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[Ripclawe]

http://www.bloomberg.com/news/2013-...cago-rating-amid-crime-pension-liability.html

Mounting pension liabilities have cost Chicago another cut in its credit standing as Moody’s Investors Service reduced the general-obligation debt rating for the nation’s third-largest city by three steps to A3, citing a $36 billion retirement-fund deficit and “unrelenting public safety demands” on the budget.

Moody’s also placed the city’s $7.7 billion in general-obligation bonds under a negative outlook, indicating another cut may be made. The moves follow a review that began in April, when the New York-based rating company said it was reevaluating the credit effects of municipal retirement obligations

Public pensions nationwide are under significant stress following the longest recession since the depression and the financial crisis that punished asset values. The magnitude of the estimated deficit for all plans ranges from $900 billion to more than $4 trillion, depending on the assumptions used.

“Absent significant growth in the city’s operating revenues, escalating pension funding requirements will increasingly strain the city’s operating budget, as pension outlays compete with other spending priorities, including debt service and public safety,” Moody’s analysts said yesterday in the report. They also cited the political obstacles to meaningful retirement system reform at the state level.


Relief Needed

Mayor Rahm Emanuel, in a statement released by his office, said the downgrade “confirms what I have been saying for more than a year. Without comprehensive pension relief from Springfield, municipalities such as Chicago will continue to receive negative reviews from rating agencies.”

State lawmakers went through two special sessions within the past five weeks called by Illinois Governor Pat Quinn, a Democrat like Emanuel, without making any changes.

“I urge our leaders to come together, find common ground, and pass pension relief that will give taxpayers, retirees, residents and rating agencies confidence in our city’s finances and our city’s future,” said Emanuel, 53, a former investment banker, congressman and White House chief of staff to President Barack Obama, a Chicago resident.

The Emanuel administration has warned that retirement contributions will cost about $1.2 billion within four years if the state legislature doesn’t restructure the system, up from $476 million last year.

Moody’s analysts Rachel Cortez and Thomas Aaron said the city’s four pensions have reported a $19 billion collective deficit -- about half of what they figure it to be. Chicago’s new rating is four steps above noninvestment, or junk, grade.

Crime Costs

The costs of controlling crime in Chicago have added to the city’s financial stress. After a surge in homicides last year, the city of about 2.7 million residents cut its homicide rate by 29 percent in the first half of this year, in part by paying 400 officers overtime to police crime-ridden neighborhoods.

Moody’s had rated Chicago general-obligation bonds at Aa3, or fourth highest. The company also cut its grades on the city’s securities tied to sales-tax revenue and water and sewer debt, to A3 from Aa3 and to A1 from Aa2, respectively, affecting almost $3.9 billion in related debt.

Chicago faced a budget deficit of $298 million before the approval in November of the 2013 spending plan, which would eliminate the projected gap without raising fees or taxes. Chicago Public Schools has said it intends to close 50 schools as part of a plan to eliminate a $1 billion shortfall. A group of parents challenged the move this week, seeking to delay it for at least a year, if not permanently.

The city and Illinois are both coping with the lack of a retirement-system solution. After the legislature adjourned in Springfield, the capital, May 31 without passing a pension fix, Fitch dropped the state to A-, its fourth-lowest investment grade. Three days later Moody’s cut it to A3, the equivalent rank. Standard & Poor’s put the state at the same level.

A general-obligation Chicago bond maturing in January 2022 last traded July 12 at an average yield of about 3.4 percent, data compiled by Bloomberg show. That was about 1.95 percentage points more than top-rated municipal debt with a similar maturity, the data show. By comparison, the securities traded at an average of 2.38 percent on April 1, when the spread to AAAs was 1.49 percentage points.

 

[Bulbo Urethral Baggins]

These failing cities have one common denominator.
Nobody wants to say it so I will.
Run by Democrats.

 

[Superblatt]

These failing cities have one common denominator.
Nobody wants to say it so I will.
Run by Democrats.

Chicago is far from a failing city. The whole state has pension issues, which the Republicans refuse to negotiate on.

 

[Smaug]

These failing cities have one common denominator.
Nobody wants to say it so I will.
Run by Democrats.

.

 

[SnakeXs]

These failing cities have one common denominator.
Nobody wants to say it so I will.
Run by Democrats.

These "failing" Democrat run cities have something in common.

Their money is usually taken from them and sent to Republican run states and cities.

 

[Junior Mint]

These failing cities have one common denominator.
Nobody wants to say it so I will.
Run by Democrats.

Oh boy

 

[Amir0x]

These failing cities have one common denominator.
Nobody wants to say it so I will.
Run by Democrats.

D..do you want to go there?

