There seems to be no limit to the amount of relevant news about the U.S. economic and financial system that the mainstream media keeps off the radar screen. I truly believe the technically insolvent status of the country’s fifth largest State is a lot more relevant to our collective lives than is the latest episode of
The Jerry Springer Show Trump vs. Rubio vs. Cruz vs. Clinton “reality” TV show.
Illinois sports a $111 billion unfunded State pension, it has $8 billion in unpaid bills, tax revenues are declining, spending is accelerating and it has yet to approve a FY 2017 budget. If this were a private corporation, it would have been taken through bankruptcy court and emerged with new owners at this point.
But the true financial condition is even worse than advertised. Let’s examine that underfunded pension estimate for a moment. That number would be based on the existing actuarial assumed liabilities vs. the allegedly marked to market value of the assets. I can say with 110% certainty that the total value of the assets are over-estimated by at least 10% and probably more. Included in its cesspool of investments would be items like private equity tech investments, high yield-turned-distressed bonds, overvalued real estate and energy investments and, of course, derivatives. There’s no way that the people running the fund have properly marked to market any of the above toxic assets.
The now-Senator and supremely corrupt Michael Bennett plugged the Denver Public Employee pension fund for a cool $250 million of losses on interest rate derivatives that he bought from his former colleagues at JP Morgan. Denver’s pension fund is tiny compared to Illinois’ grotesque public employee entitlement monstrosity.
I don’t rely on the mainstream media for updates on the Illinois financial saga. But every time I run across updates on the situation it has become worse.
I wonder if Obama will avoid the State of Illinois’ funeral the way he’s avoiding SCOTUS Justice Scalia’s funeral: LINK. Obama is a real class act…