Chicago Bond Rating Cut to Junk (Ina, Brooklyn: limousine, taxes, to live in)

[Chicago South Sider]

Originally Posted by jonnynonos

Detroit actually has an investment grade rating after its bankruptcy.

Ok, that means Chicago is dead last.

[Maintainschaos]

Originally Posted by Chicago South Sider

Ok, that means Chicago is dead last.

Detroit's last Moody bond rating update was to B3; Chicago's is Ba1. They both suck, but B3 is lower than Ba1.

[Lookout Kid]

In case anyone doesn't know what a junk bond is, here is a nice, short explanation.

What does this mean for Chicago? It means that the city will pay a much higher interest rate on money that it borrows for various projects. Chicago has been using bonds to fund basic spending for years because leaders were afraid to raise taxes to levels that actually paid for the ridiculous levels of spending. It's like your dumba$$ friend who floated an expensive lifestyle on credit cards for years, but now can't get out of the mess because interest rates are at 30%.

Or perhaps more like your dumba$$ kid running up the credit card bill, but leaving you (the parent) with the bill. All taxpayers will pay for this, not the politicians who created the mess in the first place. Even people with nothing will pay in the form of fewer programs and services. But you know, keep supporting those striking teachers and public employees with built-in raises who won't take even a modest cut in pensions or benefits! I feel another CPS strike coming on...

[chicagobear]

Obviously we just need to get the Federal Reserve to start buying up Chicago bonds in addition to Treasuries and Agencies.

[Lookout Kid]

Originally Posted by chicagobear

Obviously we just need to get the Federal Reserve to start buying up Chicago bonds in addition to Treasuries and Agencies.

And maybe Chicago can start printing it's own currency?

[PerseusVeil]

Not good news at all, but the Mayor's Office raised some good points, in my opinion.

Why was just Chicago downgraded this go around when the Supreme Court killed a statewide deal? Why was the state as a whole not downgraded? Also, why is Moody's rating vastly different than S&P's and Fitch's? S&P, which is roughly the same size as Moody's, has Chicago's rating at A+, and Fitch's rating is A-.

[chet everett]

Originally Posted by PerseusVeil

Not good news at all, but the Mayor's Office raised some good points, in my opinion.

Why was just Chicago downgraded this go around when the Supreme Court killed a statewide deal? Why was the state as a whole not downgraded? Also, why is Moody's rating vastly different than S&P's and Fitch's? S&P, which is roughly the same size as Moody's, has Chicago's rating at A+, and Fitch's rating is A-.

The only thing that matters is that ANY of the ratings agencies have Chicago at junk -- http://www.sec.gov/investor/alerts/ib_creditratings.pdf


BTW: This is from well before the Mortgage Backed Security melt down -- http://www.federalreserve.gov/pubs/f.../200368pap.pdf Makes a whole lot of sense, but does not fit with Rahm's "theories"...

[MassVt]

Originally Posted by Lookout Kid

And maybe Chicago can start printing it's own currency?

I'm wondering who will be featured on the $100 bill?....

The $2 bill will be dedicated to Blago, I'm sure..

"In Daley I/II We Trust"

[MSchemist80]

A better analogy of Chicago and Illinois would be if I cashed out my 401k early and maxed out all my credit cards to the tune of a million dollars or so buying luxury goods and a house that was hopelessly beyond my means and then marched over to my boss and said I need I raise or I'll go homeless and have no money for food or clothes.

Boss: Can't you budget and live within you means
Me: That's crazy talk.

Now here we are. Instead of paving roads or paying for nice services we are paying for lavish pensions for retired public sector employees and we have no recourse. However, for many people and businesses the solution is quite simple. Move out of Illinois and laugh your butt off at the train wreck.

[OccidentExpress]

Originally Posted by jdiddy

No, Keynes was not referring to municipal governments.

From federal, state, and local governments to consumer spending habits, Keynesian economic theory permeates every level of American society. Spending everything right now without thinking about tomorrow probably sounded like a great idea to a childless hedonist like Keynes, but Chicago is the inevitable end result when you apply that same line of thinking to the governance of a major city.