Or do we want to compare the comparative health of states and see which ones are predominately blue and which ones are predominately red?

Hint: Almost all of the states in the bottom 10 are Republican states :O

Which states also drain the most tax revenue while giving back the least? I'll wait here for you to return with the answer for my amusement.

 

[Genesis Knight]

D..do you want to go there?

Or do we want to compare the comparative health of states and see which ones are predominately blue and which ones are predominately red?

Hint: Almost all of the states in the bottom 10 are Republican states :O

Which states also drain the most tax revenue while giving back the least? I'll wait here for you to return with the answer for my amusement.

I thought he was talking about cities.

 

[entremet]

These failing cities have one common denominator.
Nobody wants to say it so I will.
Run by Democrats.

Chicago probably also generates more revenue than it gets back from the state many times fold. Cities have been getting reamed for years by state governments.

 

[Bulbo Urethral Baggins]

D..do you want to go there?

Or do we want to compare the comparative health of states and see which ones are predominately blue and which ones are predominately red?

Hint: Almost all of the states in the bottom 10 are Republican states :O

Which states also drain the most tax revenue while giving back the least? I'll wait here for you to return with the answer for my amusement.

Who said anything about States. Lets stay focused.

Chicago probably also generates more revenue than it gets back from the state many times fold. Cities have been getting reamed for years by state governments.

I can't comment without seeing some stats but I don't doubt that is true. However, that doesn't really address the corruption, crime and fiscal irresponsibility found in many big cities.

 

[Escape Goat]

Sell off the Cubs. That should take care of a few thousand.

 

[entremet]

Who said anything about States. Lets stay focused.


I can't comment without seeing some stats but I don't doubt that is true. However, that doesn't really address the corruption, crime and fiscal irresponsibility found in many big cities.

Republicans also need to run better urban campaigns. Giulani won in NYC and helped revitalize the city, but he ran as business friendly democrat essentially. He's pro-choice, anti gun. I feel the moderates have lost their voice in the Republican party and need to tailor their campaigns to urban voters.

 

[oneils]

These failing cities have one common denominator.
Nobody wants to say it so I will.
Run by Democrats.

http://www.governing.com/gov-data/municipal-cities-counties-bankruptcies-and-defaults.html

According to this data, only one of every ~1,700 general purpose local governments in the US filed for bankruptcy in the last five years. Most of those filings are for utility districts.

This site has a list of actual city/locality filings since 2010. If you want you could see if they were all run by democrats. If they were, would that really point to a correlation or causal relationship?

 

[East Lake]

Who said anything about States. Lets stay focused.

Aren't state governors are involved with city finances? Like Michigan republican Rick Snyder or Florida's Rick Scott. Also most large cities are run by Democrats even in the south, so saying it's Democrats is a bit shortsighted when you haven't provided evidence for the supposed fiscal ability of Republican governors (correction :mayors). Nor do you have an independent analysis for Chicago's long term viability or other cities numbers, which is needed. Moody's and other ratings agencies are not gospel. Their ratings can either be wrong (US rating during financial crisis) or they can be paid off by large institutions that want good ratings without the sound analysis.

"Lord help our fucking scam . . . this has to be the stupidest place I have worked at," writes one Standard & Poor's executive. "As you know, I had difficulties explaining 'HOW' we got to those numbers since there is no science behind it," confesses a high-ranking S&P analyst. "If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value," complains another senior S&P man. "Let's hope we are all wealthy and retired by the time this house of card falters," ruminates one more.

http://www.rollingstone.com/politics/news/the-last-mystery-of-the-financial-crisis-20130619

 

[entremet]

Aren't state governors are involved with city finances? Like Michigan republican Rick Snyder or Florida's Rick Scott. Also most large cities are run by Democrats even in the south, so saying it's Democrats is a bit shortsighted when you haven't provided evidence for the supposed fiscal ability of Republican governors. Nor do you have an independent analysis for Chicago's long term viability or other cities numbers, which is needed. Moody's and other ratings agencies are not gospel. Their ratings can either be wrong (US rating during financial crisis) or they can be paid off by large institutions that want good ratings without the sound analysis.

http://www.rollingstone.com/politics/news/the-last-mystery-of-the-financial-crisis-20130619

Michael Lewis wrote in The Big Short that Moody's credit raters are the dumbest in Wall Street. They're made of the dregs that cannot cut in the investment banks.

 

[Bitmap Frogs]

As long as republican's don't have a rat's chance at the major cities, they'll keep raping their revenue.

Spreading misery for political gain, fuck yeah the american way..

 

[FLEABttn]

Wouldn't Moody's potentially have a monied interest in pension and union busting?