As our nations leaders vote on allowing Puerto Rico to declare BK, saw a commercial last night asking the public to call their political leaders to vote against allowing this to happen and the reason they used..."If Puerto Rico is allowed to declare BK, what's next....the State of Illinois?"

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"That's what the internet is for. Slandering others anonymously." Banky
“Been that way since one monkey looked at the sun and told the other monkey ‘He said for you to give me your fuckin’ share.’”

hopefully

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Reality is your friend, not your enemy. -- Seacrest

The only entities that cannot file bankruptcy are state/territory sovereigns. Just like companies and cities, they need to be able to work out situations in a bankruptcy court. Those commercials are being run by the bond insurers who do not want to make good on their debt guarantees.

Effectively, you are putting IL and PR in debtors prison. They can never make good on their debts and pension liabilities. Detroit is an excellent example on how federal b/k courts can work out the situation on union contracts, pensions, post retirement healthcare, staffing, and debt issues. These courts are uniquely equipped to deal with unsustainable financial situations.

It is not a bailout to go to b/k court. It merely forces all stakeholders to take a haircut in a situation where the entity can never make good on its promises.

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Hawaii (fuck) You

Well , I assumed it all really meant is a re-organization and as you said, here is 80 cents on your dollar, want to keep doing business with the state?

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"That's what the internet is for. Slandering others anonymously." Banky
“Been that way since one monkey looked at the sun and told the other monkey ‘He said for you to give me your fuckin’ share.’”

I have read the audited financials of Chicago and Illinois several times. The problems are beyond belief. I think Chicago will be the first domino to fall, and it cannot file b/k in federal courts without Springfield approval (weird quirk in Federalism). The unions are scared to death of federal b/k court after what happened in Detroit. While Michigan has the same pension guarantee rule as Illinois written into their Constitution, federal courts do not have to abide by it. As you know, the Illinois Supreme Court has ruled out all options for reducing unsustainable pension promises.

Once Chicago needs to file b/k, it is going to be an ugly fight. They can do so in state b/k courts, but those won't be able to relieve it of the pension liabilities.

At last check, Illinois had around $35B in debt and over $100B in pension liabilities. This is against around $32B-ish in annual revenues. The larger problem is that the population is not growing, and the state already has high sales and property taxes. It's corporate income tax is also quite high. The individual income tax is relatively competitive, but we all recognize that will probably have to go up.

As much as I despise many things about California's high taxes, Governor Brown took very strong actions in the downturn and corrected many of the structural problems in that state. Unfortunately Quinn (now Rauner) and the other leaders have not made the tough decisions in Illinois.

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Hawaii (fuck) You

It would seem not quite all ... my understanding is ol' Bruce apparently doesn't, for one.

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Power is always in the hands of the masses of men. What oppresses the masses is their own ignorance, their own short-sighted selfishness.
- Henry George

this is horseshit. I'm moving to pleasant prairie. Wisconsin ought to pay for a fucking high speed rail line to downtown Chicago and O'Hare.

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Reality is your friend, not your enemy. -- Seacrest

That idiot Walker won't pay for the things that made Wisconsin attractive...like higher education or other infrastructure and the state is lagging well, well behind in the "recovery", but the state suddenly will sign on to one of Obama's plans?!?

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There are only two examples of infinity: The universe and human stupidity and I'm not sure about the universe.

Rauner doesn't have to make any decision. There are Democratic supermajorities in both the House and the Senate, so Madigan and Cullerton can pass any veto-proof tax hike they want. They just don't want to because they know there would be tremendous backlash from voters (and an even faster exodus than what has been occurring).

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They should just get on with it and pass a 100% income tax on the wealthiest 5%, with credits for belonging to any special interest group or protected class which predominantly votes Democratic such as unions, trangendered people, minorities, etc. And of course, legislators or those working for a legislator are exempt.

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"When people want their version of the truth, they go find it, no matter how baseless their beliefs." -- Ken Rosenthal

The last thing I am going to do is the blame game. There is no reason for Madigan (who I despise) to stick his neck out if Rauner is not going to stick out his. We have this same finger pointing in Washington.

The pension problem cannot be fixed with legislation. The courts have already ruled on that. Now, we need to fund this monster instead of kicking the can down the road. There needs to be a ground up review of spending priorities (please give us zero base budgeting). They need to find real savings. In tandem with that, they need to find new revenue sources. With a $10B backlog of bills and massive pension deficit, the state needs more revenue.

I am on board with Rauner's business friendly agenda. But right to work laws are never going to fly in Illinois, so don't even put that in play.

As I have said countless times, we as a society have to decide the rightful role of government and then decide how to pay for it. The current mindset is for Republicans to want tax decreases, and Democrats to want spending increases. But neither side really has a plan to pay for it.

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Hawaii (fuck) You

The Federal income tax was 94% in 1944. It was still 70% when Reagan entered office. In 1944, that rate applied to income (in today's money) of $2.7M or $200k back then.

