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The Slow Crash of Illinois State Government

June 3, 2017

Credit rating agencies told the world that Illinois debt is junk.  Investors touch it at their own risk.  That means professional investors would only buy short term Illinois bonds at an extraordinary premium.  Institutional investors wouldn’t buy Illinois debt at all.   The downward trend in Illinois finances has been clear for more than a decade.  I predict the wrong people will be stuck with the bill.

  • Are Illinois citizens responsible for politicians past promises to pay?  Illinois is already bleeding US citizens.  Who will be left to pay that debt?
  • Are Illinois bond holders responsible for mistakenly assuming taxpayers could be taxed without limit?  Investors had the facts and faculties to know better.

I prefer the latter solution because it sends appropriate signals to the bond market.  That signal is that states have a limited ability to pay their debt.  More states will receive downgrades and state spending will slow.  A judge will decide.

I predict that a judge will say Illinois taxpayers are responsible for the debt.  That “solution” leaves state politicians free to enslave the next generation as they overpay government pensions and buy campaign contributions.  Political business as usual will empty Illinois.
~_~_

Rob

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