It might take a FEW more years for your spreadsheet analysis to become apparent to the public, i.e., the State of ILL and the City of Chicago will reach a point where it's a pay-as-you-go for public pensions.
1. Have you calculated what the property taxes for Chicago residents and the state income tax would be to cover the pensions?
2. You pointed out that Nuveen dumped its bonds. Could there be a bond market panic?
These bonds are ALREADY in the high-risk category, not investment grade.
That's why I linked to the thread - people were commenting on that aspect. That even though these were "high-yield" bonds, which is the current branding for "junk bonds" or "below investment grade" bonds, Nuveen decided they no longer fit the allocation profile they wanted.
In many cases, it's "retail investors" who hold these bonds, not institutional investors, for a variety of reasons -- this was the case with many of Puerto Rico's bonds that ran into trouble.
Some may show a tighter spread than you'd think, but that's because it's not just up to the dingbats in Chicago, but also the people in Springfield... and even though it's obvious that the Chicago folks aren't really getting much direct help from ole JB, there is an assumption that Illinois will not allow Chicago to explicitly default. Even though the people in Chicago supposedly running the show are inept.
People in Chicago have been voting for decades to get more services than they pay for. I see 0 reason to believe they will spend decades paying for less services than they receive, which is what it would take to start paying now for the services that were received over the last 30+ years.
Are you predicting this playing out in some way isolated to Chicago and/or Illinois, or do you think it will be part of a larger dollar event as outlined in Ray Dalio's new book?
It might take a FEW more years for your spreadsheet analysis to become apparent to the public, i.e., the State of ILL and the City of Chicago will reach a point where it's a pay-as-you-go for public pensions.
1. Have you calculated what the property taxes for Chicago residents and the state income tax would be to cover the pensions?
2. You pointed out that Nuveen dumped its bonds. Could there be a bond market panic?
These bonds are ALREADY in the high-risk category, not investment grade.
That's why I linked to the thread - people were commenting on that aspect. That even though these were "high-yield" bonds, which is the current branding for "junk bonds" or "below investment grade" bonds, Nuveen decided they no longer fit the allocation profile they wanted.
In many cases, it's "retail investors" who hold these bonds, not institutional investors, for a variety of reasons -- this was the case with many of Puerto Rico's bonds that ran into trouble.
Some may show a tighter spread than you'd think, but that's because it's not just up to the dingbats in Chicago, but also the people in Springfield... and even though it's obvious that the Chicago folks aren't really getting much direct help from ole JB, there is an assumption that Illinois will not allow Chicago to explicitly default. Even though the people in Chicago supposedly running the show are inept.
....so how about those gambling winnings, JB?
People in Chicago have been voting for decades to get more services than they pay for. I see 0 reason to believe they will spend decades paying for less services than they receive, which is what it would take to start paying now for the services that were received over the last 30+ years.
Are you predicting this playing out in some way isolated to Chicago and/or Illinois, or do you think it will be part of a larger dollar event as outlined in Ray Dalio's new book?
I haven't read Dalio's book (yet), so here's the deal:
Chicago is going to fall apart before the rest of it does (that is, all the other over-promising from the rest of the U.S.)
Chicago will try to get bailed out by Illinois (hahaha, Illinois can't afford that.)
Chicago and Illinois will try to get bailed out by the federal government... and that's a matter of political timing.
They tried that during the pandemic... and yay! They got some $$, just like all the other states! But boo! That fueled inflation!
Anyway, some states are going to do very poorly, and others will be okay.
Illinois is unlikely to be okay.
https://www.visualcapitalist.com/americas-fastest-growing-states-2025-2050/