Mish Shedlock Comes Out Swinging on: State of Illinois, Public Pensions and Greece
Special Guest: Mike ("Mish") Shedlock, Publisher of the Global Economic Analysis Blog.
An espoused self educated Austrian Economist, Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Read more at http://globaleconomicanalysis.blogspot.com
30 Minute VIDEO
State of Illinois & City of Chicago - Never Ending Financial Obfuscation
From Seven Illinois cities, to the City of Chicago, to the State of Illinois, Public Pensions are bringing the proud 'Land of Lincoln' to its "financial knees"!
Decades of politically expedient l promises and over generous Public Pension concessions to appease powerful public unions have left all levels of government with few financial alternatives. Many are now be forced to consider bankruptcy.
The Fourth Financial Repression Pillar of "Obfuscation" has been the practiced tactic for some time which has camouflaged this cancer. This obfuscation involved many clever accounting games which according to Mish Shedlock:
"Illinois' Pension Plans are funded on average something like 39% and of course that creates a conflict of interest after judges have ruled on Pension Plans. The courts ruled that a bill Governor Rauner signed is unconstitutional and now sends things back to the drawing board. That (the bill) was supposed to save Illinois about $2B per year. Judges were in on it, Actuaries were in on it, the Rating Agencies - everyone was in on it."
"Moody's cut Chicago's rating to junk. The City of Chicago promptly removed Moody's from rating its bonds and instead hired another third party to rate its bonds. This is "rate shop whoring" and that is what I call it! The same process goes on with "actuarial whoring" because no city wants to admit that their pensions are as underfunded as they are!"
"Many of the pensions allow workers to retire at 50 after putting in 20 years of service, or whatever the requirement was. What do they do? They retire, collect their pension and then go to work for another government agencies and accrue benefits for yet another pension! - The whole system is untenable!"
"The taxpayers in Cook County are paying 50% of the tax revenues - not for services - instead it goes towards interest and pension obligations!"
... and it's Steadily Getting Worse!
Soaring State Taxes - Sacrosanct Public Pensions Are Forcing Increased State
Local Property Rax Increases
"To shore up Chicago's Pension System they would have to hike Illinois property taxes by approximately 50%. - My (Mish's) property taxes are already $14K/year!"
City, Local & Town Taxes in America are about Property Taxes. We can expect to see and explosion going forward in property taxes to pay unfunded public pensions.
Could this be a potential Death Knell For Real Estate Prices?
Could this trigger a collapse in 'Tax Free' Muni Bond Values?
Greek Crisis has Come to a head - Public Service Pensions A Major Sticking
"You have to actually wonder if the Greek Government is giving Greeks time to get their money out of the banks - only the dumb money is now left?"
....and much, much more in this fast paced 30 minute Video.