The Windy City’s lousy FICO score.

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Listen To You Tell Me Texas Friday 5/15/15

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On Tuesday (May 12, 2015), Moody’s Investors Service, the bond rating agency, downgraded the City of Chicgao’s bond rating to junk status. The Windy City now has the municipal government equivalent of your irresponsible cousin Jimmy’s 550 FICO score.

It means that those who buy Chicago’s bonds – which is to say loan the city money – are taking a greater risk. Which means they expect a greater reward in the form of higher interest.

Just as a terrible FICO score keeps cousin Jimmy from buying a new car at those swell rates you see advertised on TV, the Moody’s downgrade will force Chicago to pay much higher interest on money borrowed to build roads and buy fire engines. Interest on debt will eat up more of the city’s budget.

This is how great companies and great cities fail. When debt gets piled up, it eats up cash. With less cash available, urgent needs — such as, in Chicago’s case, replacing long-neglected bridges and roads that are now crumbling – can only be met through more borrowing. More borrowing means more drain on cash. It’s a death spiral that has claimed many a once-great company and recently, the once-great city of Detroit.

Starved for cash, the first thing that Chicago will do is raise property taxes. They’ll try to hide this fact for a while from ordinary citizens by saying that the tax increases only really affect wealthy homeowners and commercial properties.

But that’s a complete ruse. Because individuals and businesses that can do so will leave the city. As a result, the tax base will decline. Those who remain will have to pay proportionately more. More will leave – until one day Chicago might eclipse Detroit as the largest ever municipal bankruptcy.

Don’t think it can’t happen. Detroit was once one of the wealthiest cities in the country. None of this happened because Chicago spent too much money on police officer salaries, bridge and road maintenance or the water utility system. Chicago’s city council – 100 percent Democrats since can’t remember when – put their city in this position by buying votes with public employee union campaign cash. That cash was donated as a quid pro quo for the lavish public employee health and retirement benefits granted by the city council.

As has been the case in other precincts – such as the State of California – public employee unions and Democrat-dominated governments have operated in a closed-loop feedback system. It’s a system under which Democrats keep themselves in power by rewarding union members who donate the cash to keep the Democrats in power.

It’s all great while it lasts and in states, counties and municipalities all across the country, it has lasted an amazingly long time.

Get elected and hold power today by making promises that won’t come due until tomorrow.

The problem is that it’s now tomorrow.

So where will those who flee Chicago go? Well, one good bet is, somewhere in Texas, where we don’t have public employee unions.

Besides DQ, it’s one more thing to like about Texas.

Paul Gleiser

Paul L. Gleiser is president of Gleiser Communications, LLC, licensee of radio stations KTBB 97.5 FM/AM600, 92.1 The Team FM & KYZS in Tyler-Longview, Texas.

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4 Responses

  1. Linda E. Montrose says:

    Liberals never learn that at some point the bills come due and have to be paid. They live in a fantasy land…there are no free rides and no free lunches because somewhere down the line SOMEONE PAYS!

  2. p.k. lewis says:

    That is already happening. Illinois raised taxes to 66% about 2 years ago.
    Many who live there, having suffered the jibs & laughter of us who are free are moving to Wisconsin & many are leaving period.
    The taxes & the crime rate means that it is no longer OK for job-holding, bill paying people to live there,
    This State is one of those Northern States which allows huge welfare benefits( like $3,500 a month) to those who care to go this way. I know personally of many who get this much.
    It also has huge Real estate taxes forcing those who are either aged or NOT on welfare to either move or go on Welfare with tears.
    So far this scenario has hot caught up with the is & the other Northern States ….most of whom are Democrat. But this is the beginning of an avalanche of movers who are 40-50 year dwellers. These leavers are used to the snow, weather, the crime, the dirt(Chicago is dirty & industrial…you get film on Everything even in the house),everything. But 66% taxes are the straw tot has broken the camel’s back.

    Soon only those left will be those who do NOT have a job. Another Detroit . But still no one will change or accept the responsibility.
    Sad, sad, sad.

