Monday, August 29, 2016
Chicago and Illinois pension mess, a descent into insolvency and chaos
Citizens of the developed world are watching Venezuela's descent into financial and political chaos mostly, it seems, with amused detachment, safe in the assumption that we'll never end up hunting our cats and dogs for food.
Why should a city as apparently affluent as Chicago have such a nightmarish crime situation? Because it's not really that affluent. Like most of the rest of the formerly-rich world, Chicago ran out of money years ago and has been more-or-less secretly borrowing to cover the shortfall. Its public sector pensions, for instance, pay retired workers far more than the city can afford - but are legally uncuttable according to a recent court ruling.
Now that this mess has become impossible to hide, new borrowing is getting harder and tax revenues aren't sufficient to maintain previous levels of health, safety and livability. The result: a steady march down the affluence ladder towards a living standard that would be familiar to people in Brazil or India.
What does this mean? Over time - and not all that much time - life will get a lot harder for millions of people who are unprepared for it. Crime will metastasize, at-risk kids will go straight from school to prison, roads won't be maintained, garbage won't be picked up. It will, in short, become extremely unpleasant for the developed world's former middle class. Then will come the civil unrest, and just like that your neighborhood looks like those Argentina videos.
So debt and unfunded liabilities keep expanding until the bill comes due. Then look out, cats and dogs.
I have been warning about this for years in my writing on my blog. It doesn't matter what the Illinois Supreme court says. If the money does not exist than the obligations will not be paid. Meanwhile the city will try and extract more and more money out of the stoops who are dumb enough to stay within the city limits. Those that can leave will leave and the burden will increase on those that remain until the whole thing comes crashing down.
It is funny to watch the vested interest like politicians, mainstream media, the public sector unions, and the various cronies and hangerons and other scum try and bleed average working people dry. They all know that the final outcome means bankruptcy, suffering, and social upheaval. However they do not care, they want to pick your bones clean until the day the whole rotten edifice collapses.
That to my mind is pure evil and makes all of these entrenched interests my enemy. When this things ends up unraveling it will be interesting to watch how the average person reacts. I think there will be a whole lot of acting out by a lot of desperate and pissed off people.