"We Track the Financial Collapse For You, so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Safeguard your financial future. Get our crucial, daily updates.

"We Track the Financial Collapse For You,
so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Who In Their Right Mind Would Lend Money To Chicago?

When you see that Italy’s debt is rising, the logical question is, who the hell is dumping good money after bad into such an obviously failed state? The answer is that by lending money to Italy (or Greece, Portugal, Spain, or France) you’re really lending money to Germany, since the latter will have to bail those other countries out shortly.

Keep that in mind as you read this, from yesterday’s Wall Street Journal:

Cash-Strapped Illinois, Chicago Seek Billions From Investors

Illinois and its biggest city kick off hundreds of millions of dollars in borrowings this week, a test of investors’ willingness to lend to stressed governments prone to spending more money than they bring in.

The state launched borrowings with about a $440 million bond deal on Tuesday, followed by a sale topping $700 million by Chicago. Analysts expect what could be billions more especially from the state, as it puts together funds to do everything from paying retirees’ pensions to launching capital projects.

Illinois borrowing Illinois Chicago bonds

Before buying bonds from the nation’s lowest-rated state and its biggest city, investors have to assess their continuing mismatches between expenses and revenues along with pension burdens, which are slated to eat up a growing share of both budgets in coming years. Municipalities nationwide are grappling with how to pay bondholders while also meeting the rising costs of retirement benefits, but few are as financially strained as the nation’s third-largest city and the state.

Chicago pension Illinois Chicago bonds

Illinois leaders have floated borrowing at least $4.5 billion more through next year, according to its financials. Rather than using most funds to build bridges or improve infrastructure, the Prairie State plans to use many of its bonds to pay off outstanding debts or put money toward pension benefits that have already been earned. For example, a proposed $1.5 billion borrowing tentatively scheduled for June would help pay for a pile of unpaid bills the state still owes. Lawmakers failed to pass a budget for two years under the former governor, worsening this backlog.

Rahm Emanuel’s last bond deal as Chicago’s mayor will be used to pay off previous short-term borrowing alongside projects including sidewalk improvements and traffic signal installation. He considered selling $10 billion of debt to fund pensions, but it will be up to his successor—elected this April—to decide whether to move forward.

Illinois’s rating sits just above junk level. Chicago holds a speculative grade from Moody’s Corp. and investment-grade scores from S&P Global Inc. and other firms. Chicago didn’t hire Moody’s for its latest bond deal.

Despite their precarious finances, the city and state’s leaders have turned to the bond market at what some analysts say is an opportune time. Investors have poured money into municipal bonds in recent weeks, vying for a relatively limited supply of debt, analysts say, and lifting prices while pushing down the yields of even some existing Illinois and Chicago bonds.

That background helps ensure demand for the new bonds, analysts said, in the latest example of how investors’ voracious appetite for debt can help governments find willing lenders despite fiscal stress.

Here’s the key passage that ties Illinois/Chicago back to Italy:

“Despite their precarious finances, the city and state’s leaders have turned to the bond market at what some analysts say is an opportune time. Investors have poured money into municipal bonds in recent weeks, vying for a relatively limited supply of debt, analysts say, and lifting prices while pushing down the yields of even some existing Illinois and Chicago bonds.”

Why would such obviously crappy paper be such an easy sell? Because investors are looking ahead to the next Great Reflation, in which the Fed and other major central banks are forced to unleash a tidal wave of new credit to bail out the bad debts incurred in the previous round of monetary experimentation.

If the express goal is to keep bad debts from blowing up the global financial system, then by definition Illinois/Chicago will be bailed out, since they personify the concept of “bad debt”. So today’s junk munis are tomorrow’s Fed balance sheet assets. Which is another way of saying they’re taxpayers’ responsibility, not Chicago’s.

 

Emigrate While You Still Can

16 thoughts on "Who In Their Right Mind Would Lend Money To Chicago?"

  1. There is really not much more to say or write about the state of Illinois. The same people and thinking are still in charge that has created the huge financial mess. Last year, after the democrats pushed through a 33% income tax increase on all the hard working citizen of the state, the unpaid bills hit a historical record ($16 billion). So to hide this massive problem, the democrats borrow another $6 to pay down the bills (problem solved right). Now this year, our new governor in 4 short months has come up at least dozen more ways to tax the same people. The best individual solution is to leave, which what people are doing.

