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ILLINOIS: failing "Like a Banana Republic"

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ILLINOIS: failing "Like a Banana Republic"




Illinois careens into financial meltdown – and not even the lottery is safe

By Brooke Singman Published June 20, 2017



Illinois Lottery

Illinois is grappling with a full-fledged financial crisis and not even the lottery is safe – with Republican Gov. Bruce Rauner warning the state is entering "banana republic" territory.

Facing billions in unpaid bills and pension obligations, the state is hitting a cash crunch that is rare even by Illinois standards.

A top financial official just warned 100 percent of the state's monthly revenue will be eaten up by court-ordered payments. Rauner is calling a special session of the Democrat-led General Assembly in a bid to pass what he hopes will be the first full budget package in almost three years.

And Illinois will – literally – lose the lottery if the budget fails.

The state lotto requires a payment from the legislature each year. The current appropriation expires June 30, meaning no authority to pay prizes. In anticipation of a budget deadlock, the state already is planning to halt Powerball and Mega Millions sales.

“It is disappointing that the legislature’s inability to pass a budget has led to this development and will result in Illinois lottery players being denied the opportunity to play these popular games,” Illinois Lottery Acting Director Greg Smith told Fox News.

“We’re like a banana republic,” Rauner said earlier this month, after the General Assembly failed, yet again, to pass a budget package by the regular session deadline. “We can’t manage our money.”

The governor has called for a special session starting Wednesday. The state so far is operating on a series of stopgap spending packages.

But the problems are years in the making, caused in large in part by the state’s poorly funded pension system— which led Moody’s Investors Services to downgrade the credit rating to the lowest of any state. The state currently has $130 billion in unfunded pension obligations, and a backlog of unpaid bills worth $13 billion.


> http://www.foxnews.com/politics/2017/06/20/illinois-careens-into-financial-meltdown-and-not-even-lottery-is-safe.html

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Illinois Bonds - An opportunity, or pure Junk ?


Illinois Bonds : spread over AAA



/ 1 /

Illinois Bonds an Opportunity for 'Bold' Investors, Citi Says - Bloomberg

May 24, 2017 - Illinois's nearly two-year budget impasse has created a buying opportunity for municipal-bond investors willing to bear the risks, according to ...


/ 2 /

Will Illinois be the first junk-bond state? - Finance News - Crain's ...


Apr 21, 2017 - "It's hard to get on board and say that Illinois is a buy for anyone besides ... about $20 billion of municipal debt, including some Illinois holdings.


/ 3 /

Illinois' bonds, near junk status, are 'no place for an individual investor ...


Jun 9, 2017 - Duane McAllister, manager of Baird Core Intermediate Municipal Bond Fund, said large investors are becoming more reluctant to buy Illinois ...

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Illinois is on the fast track to junk by the end of June

Financial Times-16 Jun 2017
Last week, Illinois GO bonds traded at a record 335 basis points over the ... and some state contributions to the city of Chicago's pension funds.
Illinois on the Verge of Bankruptcy
theTrumpet.com-19 Jun 2017
For 700 days, the state of Illinois has operated without a complete and balanced budget, and things are starting to unravel. Bills are continuing ...

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Puerto Rico's Bankruptcy: Template For Other Troubled Cities

Forbes-22 May 2017

The Illinois Policy Institute estimates $203 billion total debt for state and local ...

. . .

Puerto Rico will soon become a legal catfight. It will be a lulu: General obligation bondholders versus sales tax revenue (Cofina) bondholders; AMBAC versus MBIA versus Assured Guaranty. This brawl won’t be a heavy weight fight. It will be a cage match because the hedge funds are vicious, wily beasts.

Even if you don’t invest in municipal bonds, as a taxpayer there are multiple lessons to be learned. First off, remember when we were taught that a state or territory cannot file for bankruptcy? Until it does. Puerto Rico, with help from Congress, filed for Title III, which is an in-court restructuring mechanism modeled after Chapter 9. No matter what you call it, it’s still bankruptcy.

I project this bankruptcy will become the template for all the cities, counties and a few states whose budgets, unfunded pension and health care liabilities are out of control. As a matter of fact, many of us in Bondland have a new word: Illi-Rico.


