Chicago's credit rating downgraded to junk status

[Peter1469]

Chicago's credit rating downgraded to junk status (http://www.cnbc.com/id/102650351)

Chicago tried to reform its unfunded pension plans, but a court just said the changes were not legal. So, Moodys says that Chicago has a debt problem it likely cannot solve. And downgraded Chicago's credit rating to junk status.


Moody's downgraded Chicago's (http://www.cnbc.com/id/10000553) credit rating down to junk level "Ba1" from "Baa2."


The announcement, which the ratings agency released Tuesday afternoon, cited a recent Illinois court ruling voiding state pension reforms. Moody's said it saw a negative outlook for the city's credit.


Following that May court decision, Moody's said it believes that "the city's options for curbing growth in its own unfunded pension liabilities have narrowed considerably."

[zelmo1234]

Another fine city destroyed by liberalism! They will do the same thing that Detroit did and the people will take pennies on the dollar in there pension funds.

A great union victory!

[Common]

Another fine city destroyed by liberalism! They will do the same thing that Detroit did and the people will take pennies on the dollar in there pension funds.

A great union victory!

Spoken like a true greedy corporate lover, everything working man is bad anything for corporations and big money is a great thing.

Chicagos financial problems are not because of public workers. THEY WORK and pay taxs.

All of you conveniently forget that public workers pay a full half of their pension costs.

[Peter1469]

I am not sure how the city's pension reform plan looked, but it would likely have been better than the results after a bankruptcy.

[Captain Obvious]

Welcome to orogressive America.

Enjoy watching liberal idiocy as the dominos fall.

[exotix]

Wasn't Moodys the one who pronounced the likes of Jamie Dimon the greatest thing evar on the road to the Bush Great Depression ?

[Captain Obvious]

Like I said...

[Captain Obvious]

So, when you hear all these hack liberals talk about how much the ACA is saving (Medicare savings... lol!) and States who refuse to expand are whatever insult they call them, point to this.

These dopes will just point more fingers at conservatives when cities then states start lining up for bankruptcy.

Idiots.

[Polecat]

Pensions = ponzi scheme. Eventually somebody gets hurt.

[Susan B. Anthony]

Detroit here we come!

[Captain Obvious]

Pensions = ponzi scheme. Eventually somebody gets hurt.

Not if they're funded.

It's an elaborate but conceptually simple calculation, time value of money thing which considers what the fund earns and who will be drawing how much over the next 10, 20, 50, etc. years.

Unfunded liabilities means that if everyone stops paying and benefits stop accruing, there's not enough to pay out all of the people who are still drawing accrued benefits.

Social security is essentially a huge unfunded liability.

Fund it and the problem goes away.

[Ethereal]

Spoken like a true greedy corporate lover, everything working man is bad anything for corporations and big money is a great thing.

Chicagos financial problems are not because of public workers. THEY WORK and pay taxs.

All of you conveniently forget that public workers pay a full half of their pension costs.

You cannot absolve Chicago's government unions of the significant role they play in imperiling the municipal government's finances. To do so would be to ignore economic reality. Just because someone is working and paying taxes does not mean they are an economically or even socially wise investment, nor does it mean that they are entitled to other people's money. These governmnent unions have basically captured the political system in Chicago and refuse to allow even modest reforms of their compensation packages or their collective bargaining agreements. Meanwhile, the private sector workers who pay for those compensation packages are tightening their belts. The arrangement is fundamentally unfair to taxpayers, and the quality of service provided by these public sector unions, in education especially, is substandard. Politicians are certainly responsible for making empty promises that ran afoul of economic reality, but people have been informing the government unions of economic reality for decades now, and the truth of the matter is that these unions simply don't care about economic reality or being fair to private sector workers who pay their salaries and benefits. They just want to get paid what they were promised by politicians and everything else be dammed.

[Polecat]

Not if they're funded.

It's an elaborate but conceptually simple calculation, time value of money thing which considers what the fund earns and who will be drawing how much over the next 10, 20, 50, etc. years.

Unfunded liabilities means that if everyone stops paying and benefits stop accruing, there's not enough to pay out all of the people who are still drawing accrued benefits.

Social security is essentially a huge unfunded liability.

Fund it and the problem goes away.

It works just like a ponzi scheme. The money I contributed went to pay already retired folks. I'll get mine back from some strangers' kids. Even the solvent funds disappear if the market says so.

[Captain Obvious]

It works just like a ponzi scheme. The money I contributed went to pay already retired folks. I'll get mine back from some strangers' kids. Even the solvent funds disappear if the market says so.

Social security yes.

In a fully funded (no liability) retirement no. In theory you could close a fully funded retirement account at any point and there would be enough for the retirees to draw from it until the day they die.

[Archer0915]

Another fine city destroyed by liberalism! They will do the same thing that Detroit did and the people will take pennies on the dollar in there pension funds.

A great union victory!

Yes it is a victory! The union leaders go theirs!

[Polecat]

Social security yes.

In a fully funded (no liability) retirement no. In theory you could close a fully funded retirement account at any point and there would be enough for the retirees to draw from it until the day they die.

Is such a thing real? I have never once heard of such an occurrence. I have heard of plenty of pensions disappearing overnight when a company fails or files for protection. Even ones that are subsidiary to a mega corp that is still rock solid.

[Captain Obvious]

Is such a thing real? I have never once heard of such an occurrence. I have heard of plenty of pensions disappearing overnight when a company fails or files for protection. Even ones that are subsidiary to a mega corp that is still rock solid.

When pensions go belly up it's because they're underfunded or the pension assets are seized by some court-order thing or another, not because it was fully funded but estimates (ie: how long you'll live, rate of return, etc.) were way off.

9/11 crashed a bunch of pensions but that was a sentinel event. A lot of pensions went tits up afterward, that's about the time companies began freezing their pensions and started implementing contributory plans.