  2. After reading an article entitled “Taibbi: on Russiagate and our refusal to face why Trump won,” it evoked an analogy that I think may be apt regarding the financial markets. Taibbi’s article, like most liberal leaning ones, had a lot of words but not much to take away (though it’s interesting so I recommend it any way.) However, there was one observation I gleaned which is that the anti-Trump/pro-Clinton voters were blinded by their belief (and ironically also tormented – but that is my addition) in a “deep state” (or “Gang of 500,” described as ‘campaign consultants, strategists, pollsters, pundits and journalists who make up the modern-day political establishment.’), whose face was Clinton, that would “not allow” Trump to win because – well – because it was so powerful and governed all things political. Those voters’ problem of course was that was exactly one of Trump’s main campaign issues. So, the election came down to whether or not the “Gang of 500“ had enough power to counter all the votes and enthusiasm for Trump in favor of the status quo. (How or why such voters would want such a thing I don’t understand but can only speculate that they had cynically capitulated to the status quo in their own lives and therefore felt invested in it, or at least defended it as a psychological mechanism to save face.)

    So, my point is this. I see possible analogous – schizophrenic – thinking and behavior in the financial markets. Just what so many people thought about the Trump campaign and his low chance of success because of the Gang of 500 and a political “deep state”, many investors believe the financial markets will prevail because of the financial media, “experts” and the pragmatism of politicians and central banks. Equity “investors” are in that camp. However, the very same people also recognize that the only need for such interventions would be because of the increasing need for them, which would mean problems are brewing. Those are the bond “investors.” So both asset classes are growing in size and value as this train barrels along.

    Therefore, just as the “never Trumpers” in the media and political “think tanks” essentially bet on the power and competence of the Washington deep state to somehow, some way assure a Clinton Presidency, basically those same mentalities in the financial world are literally invested in the governments and central banks of the world to assure ever stable and climbing financial markets. And the crazy irony is that the same mentalities are buying both stocks AND bonds, and for the same reasons.

    The even greater irony of all of this is that just a tiny fraction of investment in physical gold hedges all of the above, and when I say “tiny” I mean like 1%. If just 1% of the investment dollars out there bought physical gold as a hedge, the gold price would be many thousands of dollars an ounce just because of its scarcity, and would arbitrage all the insanity. That’s how little above-ground gold there is in the world, or – to put it differently – that’s how much “money” is out there sloshing around.

    1. A getaway to the most fascinating places in the world with your loved ones and a lovely residential home you would like to buy. Is your present job really capable of fulfilling your aspirations? In case your answer is no then it’s time for you to change. We bring to you a web based job that is certainly as easy as being on any search engine like google or doing copy paste job. It does not need technical knowledge and it does not require anything to sell. It is not like any frauds that claims to make you “rich over night” and then turned out to be pyramid schemes or stuff where you need to sell to your friends and family. It is simple to start and you will receive the instruction guide within few weeks. You could make almost $13,000-$4,000 on a monthly basis. You could invest much more time with my family and friends and can go out for incredible vacations. This job provides you opportunity to be own own boss and can work from any location. No need to wait for too long, Go and give it a look this excellent online job opportunity.>>>>>>>>>>>> ACT NOW

    2. I actually earn close to $6,000-$8,000 every 30 days through the internet. It really is ideal to certainly substitute my old tasks net income, particularly seeing that I only just work around 20 hour every week in a home office.I ended up losing my job after operating for the same company for several years, I wanted very trusted earnings. I was not researching for packages that miguide you to make you millionnare within few days you can see all over the internet. Those all of them are sort of ponzi multilevel marketing plan wherein you need to initially get prospective buyers and then sell a product to friends or relatives or any person so that they will be in your team. The best part of working on the net is that I am always home with the little ones and also enjoy lots of free time with my family members in various beautiful beaches of the world. Honestly,it is easier than you would think, all you need to do is fill out a very simple form to receive front line access to the Home Profit System. The instructions are extremely simple, you do not have to be a computer expert, however you must understand how to use the net. It is as easy as being on Facebook. Here’s the most effective way to start > https://s.coop/22ezy

    3. I generally generate almost $6,000-$8,000 every 30 days on the internet. It is really a sufficient amount to simply substitute my previous jobs net earnings, specially thinking of I actually do the work almost 20 hr each week in a home office.I got rid of my job after working for the same business enterprise for several years, I required very trusted income. I was not researching for programs that promises to make you rich in just few days you can see online. Those all of them are type of ponzi multi-level marketing programs in which you have to first get prospects then sell something to friends and family members or anybody to make sure they will be in your team. The greatest benefit of working via internet is that I am always home with the little ones and also enjoy lots of free time with my family members in various beautiful beaches of the world. Honestly,it is easier than you would believe, all you have to do is submit a very simple form to receive front line access to the Home Profit System. The guidelines are extremely simple, you don’t have to be a computer expert, however you must understand how to use the internet. It’s as easy as being on Facebook. Here’s the most convenient way to start >>>> https://link.do/Wu9eu

