Jul 14, 2017

Its Just A Matter Of Time ... Measured In Weeks Not Years

The Illinois Comptroller recently said, "you can kiss what little is left of the State goodbye" http://youtu.be/HH-Z7-PMIwI

And Then What? Which Liberal, Democrat State Is Next? RB

Here is a snippet from a Report by CNBC

These states are a bigger fiscal mess than Illinois :

But as bad as things are in the Land of Lincoln, three other states are in worse fiscal shape, according to an analysis released Thursday by the Mercatus Center at George Mason University.
Connecticut, Massachusetts and New Jersey are coping with even bigger problems thanks to large accumulated debts, underfunded pensions, and looming deficits, among other measures of fiscal health, the researchers found in an analysis of the latest state financial statements available.
George Mason University also listed as nearly, as bad off fiscally as the above, New Hamshire, New York, Maine, California, and Maryland, all of which are on the brink of bankruptcy. RB
Now, this latest report, concerning Illinois

Welcome To The Third World, 
Illinois About To Default?

From Dollar Collapse.com by John Rubino

The train wreck that is the state of Illinois has generated a lot of questions lately, including “Will its government ever pass a budget?”, “Will it ever pay its overdue bills?”, and “Is it possible for a state to go bankrupt?”
Looks like we’re about to get some answers to these questions, along with one more: “What happens to the financial markets when people finally realize that Illinois is far from the only impending bankruptcy?”
Today’s Wall Street Journal has an anecdote-filled article illustrating what certainly looks like a case of terminal financial mismanagement (How Bad Is the Crisis in Illinois? It Has $14.6 Billion in Unpaid Bills):
Among the many, many data points:
  • The state comptroller predicts unpaid bills will soon top $16 billion. “It is almost hard to say those numbers out loud because they seem so insane, but that’s where we are right now.”
  • Unfunded pension liabilities now total $250 billion. That’s about one-third of state GDP, and is in addition the myriad other debts taken on in recent years.
  • S&P Global Ratings has warned that it could lower the state’s rating to junk as early as this week if a budget isn’t passed.
  • Peoria-based OSF Healthcare, a network with 10 Illinois hospitals, is owed about $115 million for bills over four months old, the equivalent of 18 days of operating expenses.
  • The state owes Illinois dentists $225 million. Some dentists with lots of state workers are selling receivables to keep the lights on. Others are asking state employees to pay in cash.
  • The state owes two Springfield hospital systems more than $200 million.
  • The Coliseum building at the state fairgrounds closed indefinitely earlier this year after the state failed to fund needed repairs.
  • Eastern Illinois University has received $53 million less in state funding in the past five years than the previous five. Professors in the chemistry department haven’t been able to print in color since the department’s printer ran out of yellow ink a year ago. Enrollment has fallen from 12,000 to 7,000 in the past decade.
  • If the state doesn’t pass a budget in the current special legislative session or allocate emergency funding, about 700 road projects under way across the state—worth $2.3 billion and employing 20,000 people—will come to a stop.
  • Some social-services agencies are operating without state help while others have closed entirely, leaving some rural communities without mental-health clinics, domestic-violence shelters and drug-treatment clinics, despite a raging opioid crisis.
  • Illinois has lost more residents than any other American state for the third year in a row, with 90% of the state’s counties seeing a drop in population, shrinking the state’s tax base. In 2016, a net of 37,508 people left, according to census data, putting the population at its lowest in nearly a decade.
The impending downgrade to junk status might be the final push off the cliff, since Illinois – despite a constitution that kind-of-sort-of requires a balanced budget – still borrows a lot of money each year, mainly to fund its out of control pension system. As a junk-rated borrower, its interest costs will be much higher, making its financial imbalances that much worse. Assuming that anyone will lend money to the state on any terms.
Yes, Chicago is ill and Illinois is ill. It is not a "budget" they need but a budget, not exceeding their income, which they rigorously keep. To think their budget busting spending can continue is foolish fantasy which will end in disaster. The same goes for the other states which do the same stupid nonsense, which they have learned from our Federal government, and which is in the same shape but has the Federal Reserve printing presses to just print the budget shortfalls of their excessive spending.  
So what can you do? Pray for our country, save your money in some form other than stocks and bonds, and be prepared for some rough times wherever you are, but especially in the above states. RB

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