...

The various insiders are basically "addicted" to cash and the refusal of Madigan to admit that this addiction is a problem means that more and more businesses will leave the state creating a bigger and bigger burden on the shrinking pool of those willing to pay higher and higher taxes as their property values also declines in value. The debt-to-revenue of Chicago is currently above 19:1, when Detroit was forced into court ordered bankruptcy plan it was about 18:1... Death spiral.

[MSchemist80]

Originally Posted by chet everett

The thing is, as more of the "investor class" realizes that Illinois stubborn insiders are not going to follow the advice of a proven finance guy like Rauner there will be higher and higher premiums asked for every dollar Illinois needs to borrow and eventually the costs of interest will be result in a chaotic failure...

http://www.chicagobusiness.com/artic...-pension-funds


That is the sad part. In this mess Rauner and his firm GTCR are the only people who did their job. The funds under GTCR nearly always far exceeded the benchmark for returns on investment. Yet somehow the Dems blame him for this train wreck. That is like not contributing to your 401k from age 30-64 then cussing out the investment management firm because you have no money in it to retire.

The real blame goes with
-The state constitution for locking in stupidity
-The unions for making unreasonable demands
-The Dems for not telling the unions to get bent and then further for not funding the pensions and creating a govt that is grossly inefficient with multiple redundant bodies all with taxing authority and high paid admins, and in general for not having any financial self control with the people's money.
-The people of Illinois for not tossing the pols out on their @sses for the above

[dtcbnd03]

And yet all of this could be simply solved by taxing public pensions X% and funneling 100% of that money into future benefits creating a compounding reduction effect. For out of staters simply change the tax to a "maintenance fee". Easiest and only solution besides bankruptcy.

[chicagobear]

Originally Posted by IrishIllini

They're still frothing at the mouth to loan the city/CPS/state more money. I just wish someone would cut us off...

Yep, governments don't fix their budgets until they have no choice.

[MSchemist80]

Originally Posted by dtcbnd03

And yet all of this could be simply solved by taxing public pensions X% and funneling 100% of that money into future benefits creating a compounding reduction effect. For out of staters simply change the tax to a "maintenance fee". Easiest and only solution besides bankruptcy.

The problem is a large chunk of the pension recipients are now living outside Illinois. Heck they don't want to pay the taxes that pay for their pensions that is for the suckers that have to live here. So there is no way to tax them.

[MSchemist80]

Originally Posted by chet everett

k.

Loan sharks LOVE a gambler that has a profitable "family business" and just like in the Sopranos they will happily exploit that legitimate business in a "bust out" -- https://en.wikipedia.org/wiki/Bust_Out#Title_reference Like it or not that is EXACTLY what Richie Daley did by selling off the parking garages, meters, and SkyWay -- The great sell-off: Chicago auctions city assets - CSMonitor.com No surprise the cash from those assets has since been spent...

That episode was great.

https://www.youtube.com/watch?v=ZXcBvq2Jscw

summary: Store owner Davey has gambling problem and gets in deep with Tony Soprano and Richie Aprile and they end up busting out his store to settle the debt.

[chicagobear]

Originally Posted by dtcbnd03

And yet all of this could be simply solved by taxing public pensions X% and funneling 100% of that money into future benefits creating a compounding reduction effect. For out of staters simply change the tax to a "maintenance fee". Easiest and only solution besides bankruptcy.

That seems like the disparate treatment would be unconstitutional somehow. Why Illinois state pensions and not (say) a pension from Sears or Motorola?

[dtcbnd03]

Originally Posted by MSchemist80

The problem is a large chunk of the pension recipients are now living outside Illinois. Heck they don't want to pay the taxes that pay for their pensions that is for the suckers that have to live here. So there is no way to tax them.

That's why you call it a maintenance or admin fee...there's ways around it.

And as for disparate treatment...some items are not taxed in Illinois such as retirement, social security, and 529 college savings plans. So I see no reason why they can't exempt private pensions or 401ks.

[MSchemist80]

Well the @hole Democrats are going to try to pass a massive income and sales tax hike today with no reforms nor property tax relief. I'm glad Rauner is there to block it. Even the people's republic of California doesn't tax people out of their homes with property taxes.