Professor Elam

Friday March 7 2014

Moody's downgraded Chicago's huge debt load to three notches above junk status.

We are studying bonds in ACCT 3312. Moody's Fitch and S & P all rate bonds. What does this mean for Chicago?  Why is there a parallel to Detroit, now in bankruptcy?  Chicago has over $18,000 in pension liablity for every citizen of Chicago. I suspect this rating of Baa1 is wildly optimisitc, assuming someone would bail Chicago out of its ditch.

My newspaper column this week is on the next looming domsday crisis, the inability of the vast majority to retire. Between ultra low interest rates, little to no savings, 47 M on food stamps, a shaky SS system being ever extended, millennial living at hom with a triilion plus debt over their heads, and now cities with underfunded pensions, well better plan to keep working.