12 Comments - Civic Sam - Friday, Oct 16, 15 @ 9:06 am: Chicago is fast becoming a good city to move out of. Illinois too. The system is broken, both entities are becoming ungovernable, yet those in power continue to play their ruinous games. We tell ourselves the situation is salvageable, we’ll find a way to muddle on through, but the reality is that no gives damn for anything other than but their own financial/ideological interest - and that’s a recipe for disaster. It’s heartbreaking to say this, but I see no one the room to step up and bring some sense to what we are going through now. I have done my best to be civilized and smart. Can anyone who reads this paint a realistic and less gloomy picture? Who knows, maybe I just got up this morning on the wrong side of the bed. - Wordslinger - Friday, Oct 16, 15 @ 9:12 am: Local governments all over the country bought the snake oil on SWAPS. The only sure winner was the banks peddling them. - 47th Ward - Friday, Oct 16, 15 @ 9:22 am: Remember this when the city insists it must own a Chicago casino. They like to gamble, they’re just unfamiliar with winning. - ChicagoVinny - Friday, Oct 16, 15 @ 9:35 am: Is there something wrong with cleaning up these bad deals? Short of buying a time machine what other options were there? I don’t get the lumping of the city with the state’s dysfunction on this particular item - if you want to do that, plenty of other areas to pick *cough* CPS. - Carhartt Representative - Friday, Oct 16, 15 @ 9:40 am: The city should have done what other cities like LA did and pushed the banks to renegotiate the toxic swaps. - Hokey Horner - Friday, Oct 16, 15 @ 9:43 am: “Who knows, maybe I just got up this morning on the wrong side of the bed.” Sounds like you got up on the realistic side of the bed. I’d be willing to trade the whole lot of Illinois’ politicians for a fair-minded judge willing to split the demands of both halves right down the middle and call it a day. What the state needs, is the “Grand Bargain” floated here, wherein a progressive income tax is used to greatly decrease property taxes and moderate the state sales tax - but the sum total of all taxes increases by about ten percent. As part of that deal, the Dems would have to take some hits on workman’s comp. and collective bargaining. The excess dollars would be used solely to pay down the debt load. Once the financials are stabilized, bonds would be floated for necessary infrastructure repair. Hopefully, this plan won’t drive out the big earners, and the state would eventually return to solvency. Unless something like this happens, Illinois in general, and Chicago in particular, are toast. - DuPage Dave - Friday, Oct 16, 15 @ 10:02 am: Governments should not bet, period. Make good solid investments and take what comes. But don’t bet public funds at the Wall Street casino. They can never justify making millions of dollars in payments for their bad decisions. - Judgment Day (on the road) - Friday, Oct 16, 15 @ 10:18 am: “The city should have done what other cities like LA did and pushed the banks to renegotiate the toxic swaps.” ———— When you are dealing with these folks, make no mistake, you are dealing with sharks. It’s all about the money, and when you play this game, understand, they know the game (because they set the rules) better than you do. You go in making that assumption. But there are ways to even things out - but you have to ‘change’ the rules. The blunt way of doing it is to put the ’swaps’ themselves at risk - and that means the “Bankruptcy” work. I know, we can’t do that here in Illinois. But that’s how you bring the sharks to the table with more reasonable terms, because the one thing the sharks don’t want is to have their financial engineering exposed to the light of day in federal bankruptcy court. Bottom line: You never tell the sharks what you won’t do. - Robert the Bruce - Friday, Oct 16, 15 @ 10:53 am: Not sure I buy the line of argument that the city (and other municipalities) would’ve been fine overall if interest rates hadn’t gone down. If interest rates were high instead of low, cities would be paying more on their new debt issues. That’s likely part of the reason they entered into these interest rate bets in the first place(?) - dupage dan - Friday, Oct 16, 15 @ 11:31 am: Um, if interest rates were higher, perhaps the city wouldn’t be in such a mess with the pension funds. Granted, there were many mistakes made, including shorting the pensions. But those funds had been historically shorted since, most often, the economy grew enough to make up the difference. And, historically, interest rates hadn’t been suppressed as they have for this length of time. Now, the city has to borrow money that perhaps it wouldn’t have had to had the interest rates been allowed to return to historical levels. - Arthur Andersen - Friday, Oct 16, 15 @ 2:21 pm: DD, the pensions have made plenty of money in this low-interest rate environment. Don’t make a false correlation between either high “growth” and/or rising rates and high pension returns. In fact, one of the hardest times to generate strong returns is in a rising interest rate environment. Strongly agree with those who say that the SWAPS should have been renegotiated. Lord, one of the firms that got well on this deal couldn’t have gotten started without public business, and a lot of it. Shoulda been time to return the favor. - Harry - Friday, Oct 16, 15 @ 3:35 pm: What makes you think Chicago didn’t work to renegotiate the terms? What do you think this means: “Chicago paid less than mark-to-market valuations”, said Molly Poppe, a city spokeswoman. Sorry, comments for this post are now closed.