The state is out of money. But Wall Street gets theirs no matter what.

Wall street

This afternoon Illinois State Comptroller Leslie Munger announced that the state does not have the money to pay the state’s pension funds.

It means that the pension funds will lose a lot from investments that cannot be made.

Illinois will delay pension payments as a prolonged budget impasse causes a cash shortage, Comptroller Leslie Geissler Munger said.

The spending standoff between Republican Governor Bruce Rauner and Democratic legislative leaders has extended into its fourth month with no signs of ending. Munger said her office will postpone a $560 million retirement-fund payment next month, and may make the December contribution late.

“This decision is choosing the least of a number of bad options,” Munger told reporters in Chicago on Wednesday. “For all intents and purposes, we are out of money now.”

Munger said the pension systems will be paid in full by the end of the fiscal year in June. The state still is making bond payments, she said.

“We prioritize the bond payments above everything else,” Munger told reporters.

Just to be clear.  No matter what happens to the people of the state of Illinois, Wall Street will always get theirs. They are always at the front of the line. Sometimes they are the only ones allowed in line.

15 thoughts on “The state is out of money. But Wall Street gets theirs no matter what.

  1. Rauners rule. The rich get richer. Even Detroit put pensions before bond holders in bankrupcy. Rauner is quoted that bond holders will always come first during his reign of terror.

  2. According to the NY Times, in reference to Hillary Clinton the following has been stated, “In her post-State Department life, she has been showered with lucrative speaking fees from Goldman Sachs, J. P. Morgan and other financial firms. In her talks, she says it is unproductive to vilify the industry, and she avoids the kind of language that puts off financial executives, as when President Obama referred to “fat cat” bankers in 2009.” Don’t forget also that Bill and Hillary’s daughter, Chelsea, is married to a Wall Street hedge fund co-founder. So do we really think Hillary is going to be telling Wall Street how the game should be played? The only Dem that appears to be ready to take on Wall Street is BERNIE SANDERS.

  3. Well maybe Governor Bruce Rauner and his Wall Street buddies will chip in and pay for the Pensions!! Remember we will have a Compassionate State.

  4. Thanks for the post, Fred.
    For those of you who didn’t watch last night’s debate, perfect example of what Bernie said. And, JR, your comments are spot-on.
    Bernie 2016

  5. Honestly…do we expect anything different?!
    Gov. Rauner touted his business acumen and being able to negotiate a better deal as one of his qualifications for governor. “I can do it better!” Lead by example…you want to renegotiate the pensions…start by renegotiating all these bond deals with the investment firms. After all, they are his friends. “Friends don’t let friends govern drunk.” “Huh? What?”

  6. Fred,
    So don’t pay the bank? That’s like saying don’t pay the house mortgage and pay the gardener when you lose your job. Go ahead but there are consequences. As for Detroit, that was in court in bankruptcy, in case you did not notice. Are you advocating something?
    So for some of this debt that is secured by things like fire trucks, water plants and buildings I say go ahead, then Wall Street will own that stuff and charge what they want for it. Then you will have what yiou want, higher taxes.

  7. Wall St. is populated with a lot of greedy people but I think you missed the point. Wall St. is not getting the money the state is spending on bond interest. If you don’t want to pay Wall St., don’t issue any new bonds. The interest the state is paying is going to hundreds of thousands of small investors that use that money to fund their own retirement. And believe me they’re not all wealthy. If you believe other state services are more important than bond interest, you should also be volunteering to cut your pension because that’s what you’re asking me to do; reduce my retirement income.

    • The missing point belongs to you Dave. I also have retirement annuities in addition to my earned pension. I don’t issue bonds, the city and state do. They are a profit center for Wall Street (a generic term) investors. My retirement annuity portfolios are not guaranteed. Putting my money there implies a risk. No so my pension. My pension earnings are contractual and constitutionally protected. So says the Illinois Supreme Court. Your position is that returns on investments takes priority over all other state budget concerns. I don’t believe that is a morally defensible position.

      • Sorry, I wasn’t referring to you personally issuing any bonds. I was referring to the state issuing bonds. My interest payments are also contractual and constitutionally protected just as your pension is. So, to me that puts us both in the same category. Getting payments from the state first over other services you deem a priority. I’m sure you disagree but please accept the fact that people getting interest payments from the state aren’t all Wall St. fat cats.

      • I don’t disagree. In fact I think it is crazy that we live in a country in which the financial security of retirees and the elderly is no more secure than if I went to Vegas. Most of the industrial world guarantees its older folks (and in most industrialized countries, all working people) a guaranteed living wage, health care and social welfare. That we must fight for a place in line with the poor, young children, those with disabilities and so on is a disgrace. And if you read my blog, even recently, you know that I would sacrifice what needs to be sacrificed to make sure that the union and collective bargaining rights of current workers are protected from Rauner’s assault on them.

    • Wall Street advised the city that “structured products” like interest rate swaps, inverse floaters, auction rate securities, etc., etc. were safe investments – a clear breach of fiduciary responsibility.
      Now they all need to get their asses sued so we can recover damages.
      Next we need to make it illegal for municipalities and states to invest invest in these Wall Street “products.”
      Frank Partnoy explains the problem in “FIASCO.”

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