Chicago’s Finances A Mess For 2014 And Beyond

The beginning of the new year is always a popular time for predictions.

Here’s one I’ve heard being uttered with more regularity lately:

“Chicago’s the next Detroit”

You may recall that back on December 3, the City of Detroit officially became the largest municipality in U.S. history to enter Chapter 9 bankruptcy.

I’m guessing those making that comment presume the “Windy City” is going to be bankrupt too.

I just got done reading another comparison to Detroit being made again. This time it’s from, the U.S. financial news and services website co-founded by Jim Cramer, host of CNBC’s Mad Money. Jonathan Yates wrote on December 30:

A recent report by the Economist Intelligence Unit rated Chicago one of the top 10 cities in the world for its ability to “attract capital, business, talent and tourists.”

Although that certainly will focus global attention on “The Second City,” Chicago’s precarious financial condition could result in it becoming even more well known — for going broke…

At least Detroit had an excuse with the collapse of the automobile industry.

The major reason for Chicago’s financial woes is mismanagement. The city’s employee costs, especially for pensions, are unsustainable…

Yates, a contributor to, suggests investors avoid Chicago bonds. He pointed out later in his piece:

Chicago is a great city with great restaurants, great museums and great architecture.

But those are not reasons to buy its bonds, because Chicago’s finances are a mess, and that won’t change anytime soon…

“Chicago’s finances are a mess, and that won’t change anytime soon…”

Sadly, I agree with him there.

Now, Yates mentioned Chicago’s public pension crisis. Back on August 5, The New York Times highlighted just how serious a threat it is to the city’s well-being. Monica Davey and Mary Williams Walsh reported on the Times website:

Corporations are moving in, and housing prices are looking better across the region. There has been a slight uptick in population. But a crushing problem lurks beneath the signs of economic recovery in Chicago: one of the most poorly funded pension systems among the nation’s major cities. Its plight threatens to upend the finances of President Obama’s hometown, now run by his former chief of staff, Rahm Emanuel.

The pension fund for retired Chicago teachers stands at risk of collapse. The city’s four funds for other retired city workers are short by $19.5 billion. At least one of the funds is in peril of running out of money in less than a decade. And starting in 2015, the city will be required by the state to make far larger contributions to the funds, which could leave it hundreds of millions of dollars in the red — as much as it would cost to pay 4,300 police officers to patrol the streets for a year

(Editor’s note: Italics added for emphasis)

Rick Lyman of the Times added on December 4:

Under state law, the city must increase its contributions to its workers’ pension funds by $590 million in 2015, to a total annual contribution of $1.4 billion for current and future retirees. If no pension deal can be reached by November of next year, when the city will draft its next budget, the city will either have to raise taxes or cut services or some combination of both

(Editor’s note: Italics added for emphasis)

City Hall and their supporters can spin Chicago’s growing financial crisis as much as they want. But at the end of the day, they’ve got all the above problems to contend with as well as a long-term debt that’s now up to nearly $29 billion, or $10,780 for every city resident, according to the latest City of Chicago official audit.

I became aware of the extent of Chicago’s financial woes a couple of years back.

It’s a big reason why my girlfriend and I moved out of the city when we did.

I’ve been warning about this debacle for some time now on this blog. I can only hope my Chicago-based readers have taken note of it and are at least thinking about how they might minimize their exposure to the coming mess.

By Christopher E. Hill
Survival And Prosperity (


Yates, Jonathan. “Avoid Chicago’s Bonds; It Could Be the Next Detroit.” 30 Dec. 2013. ( 3 Jan. 2014.

Davey, Monica and Walsh, Mary Williams. “Chicago Sees Pension Crisis Drawing Near.” The New York Times. 5 Aug. 2013. ( 3 Jan. 2014.

Lyman, Rick. “Chicago Pursues Deal to Change Pension Funding.” The New York Times. 4 Dec. 2013. ( 3 Jan 2014.

