CHICAGO NEXT BIG CITY BANKRUPTCY?

Submitted by Tyler Durden on 07/28/2013While everyone's attention is focused on the Detroit bankruptcy, and just what assets the city will sell in lieu of raising a DIP loan, perhaps it is time to refocus attention to the city 300 miles west: Chicago. According to the Chicago Sun Times, Obama's former right hand man, Rahm Emanuel, closed the books on 2012 with $33.4 million in unallocated cash on hand — down from $167 million the year before — while adding to the mountain of debt piled on Chicago taxpayers, citing year-end audits. In addition to a liquidity problem, Chicago may also be quite insolvent as the city's total long-term debt soared to nearly $29 billion. That’s $10,780 for every one of the city’s nearly 2.69 million residents. More than a decade ago, the debt load was $9.6 billion or $3,338 per resident. Of course, in a world in which debt is "wealth", this is great news... at least until debt becomes "bankruptcy."

Ironically last year, now-retiring City Comptroller Amer Ahmad argued that the city’s debt load was not “troubling” because, "We still have a very strong bond rating. Our fiscal position is getting better every year and we are aggressively managing our liabilities and obligations" (very much along the lines of what the ECB's Mario Draghi tells the world when he gives the periodic monthly update of European stock markets during the central bank's press conference). It is ironic because last week, Moody’s downgraded Chicago from Aa3 to A3 in an unprecedented three notch cut in the city’s bond rating, citing Chicago’s "very large and growing" pension liabilities, "significant" debt service payments, “unrelenting public safety demands” and historic reluctance to raise local taxes that has continued under Emanuel.

http://www.governamerica.com/news/1044-chicago-next-in-line-for-bankruptcy

http://goo.gl/HQrCo4

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