That’s right. Illinois, the state that is $14 billion in arrears paying its bills, two years without a budget, with under funded pensions like you wouldn’t believe. The Illinois Policy Institute estimates $203 billion total debt for state and local retirement benefits and oh—as the Institute points out, “the $203 billion includes only the unfunded liabilities of the state’s five retirement systems, which ignores bonds issued to tide over the pension funds and debt taken on to provide retired government workers with generous health insurance.” And this doesn’t include all the bonds outstanding that the poor taxpayers are responsible for.

Certainly Illinois, Alaska, Hawaii, New Jersey, Connecticut et al are not carbon copies of Puerto Rico. Yet their crushing debt and liabilities look eerily similar.

. . .

Load up with airport revenue bonds from major hubs, the senior liens only. Names like Atlanta International Airport, Los Angeles, Dallas/Ft. Worth, JFK, San Francisco, Denver, Charlotte Douglas, McCarran International and Miami, to name a few. Stay away from the majority of small regionals. Invest in issues whose revenue stream is easily understood and underfunded pensions are not a consideration.

Keep it simple, keep it safe. Stay on top of the Puerto Rico news. It will matter.

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My son is due to attend the University of Illinois in January on an exchange programme.

Was nervous enough with him going Stateside without this in the pipeline.

If you have any insight into how this could affect that would be grateful for any info.

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My son is due to attend the University of Illinois in January on an exchange programme.

Was nervous enough with him going Stateside without this in the pipeline.

If you have any insight into how this could affect that would be grateful for any info.


Which City? Is it Evanston?


Chicago has some real crime issues now, I think.

Not sure, but Evanston could be better

But If the police forces get less funding in a debt crisis, the crime rate could go higher


Bankruptcy is not the end of the world.

In Detroit, it allowed the city to elect the first White mayor, and begin to address some of its real problems.

Jobs are now coming back to Detroit, and I believe they are building a (much needed?) mass transit system


(maybe you can get him to look at Philadelphia, where the trends are more positive, and there are about 30 universities):


Philly Rental boom?


With a strong surge in demand from 2006-2013, and continuing, Philly rents are now surging:




What’s the average rent, and where are the best places to rent in Philadelphia? The average rent in Philadelphia is around $1,556.

Unlike with most major cities, the city itself actually has a cheaper average rent, at $1,350 per month.

It’s often more affordable to rent within the city, though a few neighborhoods have much higher average rent. In Philadelphia, the central districts cost the most money, including:

  • University City ($1,770)
  • Center City West ($1,680)
  • Southwest Center City ($1,610)
  • Logan Square ($1,850).

Nearby neighborhoods like North Philadelphia West ($680) and Spruce Hill ($950) are considerably cheaper. This wide variance between neighborhoods makes it hard to predict what sorts of prices you’ll pay when renting in Philadelphia; what may be the price of a small loft in one area may be a similar price to renting a townhouse in another.


(note about data may be 1-2 years out of date)


> https://www.jumpshell.com/posts/average-rent-in-philadelphia



According to Zumper, rents for 1BR apartment now averages $1,380 per Month, that's the #15 city in the USA


Top 25 + Philly, at #15 - At June 2017


#02 : NewYorkCity, NY : 1BR: $2,900 - 10.8% Yoy / 2BR: $3,400 - 7.90% Yoy

#04 : Boston, MA------ : 1BR: $2,200 - 3.50% Yoy / 2BR: $2,600 - 0.80% Yoy

#05 : Washington, DC-: 1BR: $2,160 - 2.70% Yoy / 2BR: $3,190 +1.30% Yoy

#21 : Baltimore, MD----: 1BR: $1,270 +5.80% Yoy / 2BR: $1,400 - 0.70% Yoy

mean:- 4 East C. cities : 1BR: $2,133 - 2.80% Yoy / 2BR: $2,648 - 2.03% Yoy

#15 : Philadelphia, PA: 1BR: $1,380 +7.80% Yoy / 2BR: $1,570 +9.00% Yoy

Pct. : Philly as % Mean : 1BR : 64.7 % -------------- / 2BR : 59.3 % ----------------


The above figures are up-to-date, and show that Rental growth in Philly is one of the highest,

and the city still has rents at a healthy discount to over East Coast competitors, thought the gap is narrowing now.