  3. Michael Gauthier says:

    Having them move to Texas is a bad idea because they will continue to vote for the same liberal policies and programs that destroyed their previous home. As the new Governor said, we don’t want the Californiazation of Texas and I say we don’t want the chicagonization of Texas either.

  4. Tom King says:

    Houston used to be a relatively conservative town until about 1978/79 when an estimated 250,000 people from Detroit moved to Houston over a space of just a couple of years. In that time the population of Detroit declined by a quarter million. At the same time the population of Houston increased by a quarter million. Refugees from Detroit came to Houston looking for work in the oil industry, figuring, I suppose, that they had skills that were transferable and that there must be an oil workers union here.

    If you remember, they were fleeing a failing auto industry, the first symptom of Detroit’s looming bankruptcy. It was during the Carter years. Gas prices soared. Gas lines and rationing became common and to survive, people sold their big Detroit iron and bought little foreign cars that got good gas mileage. I happened to be living in North Houston at the time. Somebody from Detroit in the radio industry even fled the city. They bought a radio station in Houston and advertised it with…”If you’re from Detroit, you’ve found your station in Houston!” They played lots of Motown.

    Detroiters descended on Houston like a plague of job-seeking locusts – whole families piled in cars with everything they could carry, like Okies during the Dust Bowl, rolling the dice that there really were good jobs in Houston.

    We had one carload show up on the driveway of our little two-bedroom duplex on Canino Road looking lost and bedraggled. They’d spotted my wife and pulled in to ask if she knew a really cheap hotel. The man had a job interview on Monday and then they were going home to Detroit. They were running out of money fast.

    So my wife, faithful Christian that she is, came in the house, told me about the carload of gypsies out front, and then suggested that, since we were going to visit my Grandmother for the weekend anyway (the car was loaded and we were just about to leave), we should let them stay in our house till the poor man could go to his interview.

    I always trust my wife in matters of kindness and Christian charity, so I agreed. The poor mother broke down in tears when my wife handed her the key to the house. As we drove to North Texas, I was picturing Yankee carpetbaggers looting our home while we were gone, throwing a party, and generally messing the place up. When we returned, however, the house was neat as a pin and the mother of the family had left a note that was sweet and filled with gratitude.

    I don’t know if they ever moved to Houston, but it was a symptom of the pre-Reagan era that this kind of wing and a prayer, “They can go to hell, I’m going to Texas,” thing happened at all. When progressive socialists rape the economy in the name of grabbing power for themselves, it’s always the poor people that they claim to love so much who wind up in desperate circumstances. The man wanted a job. He fled to where he thought he could get one.

    One would hope such folk would learn their lesson. Sadly, they seldom do. Look at Houston now after a quarter million Detroit refugees hit the city in the late 70s – electing representatives like Sheila Jackson Lee and pouring out lunacy like water from city hall.

    About ten years ago, I got into the fight for transit dollars for East Texas. The Houston and Austin area rural transit lobbyists were sucking in millions of dollars a year, while East Texas, the second largest rural transit district recieved less than 4% of Travis County’s appropriation and less than 2% of Houston’s. The Democrats in those two counties were siphoning from the federal transit budget which was supposed to be apportioned by population. Instead of having the second largest appropriation we had the next to the smallest. We really had to fight to get the legislation through that cleaned up that – fortunately we’d just elected a Republican House and Senate and Governor.

    I joke that Houston and Austin is where we store our Democrats in Texas, because if you bunch ’em all up it’s easier to keep an eye on them. It’s not such a joke anymore and it’s going to get worse if Chicago falls.

    What we need to do is figure out some nice nonunion manufacturing businesses we can start up quickly to put all those Yankee refugees tow work at. Because you can bet the flood of Chicago refugees is about to begin. Guys want to work. You can hardly blame them. We should make them join the Republican Party, though. Kind of like signing a loyalty oath – instead of leaving them to gin up some new kind of union that merely reflects the old bad habits they got up to back home; the kind of habit that brought down two of America’s wealthiest cities so far and may yet bring down others.

    Just one man’s opinion,

    Tom King

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