Professor Elam

Mish outlines the standoff in IL.  The Governor wants to withold money due to IL cities unless and until the cities give him permission to borrow even more money. The problem is excess current liabilities which cannot be met. Quin's solution is to borrow even more money and do so on a long term basis. This is somewhat the revers of what Lehman was doing. Lehman, Bear, and Merrill were borrowing short term using commercial paper to leverage long term bets on long term mortgages. When the mortages slowed in making their payments to the holders the house of cards collapsed. 

This is quite foolish on Quinn's part, it never gets better, just like factoring receivables. We have studied budgeting in class but this is the real face of budgeting, who has the courage to say

The King has no New Clothes!