> https://www.zumper.com/blog/2017/05/zumper-national-rent-report-june-2017/


> #12 in the US, in Cost of Living: https://www.expatistan.com/cost-of-living/philadelphia

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Thanks DrB, very good of you to reply

The university is in Champaign IL , that's his only option Stateside, however you have set my mind at ease


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Thanks DrB, very good of you to reply

The university is in Champaign IL , that's his only option Stateside, however you have set my mind at ease



Yeah. Right. I recall now.

A very different place than Chicago, which used to be a great middle class city, under the Daly family (as mayors);

now ruined by Rahm Emmaneul, colonel from the Israeli army.


Campaign is a university town (i believe), eager for those foreign students (probably)


The kind of stress issues that are hitting PR, and may hit IL, will likely must effect urban areas

(I will check these links out tomorrow - it is late here now):



Villain of housing crash makes comeback...


An average of 14 families lose homes every day to foreclosure in Puerto Rico, more than double the rate a decade ago as the island faces a real-estate crash worse than the one that sparked the Great Recession on the U.S. mainland. Families across Puerto Rico are moving in with relatives, becoming homeless or simply fleeing to the U.S. mainland with destroyed credit records as the island's government struggles to restructure a portion of its $73 billion public debt and help the economy emerge from a decade-long recession.

"It's the crisis no one is talking about," said Ricardo Ramos, a professor at the Legal Assistance Clinic of the University of Puerto Rico. "This has so, so many consequences."

In this U.S. territory of 3.4 million people, local courts oversaw foreclosures on nearly 33,000 homes from 2009 to 2016, according to government statistics. A record 5,424 homes were foreclosed last year, up 130 percent from nearly a decade ago, when the government first began tracking those numbers.

. . .

It has taken a long time for ARMs to rebound, but that's the situation today. "They're about 5 percent of the market right now," said United Wholesale's Ishbia, "and we expect it to grow to 17 percent in two years." That would still be only third of its former size, according to Black Knight Financial Services, which provides data and analytics to the real estate industry.

The market also appears to be healthier this go around. Federal government-sponsored agencies such as Fannie Mae (the Federal National Mortgage Association), Freddie Mac (the Federal Home Loan Mortgage Corp.) and Ginnie Mae (the Government National Mortgage Association) are now offering ARMs. Also, the U.S. Consumer Financial Protection Bureau is placing tighter restrictions on the ARM market and is educating consumers on how best to use these loans.

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Champaign IL is much safer than Chicago, IL.

But you may want to warn your son to be careful where he goes, and when he goes out


- the place is more dangerous than the UK


CHAMPAIGN, Ill. (WCIA) -- 2017 isn't even half over and there have been 20-shootings in the city since the start of the year.

During the same time period in 2014, there were seven. It's according to FOIA data from the Champaign Police Department. With summer just beginning, data shows more incidents in warmer months.

Until this point in 2016, there were 16-shootings and two deaths. In 2015, there were 24-shootings and one death. There were 22-shootings in all of 2014.

"That's just terrible. I mean, I don't even have words for that. That's just terrible, I mean."

Tommie Pettigrew knows first hand just how devastating the shootings have been in Champaign. Darien Carter, who he knew as Buster...died two weeks ago. He was shot on Eureka Street.

"It makes you feel sad to know that somebody younger than you or somebody who grew up with you got killed by guns. We all should be out here, trying to be out here with your family. I've got four kids, three boys, one girl. I just want to live and be able to see my grandkids grow up."


> http://www.illinoishomepage.net/news/local-news/some-scared-with-increase-in-shootings/741493707

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Thanks , he did his entire secondary education at the American High school in Belgium so is savvy with the US mindset but Belgium isn't the US by any means . It will be from Jan to May 2018 so will miss the summer madness that seems to affect many.

My youngest is off to Heriot Watt in Edinburgh in September so I may be suffering from early empty nest syndrome .

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This $5 Trillion Time Bomb Will Devastate Americans
Aug 9, 2017

Authored by Nick Giambruno via InternationalMan.com,

Over 3,000 millionaires have fled Chicago in recent months.

This is the largest outflow of wealthy people from any US city right now. It’s also one of the largest outflows of wealthy people in the world.


But it’s not just millionaires… Every five minutes someone leaves Illinois.

