Go Read!

If you live in Chicago or Illinois go read, "What Does a Chicago Bankruptcy or an Illinois Bankruptcy Endgame Look Like?"  I'll leave the nuts and bolts for you to read in the article but below I'll set out the debt numbers listed in the article that, if correct, are staggering.  My highlights in green.

"For Illinois, the state has $31.5 billion in general obligation (GO) bonds, $15 billion of unpaid bills that are due, and, most importantly, an unfunded pension liability which grew to $251 billion on June 30, 2016. The Illinois House and Senate passed tax increase over the Governor’s veto in July 2017, but it wasn’t enough to keep Moody’s from putting the state on negative outlook with a threat to downgrade Illinois bonds to a junk rating.

A junk rating means that an issuer’s bonds are too risky and not credit-worthy enough to be considered investment grade; for now, there are no states with a junk credit rating.

Unlike Illinois, Chicago’s bonds are already junk rated (Ba1) by Moody’s and are also under review for another possible downgrade. Relatedly, the deep junk bonds of the Chicago Board of Education, already rated B3, are under review for a further downgrade due to state budgetary pressures.  The pension systems of Chicago and the Chicago Public School system are also deeply underfunded, by $35 billion and $9.5 billion, respectively."

Go read the article.   Many people are unfortunately going to come to the conclusion that they will be forced to leave the state at some point.  At a minimum if you live here you need to think of ways to protect yourself if possible from the almost certain tax increases and service cuts that are likely to happen in the coming years.