"We Track the Financial Collapse For You, so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Safeguard your financial future. Get our crucial, daily updates.

"We Track the Financial Collapse For You,
so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Welcome To The Third World, Part 25: Illinois Death Watch

It’s been a long time coming, but Illinois’ slow-mo financial disaster is now front page news. A few recent examples:

Roadwork Could Shut Down Across Illinois Due To Budget Impasse

(Chicagoist) – Roadwork across Illinois may grind to a halt at the end of June due to the continued state budget impasse, a representative for the Illinois Department of Transportation (IDOT) announced Wednesday. IDOT will be unable to pay contractors on July 1, unless the state passes a stopgap funding measure.

IDOT has told contractors that “all construction work is to shut down on June 30,” according to a statement. “Contractors will be advised to secure work zones to ensure their safety during any potential shutdown.”

Illinois has gone almost two full years without a state budget, which has hit education funding throughout the state and generated more than $14 billion in unpaid bills.14

Summer is both a high-volume construction season and a vaguely ominous time to cease road repairs; just last week, IDOT released a statement warning that the heat could lead to pavement “buckling or blowing out.”

—————

Powerball, Mega Millions to Halt Illinois Lottery Due to State’s Inability to Pay Winners

(Mish) – Both Powerball and Mega Millions Lotteries Will Pull Out of Illinois on June 30 due to the budget impasse.

Without a budget in place, the state is not authorized to make payments to the association or Mega Millions.

Lottery proceeds are about 2% of state revenue. Speaking of revenue corporate income tax collection is down 41.3%. Sales taxes are flat. How is this supposed to work?

—————

Could Illinois be the first state to file for bankruptcy?

(CBS) – Illinois residents may feel some solidarity with the likes of Puerto Rico and Detroit.

A financial crunch is spiraling into a serious problem for Illinois lawmakers, prompting some observers to wonder if the state might make history by becoming the first to go bankrupt. At the moment, it’s impossible for a state to file for bankruptcy protection, which is only afforded to counties and municipalities like Detroit.

Chapter 9 bankruptcy protection could be extended to states if Congress took up the issue, although Stanford Law School professor Michael McConnell noted in an article last year that he believed the precedents are iffy for extending the option to states. Nevertheless, Illinois is in a serious financial pickle, which is why radical options such as bankruptcy are being floated as potential solutions.

Ratings agency Moody’s Investor Service earlier this month downgraded Illinois’ general obligation bonds to its lowest investment grade rating, citing the state’s growing pile of unpaid bills and its mounting pension deficit. Illinois, by the way, has the lowest credit rating of any state. Lower ratings mean higher borrowing costs, since lenders view such borrowers as riskier bets.

“Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance, allowing a backlog of bills to approach $15 billion, or about 40 percent of the state’s operating budget,” the agency noted.

As noted by the Fiscal Times, Illinois is the only state that’s been operating without a balanced and complete budget for almost two years.

“We’re like a banana republic. We can’t manage our money,” Gov. Bruce Rauner said after the Illinois Legislature failed to produce a full 2017 budget earlier this month.

Two Big Questions
Based on the immensity of its pension obligations, the legal barriers to simply cutting benefits, and falling tax revenues, Illinois is a lock to default on some or all of its obligations in the next few years. That’s a problem for pensioners, state contractors and pretty much anyone who cares about local public services. In other words, life is going to get a lot harder for people living in the state, and especially for those living in double-bankrupt Chicago.

But the real impact will be felt farther afield, when everyone with money at risk starts asking who’s next – and finding a long list of likely suspects. If Illinois defaults, how far behind can New Jersey, Kentucky, or Connecticut be? Not far, according to current trends. And if those states follow Illinois, what are Italian bonds worth? Not much.

The second big question is: How will stronger governments respond to the implosion of weaker ones? If the failed states are bailed out by the still-solvent, what does that do to the latters’ balance sheets? In some cases it decimates them.

The dilemma? Allowing failed states to default will rock the global banking system, but bailing them out replaces a debt bust with a currency crisis. In a priced-for-perfection world, either will lead to global asset repricing — in other words an epic bear market.

Read the previous posts in this series here.

25 thoughts on "Welcome To The Third World, Part 25: Illinois Death Watch"

  1. Illinois and their Communist planners baked their bread and smeared on a heaping helping of excrement and plan on making everyone take a big bite of their economic ShitSandwich. Hey Illinois, you eat it.

  2. Allow Illinois to go bankrupt. Revoke its statehood and render it a Territory, without benefit of Congressional or Senate representation until it has become solvent.

    1. And what happens when the nappy headed fleas jump off the dead dog and head to greener welfare fields?

  3. Coincidence that the banana-republic, dictator-wannabe, boy-king, idiot Obama was from the first failed state? Ugh no. He tried to do it nationally and the jury is still out on whether or not he succeeded.

  4. Given the current political climate, Illinois will probably attempt to save money by instituting restorative justice by closing the prisons and releasing the criminals on to the streets.

  5. Illinois politicians always keep their word. In the late 1950’s, they promised that the tollway would only exist for 10 years, then be removed.

  6. IT COMING NOW A RUNAWAY FREIGHT TRAIN…reset is the only hope better do now …do it sooner (where you might be able manage) to …to survive … wait and assure your mathematical driven destruction …dollar to zero by 2020… sliver to infinity $$$

Leave a Reply

Your email address will not be published. Required fields are marked *


Zero Fees Gold IRA

Contact Us

Send Us Your Video Links

Send us a message.
We value your feedback,
questions and advice.



Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.

This field is for validation purposes and should be left unchanged.