    4. Make Up to $5000 by working for US Foods Holding from comfort of home. There are many advantages of working over the internet at home for example you can be your own boss. There is no one saying to you what to do,grab your laptop computer with internet connection, carry it to seaside beach or a park or mountain, and carry out your projects peacefully with nature, potential to earn money is almost endless all depending on you. You can actually fulfill all yourdesires by working via internet ,which has limitations while you work 9am-5pm in a office job. You would like to hang out with your loved ones ,or even go on a familyvacation? On job you must seek permission from your employer. Online earning, just take your laptop with you on your family tour.You enjoy the luxury to be financially FREE. Here’s the proper way to start –> http://w3url.com/UZ

    5. I do remember the time period when I lost my position couple of months back from my organization in which I have given too much time and hardwork. I was certainly not into policies akin to get rich “overnight” which later turned out to be an internet marketing methods in which you really should firstly get very interested potential consumers after that sell a product to family and friends or anyone in order that they will be in your group. This internet work has given me freedom to work at home and now I can spend precious time with my wife and children and get enough spare time to go out on a family trips. This job has offered me an opportunity to get earnings around $21,000-$22,000 each and every month by doing simple and easy web-based work. Go and take a look at most stunning work opportunity.>>>>>>>>>>>>> https://urify.me/ALxtx

  3. This is a perfect example of “moral hazard” set up by previous (and myriad) examples of bailouts both by the Federal government and the Fed.

    I can’t think of a single incidence in which the debtors were allowed to fail and go bankrupt leaving the “free market” to absorb the fall out, as things should be in “free market capitalism.” It’s unclear to me if the PTB really think letting things go would be fatally contagious and catastrophic, or simply don’t care about the moral hazard precedents and just want to protect the status quo and/or their own interests.

    The “problem” with all of this is it can’t go on forever, but I’m afraid it can go on for much longer than we might believe. I’m beginning to think I’ll never quite live to see the SHTF. It could be decades away. There are still so many things the central banks – and the US Fed in particular – haven’t done yet.

    President Trump is my greatest (and only) hope that massive public sector bailouts may not happen if he’s still in office, but I’m afraid even he too would capitulate as he did when he “re-opened the government” citing “American citizens” were hurting. (But didn’t he realize that the vast majority of those federal workers vote Democrat and will always hate him and never vote for him, or is he just a better man than me?) If so, then – well – “bond investors” are Americans too, unless he rejects corporate personhood (i.e., that banks and hedge funds should be treated the same as individuals.)

    We shall see but I have the sick feeling that he’ll be no different, or to be fair, that Trump’s sentiments will not matter either way because there are so many laws in place that the courts/”swamp” wouldn’t let the markets handle it. Look how hard it is just to stop subsidizing state programs like “sanctuary cities.”

  4. The idea that the bond market is a bubble about to pop is a subject not to take lightly. This matter has been scrutinized many times in recent years and little has really changed except debt has grown much faster than the economy in general.

    Investors look for large markets to park their money because it implies a degree of liquidity that insures a quick exit if necessary. More attention should be focused on what happens if a popping of the bond market bubble occurs. The article below explores the dangers of this market’

    https://brucewilds.blogspot.com/2018/06/bond-market-stability-must-again-be.html

  5. When banks issue loans, they create the credit out of thin air and charge interest for loaning something they never had. It is a no-lose situation for these legalized counterfeiters to extend unlimited credit to Chicago criminal politicians. The ultimate burden to repay will fall on the taxpayers. This is why property taxes in Chicago are through the roof and people are fleeing Illinois in droves.

    1. Hopefully as more people understand that it will be more politically possible to stiff the banks when the debt levels become unmanageable. I say “politically” because at the rate things are going the enforcement of laws will have to be settled politically since there are too many conflicting ones to honor all of them.

  6. Oh, remember you would be lending money to Rahm Emanual. If you thing that is OK you need a brain transplant.

Leave a Reply

Your email address will not be published. Required fields are marked *


Zero Fees Gold IRA

Contact Us

Send Us Your Video Links

Send us a message.
We value your feedback,
questions and advice.



Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.

This field is for validation purposes and should be left unchanged.