Sarn

Illinois' budget crisis has become so dire that the state is in danger of entering a financial "death spiral," as a prominent ratings agency threatens to downgrade the state's credit score to "junk" status.

?We?re in a death spiral?Illinois has the worst pension crisis in the nation and needs the boldest reforms,? Ted Dabrowski, Illinois Policy Institute?s vice president of policy, told Fox News. ?There is no doubt that junk bond rating is on its way.?

S&P Global Ratings has warned the agency will likely lower Illinois' credit rating to below investment grade if feuding lawmakers fail to agree on a state budget for a third straight year.
Illinois in danger of entering financial 'death spiral' | Fox News

it is serious or not?

pimpmaster9000

well the last time the bankers pulled a heist they got billions in rewards from the government and got bailed out etc...no reason not to do it again

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Barry-xlovecam

GOs are (general obligation bonds)
a of municipal bond in the United States that is secured by a state or local government's pledge to use legally available resources, including tax revenues, to repay bond holders.

https://www.bloomberg.com/news/artic...s-its-politics

Fox News and RT 'news' are very similar in many ways and mostly full of shit.

Sarn

You mean it like in 2008 year?
CNN write it too. And S&P it is serious rating agency

Illinois could go down in history as the first U.S. state with a "junk" credit rating.
The rating firm S&P Global Ratings says it will probably give the state that embarrassing distinction if lawmakers fail to reach a budget deal by the start of the fiscal year on July 1. It would be the third straight year Illinois can't pass a budget.

Illinois could soon become America's first 'junk' state - Jun. 27, 2017

shiraz9944

Barry you're dead wrong on this one. Illinois tried last month to file for STATE BK protection. US law does not allow for anything but cities and municipalities to file for BK. So they are royally fucked right now. NO budget it 4 years. Unreal. Also megamillions just pulled out and they will not let Illinois sell any lotto tickets at all now. They were paying winners with IOU's the past year. How bout that shit? The damn lottery banned them.

I really don't know how they are going to get out of it without federal help. Which is shit but what else can be done? let a state go dark? If they do though the entire legislature should be removed and the governor also. No one associated with the issue should remain if they were in office in any way during this fiasco. Dem or Rep. I think S&P already lowered them to the lowest rating a state has ever had. There is no hope to be paid on the bonds so they are I think rated junk already. Law or no law doesn't matter. They haven't paid and won't. It's law to have a budget too, they haven't done that in 4 years.

Bladewire

Trump is president only 5 months now and states already going bankrupt!

Trump said unemployment is lowest ever. Trump said he'd send the feds to Chicago to fix gang crime. Why is Trump saying a lot, but doing nothing about Illinois?

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Barry-xlovecam

You don't understand the municipal bond market and how it works.

Illinois' Munis Get Closer to Junk - Barron's
The Definitive Resource for Illinois Municipal Bonds
The Definitive Resource for New York Municipal Bonds
The Definitive Resource for Massachusetts Municipal Bonds

Municipal Bonds are repaid by state taxes.
The borrower (the state) pays the coupon rate investor discount or pay a premium to yield.

Actually, the Muni Bonds that are downgraded may be a good high-yield tax free investment if the state of Illinois does not declare Section 9 Bankruptcy. I doubt Illinois will ever bankrupt. But it sure makes a good scare headline.

Bladewire

I didn't think Flint would still have lead in their water but they do. You'd think withib 3 years they could replace the small number of impacted homes but nope!

Sarn

"The agency also warned it could cut the state to junk status next month if its Republican governor and Democratic legislature can?t overcome their budget standoff."
Illinoisâ?? Munis Get Closer to Junk - Barron's

shiraz9944

That's how it works in a "functional" state but this is a state without a budget or enough tax revenue to cover their interest payments, let alone pay the bonds back. Sure lower the yield so they pay less interest that they aren't paying already but NOBODY will buy more bonds now so they can't issue new ones to raise funds and that is the only way to raise enough revenue to get out of this hole. They have borrowed so super heavily from the state run pension funds, they are now unable to pay people's retirement pensions or medical benefits promised. Over 200 billion borrowed to keep the state running. That is gone now too.

It's you that obviously don't understand a state has never and cannot according to federal law file for Bankruptcy protection. It is an impossibility and won't happen.

Bladewire, this has been going on for 4 years now. NO budget for 4 years....so that is trumps fault LOL. It's the Gov. Repub and legislature Dems. They both are at fault here. Almost criminally. When the lottery bans you, man that is sad. Did you read bloomberg's article or Reuters? There aren't even remotely enough tax revenues coming to even stay even on operating costs and interest on existing bonds at this point. They can't issue new bonds now that their rating is so terrible so they are really really fucked.

As much as I hate to say it the FED will have to step in and fix this. There is no way out for them. They need to beg the fed for a HUGE bailout like in 2008 but on a state scale. If that is the case then, the entire legislature must go and the governor must step down. Special elections for all officials.