Rot Of Empire: Moody’s Downgrades Chicago To Junk Bond Status

I thought junk bonds were ‘high risk – high return’ whereas I’d have thought Chicago was more ‘high risk – no return.   Not so much junk bonds, just junk. Reader comment from  “Mike”

It’s doubtful that Warren Buffet’s Moody’s Investor Services will face the same wrath from Obama that Obama inflicted on S&P after S&P downgraded the U.S. Government debt rating from triple-A to double-A.   After all,  Warren Buffet owns Obama.

The outlook on all long term ratings remains negative (LINK)

But recall that Moody’s did not downgrade Enron to junk status until Enron hit the wall. While I’m not suggesting that Chicago will hit the wall anytime in the next few weeks, it does suggest that the White House is probably evaluating bail-out ideas.

I’m not sure how Obama thinks he can smooth this one by all Federal taxpayers outside of the State of Illinois (which itself is running something like an admitted $21 billion budget deficit).  But, then again, something like 45% of registered Democrats have expressed voting support for a criminal (Hillary Clinton), so anything is possible in this Orwellian paradise.

Here’s a summary of Moody’s downgrade “rationale:”

The Ba1 rating on Chicago’s GO debt incorporates expected growth in the city’s highly elevated unfunded pension liabilities. Based on the Illinois Supreme Court’s May 8 overturning of the statute that governs the State of Illinois’ (A3 negative) pensions, we believe that the city’s options for curbing growth in its own unfunded pension liabilities have narrowed considerably. Whether or not the current statutes that govern Chicago’s pension plans stand, we expect the costs of servicing Chicago’s unfunded liabilities will grow, placing significant strain on the city’s financial operations absent commensurate growth in revenue and/or reductions in other expenditures.

Our negative outlook reflects our expectation that Chicago’s credit challenges will continue, both in the near term and in the long term. Immediate credit challenges include potential draws on liquidity associated with rating triggers embedded in the city’s letters of credit (LOCs), standby bond purchase agreement (SBPA), lines of credit, direct bank loans, and swaps [Oops – banks can and should pull the plug].  The current rating actions give the counterparties of these transactions the option to immediately demand up to $2.2 billion in accelerated principal and accrued interest and associated termination fees.

Chicago, like Detroit before it, is emblematic of the Rot of Empire.  Large industrial-based cities have been gutted by modern day Robber Barons who have moved the bulk of America’s industrial base to cheap-labor eastern hemisphere domains.   These large Rust-Belt metropolitan areas are collapsing under the weight massive budget deficits and catastrophically underfunded public employee pension funds.

I would hazard an educated guess that if Moody’s has determined that Chicago is regarded as below investment grade, the stark reality is that Chicago is likely on the verge of collapse barring some likely smoke-filled back room deals cut between Obama and his former puppet-master, Rahm Emanuel (Mayor of Chicago).

I would bet that the United States is entering it’s Final Chapter.  This is why the Obama regime has intensified its attempt at global military control both domestically (Jade Helm) and abroad.

I hope I’m wrong, but I have a bad feeling that life is going to become very uncomfortable for anyone not a member of highest elitist echelon.  This would mean everyone except those in the “three-comma club” (billionaires) and the political puppets controlled by the ultra-wealthy.

9 thoughts on “Rot Of Empire: Moody’s Downgrades Chicago To Junk Bond Status

  1. Dave,

    You better double up on you’re Wheaties” intake ( non GMO type ). I got a feeling you’re going to have a lot to write about in the coming weeks. All people have to do is the arithmetic. A system that creates money as debt and then charges interest ( usury ) is nothing more than a PONZI scheme. It ultimately has to collapse. All that we’re witnessing is the final vestiges of America’s wealth being sucked out by the puppet masters. I’ve seen the future…and it’s awful. But maybe there will be a chance to rebuild on a more solid foundation one day. My fear is as yours. It will be mass tyranny and madness prior to getting the chance to rebuild.

  2. Dave:
    I had to chime in here living in this ‘utopian’ paradise of leftist marxism –
    A few things that I repeat over and over to anyone willing to listen….
    a) Don’t move here you won’t like it….
    b) It ain’t called ILLANNOY for nuthin’…..
    c) Dante’s quote should be hung above the gates to Chicago – “Beware all ye who enter here…”
    d) First Otrauma….now Hitlery…. both hail from this ‘utopian’ paradise. How’s that working for you America?….
    e) You have to live here to really understand how toxic this place really is….
    f) The state house has been held prisoner by Mike Madigan since the late 1970’s yes since the days of Jimmy Carter!!! – Many here call ILLANNOY “Madiganistan”….

    And an FYI – unfunded total liability is much larger than you note in your piece – estimates are today anywhere between $120 billion and $214 billion dollars.
    This place is bankrupt beyond measure.
    As a local radio talkie said when the ILLANNOY Supremes (which by the way is infested with leftist judges) announced their decision from on high – He said something and I paraphrase……”you think people leaving this state is bad now – just wait – there are thousands with viable businesses who have been preparing for this and seeing that the only thing that will cure this debt problem is more taxes – well….they are leaving and leaving the state very soon.”

    There are two organizations that keep tabs on this closely – linkies here:
    https://www.illinoispolicy.org/
    http://www.civicfed.org/

  3. I thought junk bonds were ‘high risk – high return’ whereas I’d have thought Chicago was more ‘high risk – no return’. Not so much junk bonds, just junk.

    1. Do you remember when an american credit rating institute (was it Moodys) downgraded US credit ratings and was thereathened by the government with lawsuits.

      I have always considered it fascinating that the US have the highest credit ranking but their biggest creditor (China) don´t.

      How can the “debt slave” have a higher ranking standard than the creditor?

      That´s the ultimate proof of how rotten and corrupt it is.

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