The Sum of All Fears

The New York Times has a summary of Illinois’s and Chicago’s public pension woes. It’s too depressing to quote and if you’re a regular reader here there’s nothing in it you haven’t already heard from me. If you’re not a regular reader, it might be eye-opening.

The only alternative solutions they provide are increasing taxes and amending the state’s constitution. I’m skeptical that Illinois can solve its fiscal problems solely by raising taxes. That might work in California but Illinois already leads the country in net out-migration. Do you really think that present Illinoisans will just sit still and pay more taxes? And who do you think is the most likely to boogie out?

7 comments… add one
  • Guarneri Link

    I honestly watch this all practically in stunned amazement. I think it’s a combination of people being totally tuned out, being innumerate and falling for the populist notions of a bottomless tax well from “the rich” and “the corporations.” The usual suspects at OTB would be in their glory.

    But where, really, are Chicago residents going to go? The North Shore? Hindsdale, Geneva, Naperville or Orlando Park? I don’t think so. They can seek refuse in, gawd, the Berwyns or Lansings of the world…or get screwed. More taxes, curtailed services and a generally undesirable environment. (And they will mostly vote Democratic in the next election. Masochism).

    As for out migration, it’s a fascinating case study. People of means continue to gobble up homes on the St Charles And Napervilles of the world. You see it in the home sales prices. But it is becoming more and more concentrated. My old neighborhood, the Stonebridge Country Club community, where you paid $25k in RE taxes for the privilege of living in an $800k home so you can go to Naperville schools and subsidize the city of Aurora, is withering on the vine. Today you will pay the same taxes but your home is worth $650k. This is unsustainable. The parasites have overplayed their hand.

    To Dave’s point, and I’ve commented on this before, with a daughter with just one year of high school left all I have to do is suffer one years tax increase……….or spend six months and one day in Florida. Do you think Madigan is going to soak me? And perhaps like no other end of school year I can remember I hear talk like this. The very people who can carry the freight are in greater numbers forming their Plan Bs. There of course will always be the Willmettes, Hinsdales or Gold Coasters. But the severe Balkinization of IL, especially Chicago and the collar areas, is well underway.

    It’s tempting to to joke that I’ll get some popcorn, watch, and say I told you so. But the truth is it’s going to be a shit show. A tragedy. Go read some quotes from Karen Lewis. Oh, and the biggest victims will vote Democratic in the next election. I guarantee it.

  • Jimbino Link

    I boogied out of Illinois back when it was one of the first states to allow citizens to have sex in any position. Back when the worst case of political corruption involved a only a shoebox full of cash.

    Illinois has always been uniquely cursed by unionization and Democrat control of Chicago. We escaped from the South Side to the suburbs in 1968 when we kids faced the prospect of attending Fenger, or worse, Harlan High School.

    I’m so glad we left.

  • Do you think Madigan is going to soak me?

    The “millionaire’s tax” they’re proposing will require a constitutional amendment. That will take at least a year to pass, maybe more.

    At this point there are no quick fixes left.

  • jan Link

    Taxation of the “rich,” is the primary remedy of the social progressive’s creed for all social ills. The only aspect of their ideology changing over time is the definition of “rich,” because eventually the rich either get tapped out or run away, When that happens the not-so-rich have the fiscal baton passed on to them, becoming the newly rich and the ones now expected to carry the politically correct load of “their fair share.”

    However, there is no economic growth attached to these socially engineered solutions, nor encouragement to preserve the nuclear family — a focus which would serve to strengthen the moral fabric of society. Rather, our core energies seem to have migrated to exploiting strife among peoples, weakening family responsibilities to each other, while punitively reigning in those not dependent on government largess. What such a philosophical roadmap has led us to is a caustic brew of angry classes and cultures, with a chaser of directionless youth, comprising what was once a functioning and upward mobile melting pot of humanity — the American experience.

    Unfortunately, though, people don’t seem to learn from or even be aware of the root issues at the crux of their problems, as they continue to vote for people and dead-end policies that further deepen the conditions they are aggrieving.

  • TastyBits Link

    When people do not understand how the monetary and financial system work, it is easy to fool them into believing anything.

    When you teach people that creating money through lending is a robust method of expanding an economy, it should be no surprise that they expect money can be created for any purpose. Free money is free money.

    In the real world, you must produce a product before you can consume that product, but in fantasy world, a sufficiently large number of people wishing to consume a product is the same as actually producing the product.

    Hence, the consumer drives the economy, and all the consumer needs is money. With sufficient money, the products will materialize, and if you are a producer and believe this crap, you should have no problem giving over your money to the government. You will make it back.

    If you have a problem with giving the consumer free money, you may want to examine your premises. Free money may not be quite as free as you thought it was, and you are the one who is going to pay for all that free money.

    Meanwhile, Warren Buffett, George Soros, Jamie Dimon, Jon Corzine, Hank Paulson, etc. will be laughing all the way away from the bank they are robbing blind. You have been led to the slaughter house by your experts. You have been used.

  • Guarneri Link

    I think you should write book on your all-equity financed world, Tasty. It will be up there with Wealth of Nations and The General Theory.

    Dave’s site will have a real live Nobel Prize winner gracing it.

  • TastyBits Link

    @Drew

    At one time, I thought you were a hustler. I do not have a problem with hustlers. It is all part of the game. Some time back, I began to realize that you actually believed the bullshit you were shoveling. You are too stupid to understand how your industry works.

    What is even more amazing is that you proudly supply links to Zerohedge without understanding anything about what the hell they are about. They are pro gold standard for the reasons I list (and more).

    Everything that I write about is out there in one form or another. The only thing that I have not seen is anybody equating the dollar to a credit instrument, but the credit supply and the money supply are conceptually one entity.

    There was a post a while back with a link to a chart about the financialization of the economy. The other idiots can see that new credit instruments must created to replace the old in addition to expanding the economy, but you are a special idiot.

    If the world functioned like you assume it does, you could start a buggy whip factory. Your quaint world where banks took deposits, used those deposits to make loans, and held mortgages is long gone. The days when a factory owner could injure workers and sell shoddy and dangerous products are over. It was mostly gone when you were still a loan officer, but by the end of the 1990’s, it was long gone.

    Wall Street is all about financialization, and it has been for quite a while. My theory is that the stock market has been bullshit for at least 20 years, and for the last 6, it has been nothing but financialization. I have been saying that the banks were insolvent after the financial collapse, and they would be for some time. I do not keep up with it, but I doubt they are any better today.

    You and your ilk try a new excuse each time the last one falls apart. “Stock market prices in the future.” Then, the future must be pretty f*cking bright. When are you going to send President Obama a thank you card. I am sure he would take a simple, “I was wrong.” What about Obamacare would destroy health insurance, doctors, hospitals, small animals, and any other dumb assed shit you could think of?

    Now is Dodd-Frank, Sarbanes-Oxley, Obamacare, unemployment, food stamps, welfare, black-on-black crime, Solyndra, or ISIS killing the economy, or is some super secret combination? Forgive me if I am a little skeptical of your economic theories.

    I would go into how stock prices are based upon nonsense, but I am sure that would be too much for you. Your betters have told you how the world operates, and you know they would never lie to you. Remember when you used to admire Uncle Warren? You would not listen to the truth back then.

    You were an idiot then, and you are an idiot now. It is just a matter of time before you get to the party, and as usual, you will be unfashionably late.

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