In a recent poll, 47% of people in Illinois said they want to leave the state. Over the last decade, more than half a million people have done just that.

This is the largest outflow of people from any state in the country.

The people who leave are generally better educated, more skilled, and earn more money than those who stay. Entire towns of affluent Illinois refugees have sprouted up in Florida, Arizona, and other states.

Illinois is bleeding productive people.

This is a major warning sign.

Wealthy people are often the first to leave a bad situation. They have the means to simply get up and go. And when they do, they take their money and their businesses with them.

This hurts the local property market and the rest of the local economy.

Many of Illinois’ millionaires own businesses that employ large numbers of people. As they leave, there are fewer people and businesses left to shoulder the state’s enormous and growing financial burdens.

Many of these people are leaving for one simple reason: rising taxes.

Illinois’ leftist tax-and-spend politicians are continuing to increase all sorts of taxes, which were already high in the first place.

The state just passed a 32% income tax hike.

Rising taxes are pushing more and more productive people to make the chicken run… and at the worst possible moment for the state’s coffers.

Illinois is the most financially distressed state in the US. Every month, it spends $600 million more than it takes in. It’s now $15 billion behind on its bills and counting.

Illinois is about to become America’s first failed state.

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Illinois Considers $107 Billion Dollar Gamble

by IWB ·

Illinois pension gamble

From Birch Gold Group

Illinois is considering a last-ditch attempt at saving its public pension plan. We discussed before how the Midwestern state is the epicenter of the U.S. public pension crisis. They’re now moving toward a risky gamble as lawmakers debate whether or not to borrow $107 billion with the intention of investing it in the financial markets.

To say they’re in a tricky situation would be an understatement. The “Land of Lincoln” is on the brink of bankruptcy as its five retirement systems have been in the red for years due to lackluster contributions. Add to this the fact that the state’s constitution has made it illegal to reduce worker retirement benefits, and the $129 billion debt they find themselves under doesn’t look likely to get better any time soon.

A Desperate Attempt

The massive tax hikes they made in July last year, which saw a 32% increase on state income and a 33% increase on state corporate tax, did little to remedy the situation

The fact that they may now resort to using debt to raise money to invest in the stock market reeks of desperation and can be considered foolhardy.

In a recent telephone interview, Robert Martwick, a Democratic member of the Illinois House of Representatives, revealed why the state looks set to take part in the biggest ever debt sale in the municipal market:

We’re in a situation in Illinois where our pension debt is just crushing…

When you have the largest pension debt in the world, you probably ought to be thinking big.

According to Martwick, the State Universities Annuitants Association is proposing the idea to the legislature’s personnel and pensions committee. They believe if Illinois issue the bonds this year, it will save the state $103 billion by 2045 and save their retirement system from going bust.

Will Illinois Be the First State Downgraded to “Junk Status”?

Illinois is already deep in debt. According to Moody’s Investors Service, in July its general-obligation bonds stood at $26.3 billion, while already having $8 billion in unpaid bills. If things keep going as they are, the state is in danger of becoming the first U.S. state to have its credit rating downgraded to “junk” status.

Adding to these fears were the opinions of financial analysts like Richard Ciccarone, the president of Merritt Research Services LLC in Chicago, which specializes in analyzing municipal finance. He believes the move won’t go down well in the bond market, saying, “It absolutely increases default risk. There’s no cushion.”

The stock market appears to be grossly overvalued right now, and Illinois could “lose everything” if the market crashed after following through on their plan.

Protect Your Financial Future

The situation in Illinois goes to show you can’t depend on the government to look after your financial future. This could set off a domino effect with other states in debt who are likely to resort to the same desperate measure.

> http://investmentwatchblog.com/illinois-considers-107-billion-dollar-gamble/

Crazy & reckless.

They should buy straddles first

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Illinois' Record $47 Billion Loss Ignored By Mainstream Media. Why?

The State of Illinois recently reported its biggest annual financial loss ever. Instead of clear reporting on that, we’ve seen perhaps the most glaring example yet of how the state’s finances can be misunderstood, misreported and intentionally distorted.

The loss of $47 billion for the state’s 2018 fiscal year, shown in audited financial statements released late last month, is an astonishing number. For some perspective, that’s about $7 billion more than the entire, current annual budget.

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