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Hawaii (fuck) You

I believe Rauner's plan all along was to have problematic cities or the state declare bankruptcy

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O judgment! Thou art fled to brutish beasts,
And men have lost their reason.

Illinois is not a fucking colony.

Tried to catch the Trump interview thing on Fox News. Don't usually watch the channel; by the time I remember the interview was on and found the damn channel, interview was over?

Anyhow, post-interview, caught one of the spots BigFan mentioned, looks like it's sponsored by this group:

https://sunlightfoundation.com/blog/201 ... debt-bill/


Strange splits among supporters. Paul Ryan supports the bill to allow PR (and, obviously, eventually New Jersey/Illinois/et al) to restructure their debt in Fed BR Ct. Other Repubs are against it. Bond-holders on Wall St seem to be behind the effort to keep states from hitting BR court.

Rauner in Springfield has been saying BR is the only way forward since before he was elected. If we end up with a President who never met a BR proceeding he didn't like, floodgates will open and all the states/municipalities will be running to BR court to restructure their debt obligations.

Hillary would probably veto any such bill; being bought and paid for by Goldman Sachs. Trump is strangely agnostic about Wall Street. Doesn't seem to care what they do, one way or the other. As far as I've noticed.

CHUY

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As Dennis explained it I see BK court as the only option. Nothing less than that forced "haircut" by all will do. And as you all are well aware on their own the pols, unions, general stakeholders and the voter with their own priorities will ever agree on what needs to be done.

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Elections have consequences.

Only option seeing as that all the other options are either suicide that still wouldn't work (raise all taxes/fees etc to astronomical levels) or simply wouldn't/didn't make it past the courts.

The Sun is setting.

in case you missed it, first live test was a couple of days ago.

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"That's what the internet is for. Slandering others anonymously." Banky
“Been that way since one monkey looked at the sun and told the other monkey ‘He said for you to give me your fuckin’ share.’”

Cool thing about these pie-in-the-sky tech projects is they tend to create / throw off, en passant, a lot of incidental
inventions/developments that survive long after the original kooky idea is forgotten.

I know that in the 60s/70s, many of the family run food purveyors acted as their own informal finance companies. Old man Sam Rosen extended my dad three or four years of zero-interest financing on bread in the 60s when he opened his place. When I was working summers in the late 70s, we were paying COD most weekdays and adding $5/day towards reducing the balance. The old man was dead by then, but the family was happy to take the profits once the tax rate came down to something reasonable.

But the leftist idea of "you don't need to make more than $X a year" is laughable. I want people out there who will do stuff like invest in chemo medication research because they want to make bazzilions of dollars if they hit on the right drug. I don't want them going "fuck it, I'm not going to take those risks and on the 1% chance I'm going to hit it, I'm going to give 94% of that to a bunch of people who are too stupid to hold a decent job."

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"When people want their version of the truth, they go find it, no matter how baseless their beliefs." -- Ken Rosenthal

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You do not talk to me like that! I work too hard to deal with this stuff! I work too hard! I'm an important member of the CSFMB! I drive a Dodge Stratus!

I've always wondered if that Sam is related to the rye bread Sam.

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"When people want their version of the truth, they go find it, no matter how baseless their beliefs." -- Ken Rosenthal

Essentially, what you are alluding to is the hurdle rate required to make a business project profitable. Most people will set a hurdle rate of around 12%. Meaning your internal rate of return is 12% or higher. Others will use a net present value calculation with a 12% discount rate to get at the same concept. Since income tax directly impacts cash flow, any increase in the income tax rate makes that hurdle much harder to overcome. As such, higher taxes reduces return on investment and means less projects will be undertaken.

Now, we all know that taxes are a necessary evil of living in a society where the government provides us with benefits. Those benefits include a court system, military protection, schools, firemen, police, roads, and then your various social programs. I'd say most folks agree that we need to pay taxes. The question is where to strike a balance. Where our society has gone wrong is that we have de-linked the benefits of government from the costs. This shows up in the massive debts that have been accumulated. such that we are receiving those benefits without paying the full cost. It is estimated that the Federal Government alone has $75 trillion in total debt outstanding - $18T or in actual debt and another 50T+ in unfunded pension, social securitys, and Medicare/Medicaid benefits. The Federal Government is running a pay as you go retirement and health care system.

Oh well. You already have economists talking about helicopter money.

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Hawaii (fuck) You

Good points. We are too insulated from cost but we see the same "benefits." That goes for state, local and federal. It's loaded up at all points. No real room to maneuver, even at the margins.

As for "helicopter " money...it seems the psychopaths I'm central banking are running out of road to drive their failed idea caravan on. Theyve totally failed, thus the recycled ideas are repackaged and get more extreme. Almost a decade later and still at near zero rates and still living and dying by Fed policy, of course at this point it's fed policy that has our economy stagnant in a ditch. Still no velocity of money and they catch their heads and trudge along.

Next steps are further forms of capital controls, money printing, government intrusion into private retirement funds, travel controls, war and then collapse.