Chicago Contrarian brings a bit of reality to Chicago's financial situation. Why a Chapter 9 Bankruptcy Might Not Work for Chicago
Detroit went bankrupt and it worked. But Detroit was not Chicago.
Detroit owned an art collection that was turned into a private collection, which got them $817 million dollars. Chicago doesn't have anything close to that kind of asset.
Detroit's pensions were funded at about 70 percent. Detroit pensions were cut, but not by a lot. Chicago's pensions are funded at about 28 percent.
The city’s four pensions have combined unfunded liability of $36 billion. They have just 28 percent of the assets on hand needed to pay for benefits already earned, a catastrophically low number and worse by far than any major city or state in America.
And finally, who would run this bankruptcy?
Detroit was blessed with an exceptionally capable emergency manager for its bankruptcy, Kevyn Orr, who was appointed by the State of Michigan.
Would the Illinois super-majority in Springfield appoint a similarly talented, hard-nosed restructuring expert willing if necessary to challenge public-sector unions, reduce payroll, renegotiate contracts, sell nonessential assets, and impose genuine operating reforms?
If you believe that, there are probably some bridges in Illinois up for sale, that you might be interested in.
In short, Chicago is not the next Detroit. Chicago's finances are in so much worse shape than Detroit was ever in, that it may not be possible for them to come back.
I am sure that the powers-that-be in Illinois and Chicago are hoping for a Democratic administration, so that they can get a bail out, at least of that $36 billion pension hole. Be prepared to scream about it to your representatives, if you don't want to foot that bill.