Tags: , , , , , , , , , , , , , ,

Sunday, January 5th, 2014 Bankruptcy, Bonds, Debt Crisis, Entitlements, Government

No comments yet.

Leave a comment

Survival And Prosperity
Christopher E. Hill, Editor
Est. 2010, Chicagoland, USA

Successor to
"The Most Hated Blog On Wall Street"
(Memorial Day Weekend 2007-2010)


Please Rate this Blog HERE

Limited Time Offers

Via Banner Ads Below (navigate to vendor home page if necessary); Updated 11/13/15:
>CHIEF Supply Free Shipping Over $69 (code needed); 15% Off Medical Supplies Plus Free Sniper Disinfectant w/ Orders Over $69 Thru 11/26 (Code Needed); Free Slim Tri-Fold Wallet w/ Orders Over $50 Thru 11/26; Free TDU Storm Belt w/ Purchase Of $69.99 Or More In 5.11 Pants Thru 11/26
>Airsoft Megastore Free Shipping On All Orders
>BGASC Silver Bullion, 90% U.S. Coin Sale
>BulletSafe Bulletproof Baseball Cap $119 Pre-Order Price; Ballistic Plate Only $169
>Food Insurance November Black Friday Specials; Warehouse Clearance Sale
>Nitro-Pak Black November Event Up To 35% Off
>Pyramyd Air Thanksgiving Sale Thru 11/21
>Tractor Supply Co. New Online Only Deals Every Day Thru 11/15; Free Shipping Online Only On Favorite Brands
NEW! Advertising Disclosure HERE
Buy Gold And Silver Coins BGASC Review Coming Soon
Nitro-Pak--The Emergency Preparedness Leader Nitro-Pak Reviewed HERE
Food Insurance Reviewed HERE
BullionVault Reviewed HERE
Free Wallet w/ $50 Purchase @Chief CHIEF Supply Reviewed HERE
bullet proof vests BulletSafe Reviewed HERE
Pyramyd Air is your one-stop shop for everything airgun related. Reviewed HERE
Airsoft Megastore Reviewed HERE
Survival Titles Save 20% Paladin Press Reviewed HERE



Prepper Website

RSS Chris Hill’s Other Blog: Offshore Safe Deposit Boxes

  • Happy Thanksgiving
    Just wanted to wish the American readers of Offshore Safe Deposit Boxes a Happy Thanksgiving. Thank you for your continued readership and support (that applies to everyone!). Christopher E. Hill Editor
  • Additions To List Of Offshore Private Vaults
    Seems like I’ve been doing quite a few of these “additions” posts lately. Here are new entries to that list of offshore private vaults on my website of the same name: • Belfast Vaults (Belflast, Northern Ireland) • Berkshire Vaults (Berkshire, England) • DNK (Amsterdam, Hilversum, and Rotterdam in The Netherlands) • Griffin-Goodwest Oy (Tampere, […]
  • Related Reading: Austria’s Anonymous Private Vaults
    This morning I was reading an article on The Nestmann Group’s website entitled “Austria: Anonymous Storage and The World’s Safest Bank.” Offshore expert Mark Nestmann informed readers: Not that long ago, Austria had the world’s most stringent financial secrecy laws. Anonymous savings (Sparbuch) and securities (Wertpapier) accounts were widely used. The War on Terror, Money […]
  • Ireland: No Bank Safe Deposit Boxes For New Customers
    Further evidence that in some parts of the world, private, non-bank vaults are increasingly becoming the only game in town. Louise McBride reported on the Irish Independent website last Sunday: The banks have taken a lot of things from us in recent years. Here are ten things you can no longer do at your bank… […]
  • World’s Best Offshore Private Vault Videos For 2015, Honorable Mentions
    Last Wednesday, Offshore Safe Deposit Boxes started naming the “World’s Best Offshore Private Vault Videos” for 2015. Third place in the “short program” category went to Siam Secure (Thailand), runner-up was Sovereign Safe Deposit Centres (England), and the winner for the TV commercial-style marketing videos this year was Custodian Vaults (Australia). Third place in the […]